In only a move this congress could make, in order to avoid a non-existent threat to US insolvency (the US is never revenue-constrained), a deal was struck that created a committee of super human congressmen (tongue in cheek) who were tasked with finding $1.2 Trillion in savings and to vote on those savings by November 23rd – sending the agreed upon savings for an up and down vote to the congress. The committee is bi-partisan and if they do not come up with a plan, armageddon is unleashed as defense and social spending is dramatically cut. Luckily, these cuts don’t take affect till 2013, if triggered – which means the cuts have nearly a zero likelihood of happening.
So what’s the problem? We are in the middle of depression and about to enter a recession within the ongoing depression – Europe is a mess and now is not the time to signal to the markets that the US will become austere. Not to mention that if the super committee fails – which is highly likely, it will create further uncertainty in the markets. I can’t imagine what it will do to the debt ceiling debate.
It’s time to short-circuit the poorly thought out super committee before it further short circuits the economy.
Scott Dauenhauer, CFP, MSFP, AIF