Debt Cuts Shelter Weak Economy

Deficit hawks and stimulus proponents could both find something to like here: Analysts studying the debt deal's impact on the United States' shaky economy predict that the spending cuts won’t have much of an effect on the economy until at least 2013. "The immediate economic impact of the ... deal should be relatively minor," said an analyst at Keefe, Bruyette & Woods. The immediate cuts of $22 billion—on Social Security, Medicare, and Medicaid—are a wee fraction of the $14 trillion U.S. economy. Democratic lawmakers pushed for smaller cuts to avoid thwarting the nation's economic recovery, according to staffers from both parties who were privy to the debt negotiations. The bad news? The country's credit rating will likely still drop.