Good Reads: So Western nations have failed to cut spending. What's next?
With a US Congress 'super committee' unable to cut spending and Britain's government also struggling, the West is looking like a wastrel; and Cairo's Tahrir Square seethes once more.
The front pages today appear to be full of failure: failure of the US Congress’s “super committee” to bring down spending in line with tax revenues; failure of Britain’s government to bring down its own rising levels of debt; and failure (thus far) of Egyptian protesters to push the country’s military from political control of the government.Skip to next paragraph
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Reading a story about failure requires a certain amount of masochism, unless one is looking for clues on how to learn from this failure and to improve. The articles in today's Good Reads push the news beyond failure and dole out golden nuggets of explanation and context to consider. So let’s learn, shall we?
RECOMMENDED: Federal budget mess: Six ways to fix it
In today’s New York Times, Binyamin Appelbaum and Annie Lowrey write about the likely economic consequences of Congress’s inability to come up with a compromise on spending cuts. Instead of finding a gentler way to reduce spending, Congress has essentially put the country into a form of receivership, where the law will now require equal cuts of new spending in both defense and domestic budgets.
Not only will this mean deep cuts in military programs and health care, but the Times' writers say it also “threatens to significantly slow growth in an already ailing economy by raising taxes on almost everyone while reducing government spending on almost everything.”
But, wait: Mr. Appelbaum and Ms. Lowrey find an economist who finds a lesson in all this.
“There could be a bit of a silver lining,” said Rosanne Altshuler, an economist at Rutgers University who served on President George W. Bush’s 2005 tax reform panel. “It forces us to come to terms with cuts in areas that have been difficult to touch — the military and Medicare. We may not like how the cuts are going to be done, but we better start dealing with the fact that cuts are going to have to be made.”
Although Republicans offered to raise taxes by $300 billion over the next decade, they insisted on conditions that all but guaranteed that the wealthy would not be hit hard. And Democrats refused to agree to deep cuts in spending on health care for the poor and the elderly unless the rich were forced to make greater sacrifices.
If Congress is having trouble getting debt under control, it is largely because debt has become such a major part of the US economy, writes the Monitor’s Mark Trumbull.