What’s Going on in Washington?

The Economist weighs in on the so-called deficit talks in DC:

IN THREE weeks, if there is no political deal, the American government will go into default. . . .

There is no good economic reason why this should be happening. America’s net indebtedness is a perfectly affordable 65% of GDP, and throughout the past three years of recession and tepid recovery investors have been more than happy to go on lending to the federal government. The current problems, rather, are political. . . .

The House of Representatives, under Republican control as a result of last November’s mid-term elections, has balked at passing the necessary bill. That is perfectly reasonable: until recently the Republicans had been exercising their clear electoral mandate to hold the government of Barack Obama to account, insisting that they will not permit a higher debt ceiling until agreement is reached on wrenching cuts to public spending. . . . Under heavy Republican pressure, he has been forced to rethink.

Now, however, the Republicans are pushing things too far. Talks with the administration ground to a halt last month, despite an offer from the Democrats to cut at least $2 trillion and possibly much more out of the budget over the next ten years. Assuming that the recovery continues, that would be enough to get the deficit back to a prudent level. As The Economist went to press, Mr Obama seemed set to restart the talks. . .

You can read the full article here.  Remember, this is not the Nation or BusinessWeek.  This is the staid and stuffy Economist.  Even they’ve had enough of this foolishness.  Have we?

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