From the Cliff to the Ceiling
Investors who celebrated the budget agreement in Congress late Tuesday to avert the Fiscal Cliff may have been looking ahead to what is likely to be another last-minute game of brinksmanship between President Obama, his allies among the Democratic leadership of the Senate and the Republican leadership of the House of Representatives, as the United States is likely to come up against its legal debt limit in February. KBW Washington analyst Brian Gardner wrote in a report on Thursday that "the playing field for the fiscal cliff debate was tilted in President Obama's favor, and Republicans had a weak hand. However, in the debt ceiling debate the playing field will be more level and we believe Republicans will have more leverage." Reluctance among Republicans to agree to further tax increases, along with resistance of entitlement cuts by Democrats "leaves the situation over raising the debt ceiling more bitter and partisan than the fiscal cliff debate or the 2011 debt ceiling debate."