Economists and budget experts believe the debt ceiling deal is little more than a missed opportunity. The experts believe that by avoiding cuts in entitlements or finding new streams of revenue the deal failed to address the causes of the debt problem, The Washington Post reported.
“They achieved a temporary political solution, but not a fiscal solution,” Robert Bixby, executive director of the Concord Coalition, a nonpartisan group that advocates fiscal responsibility, told the Post.
“The real problem here is the mismatch between growing entitlement spending and revenues. And what don’t they address here? Growing entitlements and revenues.”
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The refusal by Republicans to raise taxes and Democrats to allow substantial cuts to Medicare, Medicaid and Social Security forced negotiators to abandon any hopes for a “grand bargain” that would have offered long-term solutions.
“The problem that we have economically is a function of something we have been doing for the past 30 years, when we went on this binge of deficit spending,” Lance Roberts, chief executive of the investment firm Streettalk Advisors, told the Post. “This is not only government, but also individuals.”
The deal did nothing to address unemployment and continues uncertainty in the areas of future budget cuts and possible tax hikes that economists maintain have hurt economic growth. Nonetheless, analysts admit the deal is the best that could occur.
“It is a step in the right direction,” Scott Brown, chief economist for the financial services company Raymond James and Associates, told the Post. “But the real problem is the long-term budget outlook. As it is, we already are seeing contractionary fiscal policy — the cuts in state and local government — restricting growth.”
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Committee for a Responsible Federal Budget’s Maya MacGuineas, said the deal is “going to fall short of the critical goal, which is stabilize the debt by doing what we need to do — reform entitlement programs and overhaul the tax system,” the Post reported.
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