Monday, April 29, 2013

In February, I wrote about the budget game I called "Cancel the football program." The first winner in the game is the FAA and their furlough of the air traffic controllers. They took the path of maximum inconvenience for the public and parlayed it into getting a release of long term capital improvement funds to cover wages. "Special Assist" goes to every member of Congress who voted for this supposed fix to the sequester. Congress ( both House and Senate) tried to force themselves to actually make policy by imposing the automatic cuts if nothing got done. Now they are in the position of working diligently to avoid even that consequence of their ineptitude. In the weeks to come I expect every other agency involved in the sequester to try the same thing.

There was a good article in the Financial Times this weekend concerning the debate about austerity vs stimulus as the better policy for the current state of the US economy. The article reviews the experience of England, Ireland, Japan and Spain to their austerity policies and the attendant problems and progress. It seems like all major world economies are regressing to the middle as the severe austerity countries (Ireland, Spain) are beginning to pursue expansion mostly in response to high unemployment and the stimulus countries (US) are beginning to address long term debt levels. As I stated earlier this year I believe the sequester will not be enough to push the US economy into negative growth. It will however slow things down.

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