Default averted.

Not enough, but a big step.

To try to focus on the good parts here, an agreement was finally reached that cuts $3tr from future federal spending and takes a first serious step towards real and necessary deficit reduction. That’s good.

Also, the final passage was done by huge blocks of moderates in both political parties. That’s good too.

And unless some new revenues are found this fall by a special committee, the cuts will hit defense as well as entitlement spending in somewhat evenhanded portions. Well done.

As for the bad parts – no need to repeat them right now.

So where to go from here.

Contrary to common belief – there’s really no need to eliminate debt and deficits entirely to get on a sustainable path. If the debt is about 60% of GDP, that might be ok. If deficits are a few percentage points of total spending, that’s ok too. As long as the economy keeps growing.

And to grow the economy, new revenues and a couple of jobs bills would do a huge difference. It’s not that far away, and it’s not all that inconcievable. It was done in the 90s. It could be done again.

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2 thoughts on “Default averted.

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