I sure am glad that’s over—that is—the debt ceiling standoff, even though Congress simply “kicked the can down the road.” Maybe next time cooler heads will prevail. Maybe some lessons have been learned, such as
- The debt limit is out of bounds.
- The debate next time should be on legitimate budgetary issues, not on the de-funding of The Affordable Care Act.
- Real economic damage has been done by “scorched earth” tactics.
This week we review economic lessons from the current and past budget stand-offs. The first article estimates that 0.6 percentage points have been shaved off of fourth quarter growth. The second article places the cost at $24 billion lost in the shutdown. The third article estimates economic output growth since 2010 has been reduced about 0.7 points a year.
None of the deeper problems with American government was solved. Not only did the deal that ended the partial shutdown of the U.S. government fail to fix any big problems, it also positions the economy for another serious setback, according to The Economist. “Just as America’s economy seems to be recovering, with the promise of