U.S. House Set to Pass Doomed Spending-Cut Bill With No Debt Deal Imminent – Bloomberg.
Two weeks from a threatened default, U.S. House Republicans today plan to defy President Barack Obama’s promised veto by voting to slash spending and condition a $2.4 trillion debt-ceiling increase on passage of a constitutional amendment to balance the budget.
“Slashing” spending is and will always be a hyperbolic pronouncement with little chance of follow through. It’s as if the United States is going on a crash diet in which it subsists on a daily concoction of lemon juice, maple syrup, cayenne pepper, and water. Within a week, Canada and Mexico will find us unbearable.
No one wants to face the reality of our economic situation. It’s not like we can just cancel our cable (“We don’t even watch half these channels!”) and call it a day. And we’re certainly not going to end our $1,000 a day cocaine habit (replace “cocaine” with “military spending”).
Are there any real businesses that survived the recession with such crack-pipe proposals? There were lay-offs, hiring and wage freezes, and occasionally increased prices for their products. In other words, difficult decisions were made. Meanwhile, the United States wants to cease wasting money on paper clips and plastic spoons in the company cafeteria. That will stop the bleeding.
A constitutional amendment to balance the budget is what is called a “magic pill.” It’s tantamount to the CEO of Borders passing an edict banning Kindles. No one can answer how the law will change the conditions that make it impossible for us to achieve this now. And no one wants to answer the question as to how we balanced the budget the last time.
The Clinton years showed the effects of a large tax increase that Clinton pushed through in his first year… It fell almost exclusively on upper-income taxpayers. Clinton’s fiscal 1994 budget also contained some spending restraints. An equally if not more powerful influence was the booming economy and huge gains in the stock markets, the so-called dot-com bubble, which brought in hundreds of millions in unanticipated tax revenue from taxes on capital gains and rising salaries.
It’s most likely impossible to reproduce the conditions of the Clinton era. Most U.S. citizens are unwilling to wear all that flannel again or go to another Spice Girls concert. However, the political game being played of wanting to make a cheeseburger without using actual cheese or hamburger meat is going to inevitably reduce our economy into the drive-through at McDonald’s.