It's just a jump to the left, and then a step to the right

In his victory speech last night, Rand Paul noted that "the American people want to know why we have to balance our budget and they don’t." If he actually wanted an answer, it's easy to find out: the Federal government doesn't need to balance its budget because the government can print as much money as it wants. The question is whether this is a good idea; too much extra demand without corresponding productive ability will lead to inflation. That is not a problem at the moment, with millions of workers unemployed and factories sitting idle. Government spending can also be quite wasteful, like the botched banks bailouts or our never ending wars in Iraq and Afghanistan... but there are some signs that once Rand Paul is in Congress he will become a big supporter of the latter brand of government waste. Wise spending on infrastructure, on the other hand, can have a huge positive impact on future growth, and R&D spending created technologies like the computer and the Internet.

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:

1. 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.
2. 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.
3. War spending. Just kidding, no one who cares about balanced budgets would dream of cutting that.

Republicans were elected on the back of massive unemployment. It seems unlikely things will improve much by the next election.