AGF Logo
  • Home
  • Industry and Expert Views
  • Investing and Market Views
  • Capitol Insights
  • Français
  • AGF.com
Skip to content
AGF logo
Insights and Market Perspectives
  • Industry and Expert Views
  • Investing and Market Views
  • Capitol Insights
  • Contributors
  • Français
  • Search
Search
Close
A Glimmer of Hope on Debt Ceiling/Default Talks

  • Industry and Expert Views

For Print Only Logo
Insights and Market Perspectives

A Glimmer of Hope on Debt Ceiling/Default Talks

Author: Greg Valliere

January 30, 2023

KEVIN McCARTHY WILL MEET WITH JOE BIDEN this Wednesday at the White House, beginning months of debate (don’t use the word “negotiations”) over the debt ceiling and a potential U.S. loan default. The White House has adamantly ruled out negotiations, asserting that the debt ceiling has to be raised first.

BUT BOTH BIDEN AND McCARTHY are master deal-makers, and Wednesday’s meeting is an encouraging sign. Both men will probably agree to continue talking, and by spring there may be proposals from both sides.

ANOTHER ENCOURAGING SIGN is that McCarthy has taken Social Security and Medicare cuts off the table, and based on poor reviews, tax changes will be off the table as well. McCarthy said yesterday that defense cuts might be part of negotiations, but that’s an issue that bitterly divides Republicans.

McCARTHY HAS TO TREAD CAREFULLY, because a deal with the President could enrage hard-line House conservatives, who could seek to oust the House Speaker if there’s a compromise that allows for some spending increases.

WHAT’S NEW IN THE LAST FEW DAYS? There’s growing House support for across-the-board spending caps rather than digging into all 12 appropriations bills and the thousands of programs that can’t possibly be addressed individually. Spending caps have actually worked in the past few decades (until they expired).

THERE’S ALSO SUPPORT for passing a short-term debt ceiling extension in late summer, lasting a couple of months, and tying it to the massive budget that has to be passed before the new fiscal year begins on Oct. 1. Any effort to “kick the can” usually wins support in Congress.

ANOTHER TACTIC HAS LANDED WITH A THUD: A Republican effort to “prioritize” spending has no support at the White House. This scheme would allow for making interest payments, funding veterans’ benefits, etc., while shutting down funding for much of the government until there’s a deal.

WE’RE STILL COMFORTABLE WITH A 60-40 CALL that there will be a last minute deal, with a reduction in the pace of spending growth. A flat-out freeze in spending seems unlikely, but the growth of spending is likely to slow.

BIDEN’S MEETING WITH McCARTHY COULD BE A GOOD START: Others will enter the debate, including House Minority Leader Hakeem Jeffries and Senate Minority Leader Mitch McConnell. This won’t be easy – the Republicans eventually will have to make a formal proposal – but it’s still winter and the talks are about to begin already.


The views expressed in this blog are those of the author and do not necessarily represent the opinions of AGF, its subsidiaries or any of its affiliated companies, funds or investment strategies.

The views expressed in this blog are provided as a general source of information based on information available as of the date of publication and should not be considered as personal investment advice or an offer or solicitation to buy and/or sell securities. Speculation or stated believes about future events, such as market or economic conditions, company or security performance, or other projections represent the beliefs of the author and do not necessarily represent the view of AGF, its subsidiaries or any of its affiliated companies, funds or investment strategies. Every effort has been made to ensure accuracy in these commentaries at the time of publication; however, accuracy cannot be guaranteed. Market conditions may change and AGF accepts no responsibility for individual investment decisions arising from the use of or reliance on the information contained herein. Any financial projections are based on the opinions of the author and should not be considered as a forecast. The forward looking statements and opinions may be affected by changing economic circumstances and are subject to a number of uncertainties that may cause actual results to differ materially from those contemplated in the forward looking statements. The information contained in this commentary is designed to provide you with general information related to the political and economic environment in the United States. It is not intended to be comprehensive investment advice applicable to the circumstances of the individual.

AGF Investments is a group of wholly owned subsidiaries of AGF Management Limited, a Canadian reporting issuer. The subsidiaries included in AGF Investments are AGF Investments Inc. (AGFI), AGF Investments America Inc. (AGFA), AGF Investments LLC (AGFUS) and AGF International Advisors Company Limited (AGFIA). AGFA and AGFUS are registered advisors in the U.S. AGFI is a registered as a portfolio manager across Canadian securities commissions. AGFIA is regulated by the Central Bank of Ireland and registered with the Australian Securities & Investments Commission. The subsidiaries that form AGF Investments manage a variety of mandates comprised of equity, fixed income and balanced assets.

About AGF Management Limited

Founded in 1957, AGF Management Limited (AGF) is an independent and globally diverse asset management firm. AGF brings a disciplined approach to delivering excellence in investment management through its fundamental, quantitative, alternative and high-net-worth businesses focused on providing an exceptional client experience. AGF’s suite of investment solutions extends globally to a wide range of clients, from financial advisors and individual investors to institutional investors including pension plans, corporate plans, sovereign wealth funds and endowments and foundations.

For further information, please visit AGF.com.

©2023 AGF Management Limited. All rights reserved.

Written by

Greg Valliere

Greg Valliere

Chief U.S. Policy Strategist

AGF Investments

Also Read

  • Investing and Market Views

Market Quote: Oil Prices, Dividend Stocks, U.S. Treasuries  

September 29, 2023

  • Investing and Market Views

Sustainable Investing: Can Institutional Investors Have Their Cake and Eat it Too?

September 28, 2023

  • Investing and Market Views

Big Picture: Investors Not on the Defensive, Despite Talk of Recession

September 26, 2023

  • Investing and Market Views

Big Picture: Growth Vs Value

September 19, 2023

Get perspectives straight to your inbox.

Subscribe now

More articles like this

Ten Key Themes as a Chaotic Weekend Looms

  • Industry and Expert Views

Ten Key Themes as a Chaotic Weekend Looms

Greg Valliere | September 29, 2023

Timely insights from inside Washington.

Who Won Last Night?

  • Industry and Expert Views

Who Won Last Night?

Greg Valliere | September 28, 2023

Timely insights from inside Washington.

A Glimmer of Hope on Budget; Plus — What Would Democrats Require to Bail out McCarthy?

  • Industry and Expert Views

A Glimmer of Hope on Budget; Plus — What Would Democrats Require to Bail out McCarthy?

Greg Valliere | September 27, 2023

Timely insights from inside Washington.

AGF Logo
  • Industry and Expert Views
  • Investing and Market Views
  • Capitol Insights

Follow AGF

AGF Web Site Pages © 2023 AGF Management Limited. All rights reserved.

  • Terms & Conditions
  • Privacy
  • AGF.com