Monday, December 9, 2013

The Great Budget Crisis Ends (Probably) With a Whimper

A Terrible Deal – But About the Best That Could be Achieved

The appetite of the Republicans to shut down the government over the deficit and federal spending has been sated by their gorging on a shutdown in October.  And now they think, possibly erroneously of course, that they have a great issue in the software problems of ACA, so they don’t really need the deficit as a campaign issue.  The result, it looks like the two parties will reach an agreement on federal spending through the next two years.

House and Senate negotiators were putting the finishing touches Sunday on what would be the first successful budget accord since 2011, when the battle over a soaring national debtfirst paralyzed Washington.

The deal expected to be sealed this week on Capitol Hill would not significantly reduce the debt, now $17.3 trillion and rising. It would not close corporate tax loopholes or reform expensive health and retirement programs. It would not even fully replace sharp spending cuts known as the sequester, the negotiators’ primary target.

So what does this mean?  Well the best that can be said is that the drag of reduced government spending on the economy will not be too great, and the economy should continue to stumble towards a full recovery.  That recovery will have been much slower than it needed to be, thanks to Republicans blocking major stimulus and the Democrats designing an inadequate and ill defined stimulus.

Of course, Republicans may yet blow this, but right now it looks like a go.

The U. S. government – Not Quite as Bad As It Could Be - But  Awfully Close 

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