Fed Fight May Poison Fiscal Deal

President Obama at a Friday press conference talking about nominating a new chairman for the Federal Reserve in a press conference Friday.

The posturing for the September battles over debt and spending is getting more aggressive. Democrats are pushing for more of both, while Republicans are trying to hold the line on demanding spending limits in exchange for more borrowing.

A combination of tax hikes, spending caps and modest improvement in the economy have helped to drive this year’s deficit to the lowest point since 2008. The current year deficit is forecast to be less than $700 billion. Though the sum is astronomical by historical standards, President Obama and his team are arguing that the first deficit under $1 trillion of his presidency is reason to believe that Democrats can now reject Republican demands for further spending limits. But increasing the debt unconditionally is a nonstarter among conservatives.

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