Reuters has the story Analysis: Budget constraints limit Obama’s second-term agenda.
Many budget experts expect Congress will ultimately conclude that the spending caps are too severe to work. The drive to cut spending could abate in coming years as well if an expanding economy boosts tax revenues and narrows budget deficits.
But meanwhile, Obama will have few resources to implement his economic vision.
“When I hear an aggressive agenda for investment, given the numbers we’re looking at under the Budget Control Act I tend to be highly skeptical,” Minarik said.
Does it occur to many people that there is something wrong with an economic policy that forces actual harm on the economy to avoid the mythical problem of adequate investment in the economy’s future which requires the collection of more taxes than are now being collected?
There are two solutions to the mythical problem,
- Collect more taxes. The money going into the hands of people who can afford to save, suck liquidity right out of the economy that needs that liquidity to be invested. That’s not a criticism of the people who save. It is just a statement of reality.
- Recognize that deficits during a recession is just a problem of appearances, and just spend what needs to be spent. Some people who apply micro-economic standards to the macro-economic federal budget don’t like the look of the bookkeeping fiction of a deficit.