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The best news about the budget deal which was announced Tuesday, writes Neil Irwin, is “the fact that it exists at all”. That alone “signals an improvement in the functioning of budget policymaking”, Fitch Ratings says.
The less good news is the actual substance of the deal. Government spending will be $45 billion higher than if the deal hadn’t been reached, but Irwin points out that discretionary spending will still decline next year. Taken together, says Irwin, “fiscal policy [will] still be a drag. It just will be less of a drag than it would be otherwise”.
Yuval Levin looks at the actual changes to spending, and says, “what stands out most as a general matter about this proposed agreement is how very small it is—for good and bad”. Under the agreement, discretionary spending will return to pre-deal levels in 2016.
The full-on bad news is what’s not in the deal: there’s no extension of the Emergency Unemployment Compensation program, which provides support to Americans who have exhausted state unemployment benefits. Matt Yglesias thinks “the long-term unemployed are screwed”. At a time when long-term unemployment is twice what is was in 2008, Josh Bivens calls the exclusion of any additional assistance “both cruel and stupid”. Matthew O’Brien points out that the CBO estimates that extending benefits would have added 200,000 jobs next year (i.e. one November’s worth). He thinks Congress is simply more concerned about cutting the non-problematic deficit than helping the unemployed.
AEI’s Michael Strain writes that millions of workers are “suffering financially, emotionally, spiritually… Society is also suffering: A large pool of willing and able workers are idle; our already segmented society is even more segmented; our country is less dynamic, vibrant, and thriving”. For Strain, extending current benefits isn’t the right response. Instead, he advocates for a mix of new programs, including things like relocation assistance, subsidizing wages through already existing programs, and better transportation infrastructure.
Brad DeLong points to a chart from Calculated Risk that details public and private job gains under various presidential administrations. DeLong thinks that unless there is a radical change in fiscal policy, “we are now going to start speaking of ‘lost decades’ in the plural”. — Ben Walsh
JPMorgan expected to face criminal action for turning a blind eye to the Madoff scheme – DealBook