http://www.washingtonpost.com/business/economy/year-end-tax-cuts-have-nearly-doubled-projected-size-of-national-debt-cbo-says/2013/09/17/cda802d2-1f9c-11e3-94a2-6c66b668ea55_story_1.html
Once again, business in the House of Representatives is grinding to a halt as we approach the imminent government funding debate. Just in case it slipped your mind, lets have a recap of the 2011 debt ceiling crisis in which congress dragged out a vote on whether or not to raise the debt ceiling. Republicans in the House of Representatives threatened to let the government shut down if Democrats did not agree to include a "balanced budget amendment" to the constitution, thus holding the nation hostage as a polarized congress underwent endless debates and theatrics until a compromise was finally reached. But this time is slightly different, as House Republicans are demanding that Democrats vote to defund Obamacare before they will vote to continue funding the government.
While I do not oppose Republicans' efforts to end Obamacare, I do not believe that threatening to shut down the government is a rational way for the GOP to accomplish this goal. Not only is this tactic unorthodox and ineffectual, but it is also a surefire way to damage the economy by inciting fear on Wall Street. When investors see that there is a chance of a government shutdown, they are likely to respond by selling stocks, lowering their values and ultimately hurting the economy. For this reason, Republicans should be wary about sticking to their guns without compromise in this situation. While the effects of a government economy would probably not be described as catastrophic, it would most certainly be an undesirable situation for everyone, with all but "essential services" of the federal government being delayed until further notice.
Will Republicans and Democrats come to a compromise on this issue and vote to continue funding the government? I hope so. And if history is any indication of what will happen, we can probably assume that they will, even if it comes down to an eleventh hour agreement. While I do not like to see Obamacare going into effect just as much as the Republicans don't, the best way to cut the deficit at this point is not by letting the government default. Republicans should focus on more realistic methods of stopping Obamacare, instead of settling for an all-or-nothing, high stakes showdown with Democrats in congress by using a potential government shutdown as leverage by which to ram through their economic policies.
Thursday, September 19, 2013
Oh Look, There Goes the Deficit - TheDailyBeast.com
http://www.thedailybeast.com/articles/2013/09/14/oh-look-there-goes-the-deficit.html
In what may seem like a startling turn of events in light of the rampant growth of the Federal Government's annual budget deficit this past decade, deficit spending is actually starting to shrink. While I had expected the sequester to help rein in deficit spending when it was implemented last March, I did not expect it to make quite the impact it appears to have made on the National Debt. The author of the article attributes the 35%, $409 billion reduction in deficit spending since last year to a 15% increase in tax revenue, and a 3.6% reduction in government spending. I agree that these two statistics represent monumental turnarounds for the financial state of the federal government, but I also believe that even greater spending cuts will be necessary for the U.S. Government to get its fiscal house in order.
The implications for the economy as a whole on this issue are huge. While the unemployment rate has been declining, most companies have been reluctant to hire more new employees for the past few years as a result of uncertainty in the the nation's economic stability in the near future. Without the burden of a rampantly growing national debt, employers may have a new incentive to begin creating more jobs, which may finally mark a complete recovery from the Great Recession. While the stock market has recovered all of its losses from the housing market crisis of 2008 and the Dow Jones Industrial Average has reached all time highs, the high national unemployment rate has remained a major obstacle to a full economic recovery.
While the author of the article mentioned some good reasons for the deficit to be decreasing, I did wonder why he didn't write about the rebound of the stock market. Last summer the stock market made significant gains which means that capital gains taxes must have brought in a greater amount of revenue, which could certainly have affected the deficit. Overall, I found this article to be interesting and insightful, and I am happy to see that deficit spending is finally shrinking.
In what may seem like a startling turn of events in light of the rampant growth of the Federal Government's annual budget deficit this past decade, deficit spending is actually starting to shrink. While I had expected the sequester to help rein in deficit spending when it was implemented last March, I did not expect it to make quite the impact it appears to have made on the National Debt. The author of the article attributes the 35%, $409 billion reduction in deficit spending since last year to a 15% increase in tax revenue, and a 3.6% reduction in government spending. I agree that these two statistics represent monumental turnarounds for the financial state of the federal government, but I also believe that even greater spending cuts will be necessary for the U.S. Government to get its fiscal house in order.
The implications for the economy as a whole on this issue are huge. While the unemployment rate has been declining, most companies have been reluctant to hire more new employees for the past few years as a result of uncertainty in the the nation's economic stability in the near future. Without the burden of a rampantly growing national debt, employers may have a new incentive to begin creating more jobs, which may finally mark a complete recovery from the Great Recession. While the stock market has recovered all of its losses from the housing market crisis of 2008 and the Dow Jones Industrial Average has reached all time highs, the high national unemployment rate has remained a major obstacle to a full economic recovery.
While the author of the article mentioned some good reasons for the deficit to be decreasing, I did wonder why he didn't write about the rebound of the stock market. Last summer the stock market made significant gains which means that capital gains taxes must have brought in a greater amount of revenue, which could certainly have affected the deficit. Overall, I found this article to be interesting and insightful, and I am happy to see that deficit spending is finally shrinking.
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