With a flair for needless melodrama, Congress decided not to shutdown the government last night. That is a good thing. From an economic standpoint, Keynesian economists are shaking their head, because the economy has lost stimulus, however minutely. Austrian economists are relieved, because the deficit is reduced, however minutely. Of course, supply-side economists got their feelings hurt, as they were ignored in the compromise legislation. As a three-footed economist with a foot in each camp, I think it was much ado about nothing. Because dampening the economic recovery with a government shutdown was avoided, I feel like saying . . . whew.
The far greater problem is raising the debt ceiling. If we fail to raise it, the cost of paying our national debt will start increasing rapidly from 7% of our GDP to something much higher. This will decrease the funds available for either entitlement spending or discretionary spending. Or, this will require even more borrowing. When we miss that bullet, I will feel like saying . . . WHEW!
If this melodrama means that dogs and cats have finally learned to play together, I will feel like saying . . . Thank You, God!!!
