Goldman’s Alec Phillips predicts that the next fiscal fights — which will start early next year — won’t be that big of a deal.
The title of his note is: The Next Fiscal Debate: Perhaps as Much Bark, But Probably Less Bite.
His basic argument: Because of the damage done to the GOP this time, there just won’t be the same kind of momentum or inclination to fight like there was this time.
The first deadline is a House-Senate budget negotiation targeted to conclude by December 13. We don’t expect a fiscal agreement to be reached then, but there is no immediate consequence of failure. The second deadline is January 15, when spending authority must be renewed to avoid another government shutdown.
We do not expect “Obamacare” to be an obstacle to the next extension the way it was over the last two weeks, and view the risk of another shutdown to be low. The next debt limit increase seems likely to be a greater source of uncertainty than the December and January deadlines. Debt limit increases are usually politically sensitive, and there is a good chance that it won’t be raised until close to the deadline again.
However, at this point we do not expect the next debt limit increase to be quite as disruptive as the one just debated. The recent showdown had negative political consequences for Republicans, and after two “clean” debt limit increases they may find it difficult to argue for policy concessions on the next extension.
Of course, conservatives are already saying they plan to wage another battle early next year.
The good news is that the conservative establishment may be more hesitant to get dragged into the fight.