SEARCH BLOG: ECONOMY.
Greek lawmakers have approved the 2013 budget involving fresh spending cuts, despite mass public street protests.Imagine that. A left-wing government saying no to spending more than it has. Well, almost. It is trying to get loan from the European Union that are contingent upon spending cuts. They are kicking and screaming, but facing up to the harsh realities.
Meanwhile, in the U.S., Bloomberg reports:
Avoiding automatic spending cuts that are part of the U.S. government’s so-called fiscal cliff would have the biggest economic effect per dollar, the Congressional Budget Office said in a report today.
The report reaffirmed the CBO’s previous projections that allowing the scheduled tax increases and automatic spending cuts to take effect would lead to a recession in the first half of 2013. It also analyzed the economic effects of each part of the scheduled changes. The spending cuts would affect defense and non-defense programs.
“Because the tax cuts have been in place for so long, CBO expects that households would view an extension of current tax rates as a continuation of established tax policy and would therefore alter their spending very little,” the report said.In other words, the automatic spending cuts are bad and raising taxes are bad. So, what is a country to do? There is really nothing there about fixing the long-term problem. There is only the view that the combination of spending cuts and tax increases would cause a recession next year... a recession we may well be headed toward already.
The big question is, after 2013 which course fixes the long-term problem... if any?