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Debt ceiling deal: Winners, losers, and chances of Fed pause

Yahoo Finance

The bill to raise the debt ceiling passed through the House and now heads to the Senate for a vote. Yahoo Finance spoke to experts, analysts, and economists to discuss the winners and losers from the debt ceiling debate, as well as the chances of the Federal Reserve taking a pause despite ongoing issues with inflation.

Joseph Zeballos-Roig, Domestic Policy & Politics Reporter at Semafor, discussed the winners and losers of the debt ceiling fight. Zeballos-Roig said, "Republicans, Democrats are eager to claim wins for both sides, for both of the respective parties."

Former Vermont Governor Howard Dean weighed in on the debt ceiling debate, commenting on President Biden and House Speaker Kevin McCarthy. Dean said, "It's a big win financially for the country, but it's also a big win politically for both McCarthy and Biden ... we haven't seen a win like that for a while."

Meanwhile, Maya MacGuineas, President of the Committee for a Responsible Federal Budget, agreed with Dean's comments. MacGuineas added, "This is the first time in over a decade that we've had a budget framework or deal that actually made the fiscal situation better, not worse."

With the debt ceiling bill in the rearview, many investors are now looking ahead to June's FOMC Meeting. Stifel Chief Economist Lindsey Piegza discussed the Federal Reserve's willingness to pause. Piegza said, "I think the Fed has indicated a willingness to pause and they still may do so, but I want to be clear, any decision ... will be made in spite of the data. The data, particularly the inflation data, do not support a pause at this point."

Video highlights:

00:00:03 - Joseph Zeballos-Roig, Domestic Policy & Politics Reporter at Semafor

00:00:29 - Former Vermont Governor Howard Dean

00:00:41 - Maya MacGuineas, President of the Committee for a Responsible Federal Budget

00:01:12 - Stifel Chief Economist Lindsey Piegza

Video Transcript

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JOSEPH ZEBALLOS-ROIG: This does take the threat of default off the table for the foreseeable future through January 2025. The next step now is for the legislation to go through the Senate. Republicans and Democrats are eager to claim wins for both sides, for both of their respective parties. There's a lot of provisions here that would revert spending to last year's levels. And appropriators, now, are going to have to fill in the blanks as to how they're actually going to go about apportioning the spending and the deal.

HOWARD DEAN: It's a big win financially for the country. But it's also a big win politically for both McCarthy and Biden. I think this is a big win for the moderates in this country. And we haven't seen a win like that for a while.

MAYA MACGUINEAS: This is the first time in over a decade that we've had a budget framework or deal that actually made the fiscal situation better, not worse. We have been adding on more and more to the debt, which is why we're currently in such a dangerous fiscal position.

Second, there was a bipartisan bill that did something hard instead of easy. And the art of compromise came back through this bill. And so we are nowhere close to done on what needs to get done. But if this is the first step in moving towards more bipartisan efforts on fiscal policy, that would be a tremendous achievement.

LINDSEY PIEGZA: To pause or not to pause? That is the question for the Fed. And it's very clear that the committee is not of one mind. I think the Fed has indicated a willingness to pause. And they still may do so. But I want to be clear-- any decision to move to the sideline temporarily will be made in spite of the data. The data, particularly the inflation data, do not support a pause at this point.

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