| Welcome to Bw Daily, the Bloomberg Businessweek newsletter, where we'll bring you interesting voices, great reporting and the magazine's usual charm every weekday. Let us know what you think by emailing our editor here! If this has been forwarded to you, click here to sign up. The US was racing toward financial calamity … and then, suddenly, it wasn't. Over the weekend, President Joe Biden and House Speaker Kevin McCarthy struck a deal to suspend the debt ceiling. It was frankly anticlimactic. There was no dramatic showdown. Financial markets weren't cratering. Panic hadn't yet set in. Most Washington insiders expected the process to take longer and be more contentious. Instead, after a big buildup, stern warnings of impending global catastrophe and maximalist demands from both sides—Gut Medicaid! Mint the coin!—the final deal was modest and underwhelming. As no-so grand finales go, it ranks with The Sopranos or arguably Succession: sudden, uneventful, sort of a letdown and open to endless, unsatisfying interpretations. On the plus side, America will pay its bills and not destroy the global economy in the next two years: The deal suspends the debt limit until 2025. It also caps nondefense discretionary spending, rescinds some unspent Covid-19 funds, trims a big increase in IRS funding and puts work requirements on some food stamp recipients. But it doesn't gut Medicaid, Medicare or Social Security, or invalidate the debt ceiling by means of a platinum coin or a presidential invocation of the 14th Amendment. As a result, partisans on both sides are unhappy. Representative Chip Roy of Texas, a Republican hardliner, called the deal a "turd sandwich." Kentucky Senator Rand Paul blasted its "fake spending cuts." Liberals were equally caustic. "There's not a single affirmative win for Democrats," says Jeff Hauser, a progressive strategist. "All Biden's done is made things worse by further cementing the debt-ceiling hostage-taking as a legitimate tactic."  Representative Chip Roy during a House Freedom Caucus news conference outside the US Capitol on Tuesday. Photographer: Sarah Silbiger/Bloomberg Perhaps the deal's most notable feature, though, is that it doesn't look much different from what Republicans might have negotiated through the ordinary budget process. This raises the question of whether the whole drama is worthwhile in the first place, given the costs it imposes on the economy. "If they hold everyone hostage in the name of lowering interest rates, and in the process of issuing their threats end up raising interest rates, well what have they really achieved?" says Kathleen Day, who teaches the history of financial crises at Johns Hopkins Carey Business School and wrote Broken Bargain: Banks, Bailouts, and the Struggle to Tame Wall Street. "I think the rest of Congress needs to find a backbone and tell these people to shut up and sit down." The idea that debt-ceiling fights don't actually accomplish much is reinforced by a new Goldman Sachs analysis. The bank's Alec Phillips called the deal a "major reduction in uncertainty, minor reduction in spending." Rather than force McCarthy to do their bidding under threat of losing his job, the Republican hardliners who engineered the debt showdown have seen it backfire in their faces. McCarthy's image is enhanced by the deal and his conference shows few signs of revolt. So why not just drop the tactic once and for all? Despite the reckless, never-ending cycle of default threats—if Congress passes the deal, as expected, it will mark the 79th debt-ceiling revision since 1960—not everyone in Washington wants to do away with it. "Congress only does something when it has to, so the debt ceiling is a useful vehicle for forcing action," says Alex Conant, a Republican strategist. Besides, he points out, for all the caterwauling about extremists seizing control of Washington, "it's not the extremists who are doing victory laps—it's the moderates." Assuming McCarthy can whip a majority of his members to support the bill and Democrats supply the remaining votes, we won't have to think about the 80th debt-ceiling fight until after the next presidential election. By then, passions may have cooled. Reason might prevail. Members of Congress might finally see the debt ceiling as the fool's gold that it always is. "When Dems were freaking out because Biden was caving, that felt really good for Republicans," says Liam Donovan, a Republican strategist and debt-ceiling expert. "Now that they're looking at the deal, it's turning into a bitter pill. I hope it makes them think this isn't worth doing again." As we all know, it probably won't. —Joshua Green, Businessweek Politics aside, what will the debt-ceiling deal do to the economy? It is, after all, supposed to constrain spending at a moment when a recession seems to be just around the corner. Well, according to Businessweek's Enda Curran, it might have less of a bang than one might think. But sure, it looks bad: Most economists expect the US will tip into a recession over the coming year: Those surveyed by Bloomberg before the debt deal was reached had penciled in a 0.5% annualized drop in gross domestic product for both the third and fourth quarters. Measures in the agreement, such as clawbacks of Covid-19 assistance or the phaseout of forbearance on student debt, could crimp consumer confidence, affecting both the timing and the severity of a downturn. Textbooks also say that tightening fiscal and monetary policy at the same time heightens the risk of a recession—though it's worth noting that the bounce-back from the Covid slump has been no ordinary recovery.
But maybe this deal isn't such a killer: While Republicans have billed the agreement as the biggest deficit-reducing legislation in a dozen years, the general consensus among analysts is that it doesn't quite live up to the hype. "In reality it's a modest proposal with plenty of workarounds and budget gimmicks," says Ben Koltun, director of research at Beacon Policy Advisors.
And others have a similar take: Michael Feroli, chief US economist at JPMorgan Chase & Co., wrote in a note to clients that "the implied spending reduction doesn't look like a game-changer for the macro outlook."
What else do people say? Read it all here. | 
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