Yet this does not end Washingtons penchant for more cliffs. The delayed issue of the debt ceiling, the $110 billion spending sequesters, is to be resolved by March 1 and, if the Republican proposal is accepted, a budget to be passed by April 15. Either side holds the bait for the spending sequesters, the Democrats do not want Social Security to be cut, whilst the Republicans wish to save the military, which shall be hit the hardest if automatic-spending cuts are to go on. However, the Republicans may hold the cards when it comes to the budget, since the Democrat-controlled Senate has failed to pass one for the past four years. In other words, Washington to-and-fro will continue.
But with Republicans relaxing their radicalism, and Democrats being forced to confront their obstinacy over Medicare and Social Security, we can expect the end of extreme brinkmanship that ideological polarisation has brought about in Washington. This would calm the markets and reinforce a somewhat muted American economic recovery.