Raymond Richman - Jesse Richman - Howard Richman
Richmans' Trade and Taxes Blog
$260 billion in budget cuts is not enough
If they can't agree to bring the budget toward a sustainable balance when the next elections are 2 years away, when will they do it?
According to Politico, the tax increases and spending cuts of the compromise deal being worked out between President Obama and the Republican House leadership will only reduce the federal budget deficit by about $260 billion per year.
Currently the U.S. federal government budget deficit is $1,327 billion per year. Without this deal, the tax increases and spending cuts of the fiscal cliff would have reduced the deficit to $825 billion per year. This deal will only reduce the budget deficit to $1,067 billion per year, resulting in a 6.7% rate of budget deficit growth which is about 4% faster than GDP growth.
Here's how this growing debt to GDP ratio will eventually play out, according to the Congressional Budget Office:
And here is how my father, son and I described this future in our American Thinker article about the fiscal cliff (The Fiscal Cliff is a Good Thing):
They are sacrificing America's economic future in order to avoid a minor recession. Isn't there an adult left in Washington?
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