In any case, the question is whether the new Republican Congress members are actually serious about balancing the budget is an important one. Demand in the economy can come from exports, households, business or government. Instead of exports, we have imports, and households are suffering from massive debt and unemployment. So either businesses decide to start hiring and investing again, or we're reliant on government spending... and state and municipal governments must balance their budget and are constrained by massive revenue shortfalls.
Thinks to look out for:
- Renewal of the emergency extended unemployment benefits. There are 3.7 million people claiming unemployment benefits past the standard 26 weeks. The funding for this expires Nov 30th, and depends on a lame duck Congress for renewal. Of course, there are also many others who've hit the limit of 99 weeks and now get nothing.
- The Catfood Commission. Obama's Deficit Reduction Committee will be announcing its recommendations December 1st, probably with (completely irrelevant and unnecessary) suggestions for cutting Social Security. This may have no short term impact, since to appease the "we got our Social Security and Medicare, so fuck the rest of you" crowd, aka Tea Partiers, the Republicans may try for a phased implementation of cuts.
- War spending. Just kidding, no one who cares about balanced budgets would dream of cutting that.
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