The federal government could be shut down within six weeks! While the stock market is obviously pricing in the increasing uncertainty, where are the politicians? The Continuing Resolution that is currently funding the government expires September 30th. Shouldn't somebody be hitting the panic button by now?
It could be a false sense of security because the deficit has fallen so much this year already, from 7.2% of GDP last year to only 4.2% this year. Republicans can pat themselves on their back for sequestration that reduced spending by 2.9%. Democrats can pat themselves on their back for the higher payroll tax, plus their good luck that Fannie & Freddie repaid more of their bailout debt than expected.
But, that is very short-term thinking. The present value of our future spending on entitlements has not been restrained . . . or even discussed. Sequestration and small tax increases are impotent in the face of the entitlement burden. Is anybody discussing this?
I know, I know . . . it is the dog days of summer, when everybody is on the beach, but this is important. A government shutdown will absolutely decrease GDP. The longer it is shutdown, the bigger the damage to GDP.
I'm suspicious "the fix is in," meaning there is some understanding a shutdown will be avoided by postponing any resolution or decision now. When that becomes apparent, there will be a brief market rally. If there was a "grand bargain," there would be a strong bull run, very strong indeed! But, that won't happen.
The dogs need to get off the beach, get back to Washington, and start barking at each other, please!
It could be a false sense of security because the deficit has fallen so much this year already, from 7.2% of GDP last year to only 4.2% this year. Republicans can pat themselves on their back for sequestration that reduced spending by 2.9%. Democrats can pat themselves on their back for the higher payroll tax, plus their good luck that Fannie & Freddie repaid more of their bailout debt than expected.
But, that is very short-term thinking. The present value of our future spending on entitlements has not been restrained . . . or even discussed. Sequestration and small tax increases are impotent in the face of the entitlement burden. Is anybody discussing this?
I know, I know . . . it is the dog days of summer, when everybody is on the beach, but this is important. A government shutdown will absolutely decrease GDP. The longer it is shutdown, the bigger the damage to GDP.
I'm suspicious "the fix is in," meaning there is some understanding a shutdown will be avoided by postponing any resolution or decision now. When that becomes apparent, there will be a brief market rally. If there was a "grand bargain," there would be a strong bull run, very strong indeed! But, that won't happen.
The dogs need to get off the beach, get back to Washington, and start barking at each other, please!
