Morgan Stanley: This Debt Deal Is EXACTLY What the Economy Needs

obama, walking, white house lawn, april 2011

Photo: The White House/Pete Souz

From Morgan Stanley’s David Greenlaw:News out of Washington suggests that a debt ceiling deal might be coming together soon. Apparently, President Obama and House Speaker Boehner have an agreement in principle on the framework of a package that would include significant entitlement reform, major tax increases starting in 2013 and an extension (and possible expansion) of current tax breaks into 2012. This is exactly the type of program that is needed from a macroeconomic perspective — long-term deficit reduction combined with a continuation of near-term fiscal stimulus. The likely market reaction to such a deal is unclear.

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