Tuesday, May 29, 2012

A Budget Grand Bargain Will Follow the Election


A Budget Grand Bargain Will Follow the Election

BY ROBERT RUBIN, HTMT.

Fiscal cliff set a deadline for the gridlocked Congress to rethink and re-bargain for some substantial fiscal risk which will greatly affect the future policy and growth in the US.

Last summer, Congress failure to reach a fiscal "grand bargain"made the economic-policy divide separating the 2 parties. There is a second chance to breakthrough by the so called fiscal cliff.
Congress's failure to reach a fiscal "grand bargain" last summer manifested the deep economic-policy divide separating Democrats and Republicans. Fortunately, the so-called fiscal cliff will soon create an extraordinary second opportunity for a breakthrough compromise.
Washington continued failure to get the fiscal house to poses these basic risks
  • Government borrowing risks crowding out private investment
  • Unsustainable fiscal outlook undermines business confidence by creating uncertainty about future policy
  • Deficit constrain the capacity to make public investment

Washington's continued failure to get our fiscal house in order poses five basic risks. One, government borrowing risks crowding out private investment. Two, our unsustainable fiscal outlook undermines business confidence by creating uncertainty about future policy, economic conditions and our ability to govern, which in turn dampens investment and hiring.

Three, deficits constrain our capacity to make the public investment critical to competitiveness, growth and ...

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