Lawmakers agree on the first bipartisan budget in four years: “Is it perfect? Does it go far enough? No...” but a “small positive step forward”

The House overwhelmingly passed the first bipartisan budget in four years last week; the bill moves to the Senate for a vote this week. The 332-94 vote left hard line conservatives and liberals complaining, but most lawmakers agree with Speaker Boehner’s description of the deal: “it’s progress.” Although SNWAM does not expect Standard & Poor’s to upgrade United States debt back to “AAA” in the near future, the deal eases fiscal headwinds caused by automatic government spending cuts known as “sequestration,” particularly for the military, to the tune of $60 billion through 2015. After October’s government shutdown and the escalated debt ceiling debate, the deal is a welcome sign that tension between political parties in the legislative branch may be abating. Whether or not differences can be resolved will become apparent when Congress tackles the looming debt ceiling (again), which Treasury Secretary Lew says will need to be raised in March. In February this year, Federal Reserve Chairman Bernanke specifically pointed a finger at Congress for “unnecessarily impeding the current [economic] recovery.” However, if the budget deal is any predictor of future activity, increased confidence and reduced fiscal drag could accelerate the announcement date or pace of a “tapering” of asset purchases by the central bank.