Congress moves to resolve debt crisis amid warnings

11:33 AM, Oct 16, 2013   |    comments
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By Brian Tumulty
Gannett Washington Bureau

 -- Congress moved Wednesday toward passage of a short-term deal to reopen the federal government and raise the nation's debt ceiling, but economists and business leaders warned that the recent pattern of governance through brinkmanship is putting a brake on economic growth.

The short-term bipartisan Senate deal announced by Senate Majority Leader Harry Reid, D-Nev., funds federal agencies through Jan. 15 and suspends the debt ceiling through Feb. 7.
House and Senate negotiators would be required to recommend a long-term budget plan by Dec. 13.

Votes in the House and Senate were expected later in the day.
The debt crisis that threatened to produce a default on federal obligations in the coming weeks could have produced "a deep dark recession'' on a par with the Great Recession by the end of November, according to Mark Zandi, chief economist of Moody's Analytics.

Even though that crisis appears to have been averted, the inability of Republicans and Democrats in Congress to reach a long-term deal on federal budgets and payments on the national debt has left enough uncertainty for businesses that they will be reluctant to invest and hire new workers.

Larry Fink, chairman and chief executive officer of the world's largest money manager, BlackRock Inc., said in an interview on "CBS This Morning'' that the latest Washington crisis has had a huge effect on job creation because CEOs are holding back.
"They're not going to invest in plants and equipment,'' Fink said. "They're going to hold back. And so here we are. We have a very, you know, unquestionably poor job economy, and we're only going to make it worse."

Zandi said the best outcome would be for Congress and the administration to get out of the way of the private economy.
"The key to everything is establishing a stronger rate of growth,'' Zandi told reporters Wednesday at a breakfast. "And the key to doing that is getting Washington off the front pages.''

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