Experts see D.C. deal on debt limit — but can’t figure out how

Forget another big scare over the U.S. debt ceiling. Democrats and Republicans will soon strike a deal to raise the amount the federal government can borrow and squash any chance of a crisis.

That’s the conventional wisdom (again) in Washington. Republicans would rather keep the focus on what they perceive as the Obama White House’s haplessness, analysts say, instead of highlighting divisions within conservative ranks, especially with the midterm elections approaching. Conservatives have a chance to retake control of the Senate.

Bloomberg

Can Washington avoid another crisis?

In the “buildup to November’s mid-term elections, we expect another suspension of the debt ceiling without a major fight,” the Wall Street firm Morgan Stanley told clients.

What the so-called experts can’t quite figure out is how the deal will come about once the debt limit is set to be reached again – technically on Feb. 7 but the Treasury probably can manage the situation until the end of the month.

“There is virtually no chance of a U.S. default or any material credit event, but there is not yet a clear path to a deal,” according to an analysis by the Washington office of the Eurasia Group, a global political and economic consulting firm.

The one worry among political cognoscenti is that the symbolic to-and-fro over the debt limit could accidentally turn into full-fledged fight.

A large coterie of House Republicans, for example, still want to make a ritualistic display of opposition to show conservative voters they are not giving in without a fight. They are sure to demand some concessions from the White House, perhaps approval of the Keystone pipeline or delay in some aspects of Obamacare.

Yet Democrats are certain to balk since they did so successfully in the last round of fighting.

What to look for? Watch what President Obama says about the debt ceiling on Jan. 28 during his annual State of the Union address. And pay attention to the response by top Republicans after the party’s annual retreat ends on Jan. 31.