FXstreet.com (Barcelona) - Nomura economists have noted that
Republican Speaker Boehner and other leaders in the House have
issued a statement calling again on the Senate to pass two bills
which have already passed in the House.
These bills (H.R.5652: Sequester Replacement Reconciliation Act of
2012 and H.R.8: Job Protection and Recession Prevention Act of
2012; also see last week‟s H.R.6684: Spending Reduction Act of 2012
which passed the House) extend all of the Bush tax cuts and
implement spending cuts proposed by the House Budget Committee
under the leadership of Chairman Paul Ryan.
The team note that Senate Majority Leader Harry Reid has opposed
this approach in the past and thus, in their opinion, it is
extremely unlikely that the Senate will pass these bills as they
are. They feel that Reid has indicated that he is prepared to bring
legislation addressing the fiscal cliff to a vote in the Senate,
but only if there is a realistic prospect of passage in the House.
Boehner´s statement indicated that the Republican leadership in the
House is prepared to respond if the Senate passes any legislation
relating to the fiscal cliff, but there was no indication of what
sort of deal they would be prepared to sort out. The Nomura team
see the bottom line as that there remain significant hurdles to
pass legislation of substance in both the Senate and the House with
the limited time remaining in the lame duck Congress. They remain
sceptical and maintain that the most likely outcome is that we will
"go over the cliff" - that is, there will be no substantive
moderation of the fiscal cliff policies before year-end.