Follow Yahoo!'s The Daily Ticker on Facebook here!
There seems to be no end in sight for the dysfunctional manner in which our elected Congressional officials have chosen to run the United States of America. Whether or not to give President Obama the authority to raise the debt ceiling by $1.2 trillion is just the latest example.
The country's debt limit will be raised by the aforementioned amount to roughly $16.4 trillion, allowing the government to operate through the November election, but not because of any broad consensus among Democrats and Republicans in Congress.
The decision to raise the debt ceiling this time around was one part of the debt deal made last August, which allowed for three incremental increases in the amount the U.S. could borrow. In a symbolic move to show their aversion to raising the debt ceiling, the Republican-led House of Representatives took up and passed a measure of disapproval last week for the additional line of credit. Thursday the Democratic-led Senate voted that proposal down along party lines.
But had the Senate also passed a resolution against raising the debt ceiling, it surely would not have survived a presidential veto. The exercise by House Republicans was purely a measure to save themselves and their voting records during upcoming elections from Tea Party-like conservatives who oppose more government spending.
For individual investors, this dysfunction is their biggest concern for the U.S. economy in 2012, according to a new poll by Motley Fool. 44.5% of those asked said dysfunctional politics was their top concern followed by 24.8% who said the national debt was the most critical issue for investors in the year ahead. The survey also found that more than two-thirds of investors blamed uncertainty for slow economic growth.
In search of a bit of optimism on the state of politics in the U.S. and our fiscal mess, The Daily Ticker's Aaron Task sat down Byron Wien, vice chairman of Blackstone Advisory Partners. In his annual list of potential surprises for 2012, Wien says he believes there is more than a 50% chance Congress will get its act together.
In 2012, "Congress decides its dysfunctionality is harmful to both parties and acts before the November election to deal with the failure of the Super Committee to develop a program to reduce the U.S. budget deficit by $1.2 trillion over ten years," he writes.
If lawmakers in D.C. don't find a solution before November, he does not believe it is not likely to happen before 2013 when $1.2 trillion in drastic automatic cuts are set to take effect due to the bipartisan Super Committee's failure last fall to agree on ways to make cuts of the same amount.
Republicans want to cut all spending now, but do not want to increase the tax rate on individuals or corporations. Democrats, on the other hand, believe money needs to be spent in the short term to jumpstart the economy while agreeing to future cuts. The left is also for increasing taxes on those who make more than $250,000 a year.
With no way forward by Jan. 1, 2013, $600 billion in cuts will be made to defense and $600 billion to entitlement programs.
"There's a lot we've got to clean up in this country. We are living beyond our means and we've got to pull back," says Wien while staying positive and making the following prediction. "Either Obama as president or a group in Congress, Republicans will try to seize the reins early because that will show that they are willing to take the initiative to address America's problems."
Do you agree that Congress will find a solution to the country's debt problems this year?
13 comments