Does This Debt Report Signal More Budget Cuts Ahead?
As flight delays became common and air travelers stared in disbelief at arrival/departure boards, the effects of government budget cuts became palpable. Republicans and Democrats alike engaged in “I told you so” posturing on Capitol Hill, yet the results were clear: arbitrary spending cuts had aggravating consequences. The latest report on the national debt is causing people to wonder if more cuts will start affecting them where they live.
On the whole, it could be said that the report spells good news. U.S. finances are such that it will take until October for the country to reach its debt limit. Theoretically, that gives Congress extra time to work together (and with President Obama) on a deal that would solve the problem for the long term. Republicans want more spending cuts to get on track to solving deficit and debt issues, while Democrats say they need more tax revenue to realize that goal.
In that respect, the encouraging news on debt only means that both sides will have more time to finagle with respect to party and individual interests. Businesses do not usually hesitate when learning they have higher revenues than expected (more pronounced in light of drastic budget cuts), yet the Republican-led House and nearly equally divided Senate have shown they will wait until the last minute to find any common ground.
That puts every citizen and visitor in the U.S. on edge in some respects. Economically speaking, the severe budget cuts known as sequestration are starting to be felt. Delays in air traffic affect the earning potential of everyone from the small business employees to the largest corporations. On a smaller scale, America’s jobless would find themselves without an extension of unemployment benefits if no compromise is reached in Washington.
Budget cuts to unemployment funds keep money out of the hands of consumers who almost instantly put it back into the economy, spelling bad news for retailers nationwide. Of course, the optimistic view would hold that the added time in the hands of both parties would lead to a constructive, evenhanded compromise. As the nation saw with the fiscal cliff negotiations, there is little reason to expect that to happen.
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