Carter wrote:What an absolute load of.. "horse shit"
Somebody explain to me how this is good for America.. it does very little to affect the long term dependency on debt underpinning the country.. it is like a bankrupt moving his debt from one credit card to another credit card, whilst still maintaining a life style he cant afford.
A country isn't like a company, Carter. Or like a household. I know that is hard for people to understand, even for intelligent people, people with common-sense attitudes about money. The problem is that at the macro-economic level, common-sense intuitions most of us have no longer apply. That is the problem with macro-economic (generally Keynesian) thinking: it tells us to do something counter-intuitive. Our intuitions tell us to scale back quickly when we are overspending a lot, and that not doing so is being 'weak-willed', 'soft', and the reverse when things are looking up. And yet the standard macro-economic models tell us something different.
The USA has been living well beyond it's means since around 2001 in all sorts of ways. It has been borrowing so it could could tax less and spend more, boosting it's economy at the federal level. It has done the same at the private level (corporations, banks, investments, stocks, mortgages, credit card-debt, etc.). No doubt about it. But the unfortunate fact is that radically breaking with that 'bad policy', quitting the bad habbit, going cold turkey (austerity) would do a lot of harm in the short-term, causing hurt that would likely echo in the long-term. I think that the great depression taught us what NOT to do (Austerity) pretty clearly. I think that Europe is repeating old mistakes in opting for that approach (which may be inevitable, given the way the EU is structured, but which most economist, even some writing for the Financial Times in the UK shake their heads at). I understand why the UK opted for it (given it's situation, it may even be the best choice). I think the USA can't afford to go down that route. And both parties there know it.
You might not agree. This is an old left-right dispute: what to do when the economy slows, where the right usually says: scale down, and the left says: don't make it worse, borrow to lessen the downward curve and pay the money back when things go well again (though that resolution is often forgotten when things are going well, because folks start thinking it will never go bad again). I think that, rationally, the second view is the more correct one. (And not because I am all that left-wing... the argument just makes sense to me, more than arguments to the contrary). And in most countries, even the right side of the political spectrum usually agrees to it, partially, if not always in their public statements. Republicans in the US seem to acknowledge it, at least (both parties favor pursuing Keynesian policies, the republicans just want to 'boost' through low taxes more than the democrats).
And so... I think that a patch-deal that prevents an austerity-level 'downscaling' (lower spending, big tax increase) from hitting all at once is a good thing. Ideally, you need to be 'wise' about how you scale back, do it gradually and prudently, in a well considered manner. And if doing it prudently and in a well considered manner isn't possible for the feuding BS-salesmen running the US, then I think it is at least a good thing if they do it gradually, which is what this deal seems to do, vs. going down that cliff.
Of course, I can never be sure if I was right... since the cliff-thing din't happen. But I hope that despite the stuff happening in Washington, the US recovery won't melt away, that it will turn into something solid and steady, which will make it possible for the US to negate it's deficit in the next 8 years or so, perhaps.