Sunday, April 18, 2010

We Are *So* Screwed

Dig this.
Congress is poised to miss its April 15 deadline for finishing next year’s budget without even considering a draft in either chamber ...

Indeed, some Democratic insiders suspect that leaders will skip the budget process altogether this year — a way to avoid the political unpleasantness of voting on spending, deficits and taxes in an election year — or simply go through a few of the motions, without any real effort to complete the work.
Yes, I know, this has happened before, but never in a fiscal environment like this where we're borrowing at levels equal to the height of the Second World War.
The practical consequences of failing to produce a federal budget for next year are about the same as they are for a family that doesn’t set a plan for income and spending: Congress doesn’t need a budget to tax or spend, but enforcing discipline is harder without one. And, like a family that misses out on efficiencies because it hasn’t taken a hard look at its finances, Congress can’t use reconciliation rules to cut the deficit if the House and the Senate don’t adopt the same budget.
Note that the Second World War was relatively short compared to the Democrats' plans for monster deficits. It lasted only 4 years for the US. Our current trillion-dollar deficits will go on for a decade or more.

"We had it easy. All we had to do was defeat Nazi Germany and Imperial Japan simultaneously. You have to provide compassion™!"

3 comments:

Rose said...

We're doomed.

mark said...

You guys don't get it. This is just part and parcel of the 'strong dollar policy'.

The more the govt deficit spends, the more they crowd out private sector investment, the more they destroy the productive economy, the more they raise marginal taxes on the productive, the more the Fed prints money, the more that politicians show that they have no intention of controlling spending...

the worse the economic news in the US will be meaning a move out of 'risk assets' (i.e. productive Asia and necessary commodities) and a 'flight to safety' - the good old USD and US Govt debt.

The perfect plan - the more irresponsible the US Govt is the more people will want to lend to it. I really don't know who is crazier, the borrower or the lender.

K T Cat said...

mark, the scenario you lay out is only good for the short term. After a while, the whole thing would implode. Argentina under Peron did this.