Wednesday, April 18, 2012

Can Our Government Pass Its Test?


We would like to know what you think and are posing this question.  Can the US government make the necessary cuts in spending to avoid a shut down of its services in December?  Another way of stating this is, will Congress and the President have the guts to make the tough decisions that will a) get the budget under control b) stop the ever-increasing debt c) cut inferior programs and policies that are no longer effective?
In other words, will Congress do its job?  

We doubt it and expect there will be a lot of grandstanding and chest beating with very little progress. These bums will not act until there is an absolute crisis and at that point in December, it won't be an emergency.

Additionally, if the Democrats win big this fall, there will be little movement as they will read the results as a condemnation of Republican actions in the House to cut spending and will want to wait until January to make their "necessary" tax increases. If the Republicans win, they will delay everything until the new Congress is seated to make changes to their way of thinking. 

So for these reasons, we doubt anything will occur in December.  What do you think?  We want to hear from you.

Conservative Tom


U.S. faces big tax, budget test at year end: Geithner

Reuters – 1 hour 14 minutes ago
Fantasy Finance
WASHINGTON (Reuters) - The government will face a major test on whether it has the capacity to govern when it faces big tax and budget decisions at the end of the year, U.S. Treasury Secretary Timothy Geithner said on Wednesday.
Before 2013, the country will be forced to deal with the expiration of tax cuts that affect nearly all taxpayers, automatic budget cuts, as well as another debate over raising the country's debt limit.
"It will be a big test in Washington, a big test of the country to govern itself in how Washington deals with those challenges," Geithner said ahead of a meeting on Friday of finance ministers from the Group of 20, representing the world's leading industrialized and emerging market economies.
A protracted fight over how to rein in the country's trillion dollar plus deficits and raise the debt limit in 2011 forced the government to the brink of several shutdowns and stripped the country of its top credit rating.
The Treasury expects the country to hit the debt ceiling or the legal limit it is allowed to borrow before the end of the year and individual tax cuts enacted under former President George W. Bush - known as the Bush tax cuts - will expire December 31.
As well, $1.2 trillion in automatic budget cuts are set to kick in early January, which will force the Obama administration and Congress to deal with the country's fiscal problems.
"Hopefully we use it as an opportunity to make another significant step towards long term fiscal reform at that time," Geithner said.
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1 comment:

  1. AnonymousApril 24, 2012 at 1:05 PM

    "Greece, Portugal, and Spain have substantially reduced their deficits over the past two years, despite the fact that their economies were stagnant or contracting. And of course, their terrible economic performance can be attributed in large part precisely to those very same austerity measures, as contractionary fiscal policy in each country has depressed their economies.  Yet eurozone politicians' obsession with deficit reduction continues -- and continues to have new repercussions every day on the eurozone's economies and governments." 

    http://streetlightblog.blogspot.com/2012/04/eurozone-austerity-by-numbers.html

    -------------
    I mention this today because Spain has just officially gone back into recession, and the government intends to do even more austerity in response. Yes, these countries are reducing their deficits, but the WAY they are doing it is depressing their economies even more. Are you still sure you want to follow their formula? Blind spending cuts is not the solution. The solution is to cut spending on things like military that have relatively less contribution to GDP and invest more in things like infrastructure and health that support economic expansion. The goal should be to get spending and revenue balanced at each around 20% of GDP within 10 years, rather than continue deficit spending to 2030 (Ryan budget) or even longer (Obama budget).

    --David

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