I'm a natural pessimist, and as an aficionado of economic policy, the last few years have given me lots to be pessimistic about. (With no intent at hyperbole, we are fully embarked on the worst fiscal path in the history of the republic.) But yesterday an event occurred, small but telling, which gave me genuine hope for the first time in a long while. It may, in fact, have been a very good day for me, for us, for our children and grandchildren. There are still obstacles to overcome, but the future suddenly seems sunnier.
I'm speaking of a small change added to the senate budget resolution which promises some fiscal sanity over the next few years. Basically, this amendment (proposed by Russ Feingold of Wisconsin, may the winds sing his praise!) puts the Senate on a "pay as you go" basis for the next five years for both expenditures and tax cuts! At last, some small evidence that the minority of DC grown-ups have grown tired of the clown show.
There are two very good post about this on Brad DeLong's excellent blog. The first discusses the language of the amendment, which states that any bill that would widen the deficit --- including the extension of the Bush tax cuts --- would require a supermajority of 60 votes. See also the comments to this post, which go into detail on why a seemingly internal Senate rule change was attached to a budget bill. (Short version: a procedural trick to keep the wingiest of the wing-nuts --- Do I see the Junior Senator from Oklahoma asking for the floor? --- from fillibustering the change.)
The second post, from a couple days earlier (and little remarked on at the time) comes via Max Sawicky and consists primarily of a chart contrasting the national debt as a percentage of GDP with or without extension of the Bush tax cuts. Even though these are only loose predictions, the difference is striking: if we extend the Bush cuts (and fix the AMT) then by 2013 it's estimated the federal debt will be over 50% of GDP! Without these changes by 2013 the ratio will fall, and will be down to just over 20% by 2013.
The amendment still has to survive the conference committee, but with fingers crossed, we may be turning off the road to disaster.
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