US: Another government shutdown prevented - BBH

The US House of Representatives passed another continuing resolution to prevent a government shutdown starting Friday, points out the research team at BBH. 

Key Quotes

“It extends spending authority through March 23, while boosting defense spending for the remainder of the fiscal year.  But, do not let it distract from the larger effort in the Senate.  A deal may be in the works that resolves the spending authorization and the debt ceiling issues.  Essentially, rather than split the differences and compromise, the solution is to let both sides have what they want.  Guns and butter.”

“Military and non-defense spending caps imposed by a 2011 agreement will be lifted this year and next.  When coupled with the recently approved tax cuts, it is difficult not to see how the fiscal condition will deteriorate.  Making it even more troublesome is that it comes at a time when the US economy is already growing above trend, and we continue to point out the accumulation of evidence that it is in a mature or late part of the business cycle.  The debt hangover from a regime of tax cuts and spending increases may shape the investment climate in the future as well as be a key issue in the 2020 elections.”