It's a day of the obvious it seems, but Suzy Khimm has a really great post up at Wonkblog that outlines how much in deficit reduction Congress and the president has already achieved, but also how those savings have depressed our GDP growth. This is, of course, I no-brainer. The government is part of the GDP equation and it's long been established when you cut government spending, you slow economic growth.
But perhaps more substantively for the future. Ms. Khimm notes that Barclays economist, Dean Maki, believes that only entitlement and tax reform can put the US on the path to greater economic growth. Quite honestly this is also pretty obvious. Companies have rebounded from the recession, but many are hording cash right now or looking for mergers and acquisitions to spend that cash on. One of the big reasons for that is governmental uncertainty. If you're a business owner you just don't know what the tax environment and entitlement is going to look like because there's tons of talk around making changes, but nothing has changed yet. It would be better for the economy if the government would do something decisive to give taxation and entitlement clarity to employers. Sadly, as I noted at length yesterday, if one side isn't ready to negotiate then no deal is going to get done.
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