The Congressional compromise deficit reduction agreement is a very good end of the year present. After the prior budget impasses, government shutdowns, sequestration, and not helpful rhetoric, it is refreshing to see that an agreement has been crafted that will last two years and move us in the right direction—spending increases will decline in a more rational way, some fees will go up, and a non scorched earth fiscal discipline seems to be in place at last.
This clearly wasn’t an easy compromise to craft, especially given the current climate. And it is already evident that certain ultra conservative politicians and think tanks are vehemently opposed to this package. On the other hand, though perhaps less vocal, the far left leaning liberals are equally disenchanted. But isn’t this what compromise is all about? No side gets all that it wants; the country however wins when there is a measured response to serious issues that have major ramifications on the economy.
Our economy is strengthening. Third quarter GDP increased an annual rate of 3.6% which is a significant improvement over the second quarter increase of 2.5%. New residential sales of single family homes increase by 444,000 units which is more than a 25% increase. Unemployment for the month of November was at 7%, a rate unseen since the end of 2008. And the Dow Jones Industrial Average being close to 16,000 has helped bring comfort after years of concern about the viability of investments in the stock market. In all these areas we can and should do even better but the improvement has made a significant positive difference.
But, we should all remember that an economy can be both robust and yet still fragile. Every threat of a government shutdown, every mention of sequestration and, most importantly, every indication that common sense compromise is off the table, weakens the threads that hold the economy together and move the economy forward. Our government leaders do a tremendous disservice when they turn their backs on what needs to happen to best serve the interests of our country.
There are fundamental differences between the Democratic Party nationally and the Republican Party nationally. Those differences are a healthy part of the fabric of our society. But getting past these differences when decisions need to be made makes all the difference in helping to move an economy forward and a society forward.
All the best for the New Year.