While lawmakers managed to avert a government shutdown with the recently passed continuing resolution, a debt ceiling or another government shutdown crisis looms when the CR expires on Dec. 11, warns political strategist Greg Valliere.
In a recent interview with ThinkAdvisor, Valliere, who recently left his post as chief political strategist at Potomac Research to become chief global strategist for global investment management firm Horizon Investments, said that Federal Reserve Board Chair Janet Yellen's goal to raise interest rates in December "could be thwarted" if the government shuts down.
"I'm very apprehensive about December," Valliere said. House Speaker John Boehner will leave and likely be replaced by House Majority Leader Kevin McCarthy, R-Calif., setting up "a very confrontational environment."
Analysts at Washington Analysis noted in their Monday commentary that McCarthy is the most likely candidate to replace Boehner, ahead of Rep. Jason Chaffetz, R-Utah, and Daniel Webster R-Fla. "Though more closely aligned with the conservative wing of the GOP" than was Boehner, McCarthy "is unlikely to allow a government shutdown come December over short-term policy issues," Washington Analysis says.
McCarthy's ascendency to House speaker will be a "modest positive for the defense sector as a whole," Washington Analysis says, as he is likely to favor a budget deal later this year that would: raise mandated spending limits for defense and non-defense discretionary outlays; and increase war spending to achieve a YoY defense spending increase near the $30 billion rise the House and Senate have advocated and the $35 billion increase the Obama administration requested." Boehner, however, "likely would have accomplished something similar," Washington Analysis states.
