2011-08-03

FOLLOW-UP: On the Current US Deficit and Debt Crises

I'm not even going to link to the original post, because so much has changed between then and now that it's frankly irrelevant.
Well, I'm still in my house and not in a cave, so the US and the US economy have survived the debt ceiling crisis, with Congress passing and President Obama signing into law the bill to raise the debt ceiling, in exchange for fairly substantial cuts all along the way. I won't bore you with details, but the gist is that the debt ceiling will be raised by $400 billion immediately, $500 billion in a few months unless 2/3 of both houses of Congress vote against it, and $1.5 trillion later. The first two will be accompanied by specific spending cuts dollar-for-dollar, while the third will also be accompanied by dollar-for-dollar spending cuts (or tax increases) hashed out by a group of 12 members of Congress; if an agreement can't be made in time, automatic cuts will become effective, particularly affecting defense and discretionary spending.
I'm glad the economy didn't collapse and the US didn't default. Of course, I would have liked to see tax increases, or at least the closure of tax loopholes and breaks/subsidies, but with the government as dysfunctional as it is now, I suppose I can't ask for more at the moment.

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