2010-12-23

Deflation in 2011

The U.S. Congress is talking the talk right now, in about two weeks we'll see whether they can walk the walk. These are most certainly deflationary in impact:

GOP unveils strict House rules
On the spending front, Republicans plan to implement a series of rules called CUT/GO — a conservative answer to the PAY/GO rules instituted by Democrats. Under CUT/GO, increases in mandatory spending would have to be offset by spending cuts in other programs. Mandatory spending refers to the autopilot portion of the budget covering Social Security, Medicare and other programs designed to make payouts based on eligibility criteria rather than a set dollar figure each year.

Under CUT/GO, offsets could not be achieved by raising taxes, according to the summary.

In addition, GOP leaders will eliminate the so-called Gephardt Rule, which has long allowed House members to avoid a direct vote on raising the nation's debt ceiling. The rule provided that a bill increasing the debt limit was automatically generated when the House adopted a conference report on the annual budget resolution.
If enacted and followed, CUT/GO would eventually eliminate the entire federal budget except for Medicare and Social Security—which is why reform of those programs is critical. Interestingly, if the GOP sticks to its guns, this would force the issue to the table.

No comments:

Post a Comment