The only realistic way to balance the budget is to grow the economy. So maybe all those angry tea partiers will be pacified and start buying things again. And then all those companies that belong to the Chamber of Commerce, comfortable that the Republicans have their backs on taxes and regulation, will start investing again. Then the economy will boom, tax revenues will rise and, before you know it, we’ll be back in surplus again. But I don’t think so.
Nor do I. The anger won't end simply because the election is over: they still socialism to defeat, fully. O, and that communist in the the White House, too.
So Senator-elect Paul might go to Plan B. He and fellow travelers like Mike Lee, Utah’s freshly minted senator-elect, would filibuster the move sometime next year to raise the federal debt ceiling from its current $14.3 trillion to accommodate rising entitlements and interest payments. This, according to a current of thought circulating inside the Beltway, would lead to a default by the U.S. government — a wonderful way to balance the budget overnight.
Imagine what the markets would do: fall, and fall precipituously.
It can’t happen here, you think. But if I were a foreign investor, I’d start pricing a little default premium into Treasurys, because the level of economic ignorance and political irresponsibility in some of the lawmakers elected Tuesday is hard to overestimate.
Perhaps impossible to overestimate.
What will happen now? More posturing, more hot air. The Bush tax cuts will be extended in a lame-duck session. But then McConnell and Boehner will try to ride herd on their new caucus members, and Obama will try to grow a backbone so he can start vetoing any bills attempting to roll back his signature legislation.
And then Rand Paul will balance the budget. Or not.
We'll see.
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