Last Night's Primary Results Point To No Progress On The Deficit The Next Two Years
The federal budget might as well have been on the ballot in Delaware and New York last night because deficit reduction was the big loser.
Last night’s primary results points unambiguously to little or no progress being made on the budget over the next two years because Republicans in the House and Senate will have little or no ability to compromise on taxes and spending. In light of the Castle and Lazio losses in Delaware and New York, respectively, and following Lisa’s Murkowski’s defeat in Alaska, any GOP senator or representative who even dares vote for a budget deal with congressional Democrats or the White House…or perhaps even looks like he or she is interested in working with them…has to assume that they will get a well-financed primary challenge from a far-right/Tea Party candidate and that his or her cooperation will be stated as the reason they should be defeated.
Add to that the narrow majorities that will exist in both houses next year (regardless of which party is in control) and you have a recipe for absolute budget stalemate.
This scenario means that the only improvement on the deficit outlook will come from (1) economic growth, (2) a reduction in the amount of stimulus funds being spent as the program winds down, and (3) and a reduction in activities in Iraq and Afghanistan. That will leave a projected deficit of about $1 trillion in fiscal 2012 and the budget as an almost-guaranteed issue in the 2012 presidential election.