Monday, July 11, 2011

REALITY CHECK: Simplifying the Budget Impasse

The debate over whether raising taxes or cutting spending is the way to avoid default has moved into high gear as the President issued a "Grand Compromise" to the Republican Congress that includes significant tax increases, as well as long-term spending cuts. So far, the GOP is having none of it. But I think we can simply the political calculation going on in the halls of Washington:

  • IF the US Government goes into default, we will vote everyone out.
  • IF the only spending cuts are to take place 2, 3, or 4 years out, we will vote out every Republican
  • IF there are tax increases, we will grumble but live with it. Your job is probably safe.
  • IF there are ONLY tax increases and no substantive spending cuts, we will vote out every Republican.
  • IF Medicare, Social Security, and Military Spending remains off the table, nothing will be resolved and we will vote everyone out.
Hopefully, the President and Congress are keeping these important realities in mind as they play hardball in their negotiations.

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