The economic state of the U.S. as we close-out 2012 is not good. What seems to be a lack of leadership with our president and congress has given us the feeling that our government is not functioning properly. Economic growth is weak and the signals for inflation and modest job creation are loud and clear.

Irwin M. Stelzer wrote that the fiscal cliff drama is a sideshow. He probably is right. The ideology of both sides has a lot of light shown it. Tax increases and spending, higher or lower, are the topics that get the most attention. 2012 was a test of spending and tax policy. The path to compromise is full of potholes.

A new item has come up too. The debt ceiling. It is to be reached on Monday, the 31st. Republicans may be the group that this spotlight shines on. Republicans may hold out and waive spending cuts in return for a rise in the debt ceiling. The debt ceiling may be the only arena to check President Obama's spending.

There is no plan of attack to grapple $1 trillion in deficits. Reforms of healthcare costs and retirement have also been ignored. We have borrowed to pay for current consumption since the 1960's; to the point where the structural deficit in America is 7% of GDP.

Can our economic numbers get any less manageable? About 100 million Americans are unemployed. Household median income in America has fallen for four straight years.

Is the U.S. Congress incompetent? The accusations of one side to the other is that there isn't a balanced approach. At least Reps and Dems can agree on one point. The Americans aren't buying the notion of a lack of a balanced approach. Is the mortgage deduction still on the table?

Currently our economic growth is under 2%. The Federal Reserve pegged 2012 growth at 3.7%. Our economy requires $5 worth of debt to provide $1 worth of economic growth. Prosperity is broken. Our rate of growth is not strong enough to improve levels of income and employment.

Is it too late for offers and counteroffers? Most likely. So taxes increase and spending will do what?
Somebody put the offer out to tell us that.

Source links:

Doug Ross on directorblue.blogspot.com
Irwin L. Stelzer and the Weekly Standard
Lance Roberts on Business Insider
Brad DeLong story


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