Now becomes serious. House Speaker John Boehner warns that it will not be disconnected for a short-term costs extension to keep the deficit-laden federal government operation. ' Read my lips, "she says. "We are going to cut spending." the revelation of the budget is here.
The current authority for expenditure which runs through March 4. Between now and then, Congress would cut spending either on a temporary measure to keep the Government running. Perhaps a bit of both. In addition to a sustainable outcome, however, a shutdown looms.
This is unlikely, but the odds are not zero either. Let's call this the risk of courageous. Helps the calendar is either. As Jaime Dupree notes,
Court is off next week, so while the House approves a budget gap (billion in budget cuts), the Senate won't be back until the week of 28 February, to deal with it.
and now, not even the first item on the agenda for 28.
"the Senate adjourned until 28, where we will pay up to ... Patents Bill, "tweeted a bemused Don Stewart, a spokesman for Senate GOP Leader Mitch McConnell (R-KY).
Paul Krugman charges all the talk about the budget debate is actually "cheating," Affirming that,
House Republicans are talking big cuts but to focus solely on the same small budget sliver [nonsecurity-discretionary spending].
And sharp cuts, proposing immediately simply won't Republicans where money is going where it is not spending money while Severing. economy continues to be a deep depression is a recipe for slowing economic growth, which means lower tax revenues, that any deficit reduction from G.O.P. cuts will at least partly offset by lower revenues.
the entire debate on the budget, then, is a farce.
Krugman argues that "If you're serious about the deficit, should be willing to consider closing at least part of this gap with higher taxes." in theory, Yes. But it opens the door to the old debate about whether we are in this mess because taxes are too low, or costs are too high. I am not going to resolve this issue here, but a little perspective never hurts. Here is the tax Rorsach for day of the graph from the historic tax brackets.
Finally, the Government can set two levers: revenue and expenditure. The details are cluttered, but it is a minefield, once the dust clears policy. With this in mind, one more chart to chew. The annual change in the current Federal recoveries (blue line) vs. current expenditure (red line) seasonally adjusted terms recently moved into something approximating an encouraging State. Yes, this is a drop in the ocean of the deficit forecasts. But at least there is a hope that if the Government can restrain the increase of expenditure--a massive if--the ability for some progress in budgetary matters is doomed.
Regardless of what happens, the Government's fiscal house in order is going to be painful and the problems of willl red ink is with us for years. The real issue to decide how to dig ourselves out of the hole without shooting ourselves in the foot in the head. Reduction of the budget during the development of employment is weak, but it carries a risk too do increase taxes. The numbers show that some of the two will be necessary to make substantial progress on the deficit. Everyone knows this. The question is how that reality will reveal itself to the actual legislative changes.
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