President Obama praised lawmakers and Vice President Joe Biden after the House of Representatives voted to pass a Senate measure to avert the most serious impacts of the so-called "fiscal cliff."
The last-minute deal-making on Capitol Hill may have helped avert the fiscal cliff for now, but many commentators expressed pessimism over the agreement and the distressing sight of lawmakers allowing the world’s largest economy to teeter near economic disaster.
“This is a bad bill that made a bad situation worse,” Richard Haas, the president of the Council on Foreign Relations, said Wednesday on MSNBC’s Morning Joe.
“The only thing it did was avoiding sending the signal (to the rest of the world) that we’re reckless and out of control,” he added.
Consumers, businesses and financial markets have been rattled by the months of budget brinkmanship. The crisis ended when dozens of Republicans in the House of Representatives buckled and backed tax hikes approved by the Democratic-controlled Senate.
But even with the agreement, more budget drama is expected on the way. In February, Congress will have to decide what to do about a slew of other spending cuts. Then, in March, lawmakers will decide on whether to increase the federal borrowing limit.
“We could see an early lift in the markets because of relief the deal went through,” Gary Thayer, the chief macro strategist at Wells Fargo Advisors, told The New York Times. “The response may be muted because the deal left out many long-term issues.”
'A missed opportunity'
Erskine Bowles and Alan Simpson, who headed a deficit commission for Obama, said lawmakers missed a "magic moment to do something big" for the American economy.
“The deal approved today is truly a missed opportunity to do something big to reduce our long term fiscal problems, but it is a small step forward in our efforts to reduce the federal deficit,” they said in a joint statement released Tuesday.
In a scathing editorial, the Wall Street Journal called for the parties to go their own ways in Congress and tried to rally Republicans against Obama.
“Having been cornered into letting Democrats carry this special-interest slag heap through the House, Speaker John Boehner should from now on cease all backdoor negotiations and pursue regular legislative order. House Republicans should pursue their own agenda and let Mr. Obama and Senate Democrats pursue theirs. Mr. Obama has his tax triumph. Let it be his last,” it wrote on the editorial page.
Economists had been warning that the tax increases and spending cuts could take a chunk out of the U.S. economy.
But early Wednesday, world markets registered relief over the deal.
Benchmarks in Australia and Hong Kong boomeranged on the first trading day of the year. Asian markets had slipped on Monday, fearing that negotiations over the measure might collapse.
Many analysts were gloomy about long-term prospects.
“The process was so chaotic and the outcome so unsatisfactory that we are likely to see a further U.S. downgrade at some point,” Steven Englander, fixed-income strategist at Citi, wrote in a research note.
The House voted Monday to approve the Senate's fiscal cliff bill by a vote of 257-167. Richard Lui, Luke Russert and Mike Viqueira report on MSNBC.
But China's state news agency Xinhua took a more severe view, warning the United States must get to grips with a budget deficit that threatened not a "fiscal cliff" but a "fiscal abyss." Most of China's $3.3 trillion foreign exchange reserves are held in dollars.
For the Washington Post, the entire episode was depressing.
The newspaper expressed discouragement for what the episode suggests for political compromise going forward.
“The United States will have to wait longer yet for its inevitable budget reckoning,” it wrote in an editorial.
“We hope the nation’s leaders will be able to accomplish in stages what they have been unable to do in a series of self-imposed crises: raise more revenue and significantly reduce future entitlement spending. But the fiscal cliff episode offers little encouragement,” the newspaper concluded.
Reuters and The Associated Press contributed to this report.