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Economist: Budget deal has glaring misses

Aug. 13, 2011 at 3:04 PM

WASHINGTON, Aug. 13 (UPI) -- What the U.S. budget needs is exactly what was left out of the debt-ceiling deal that made it into law in Washington in early August, a U.S. economist said.

Republicans stonewalled on the idea of raising revenues to cut the budget deficit. Democrats, in turn, stonewalled on trimming major entitlement programs, The New York Times reported Saturday.

In effect, "Politicians are doing their damnedest to prevent that (raising taxes or trimming entitlement programs) from happening. The Republicans are and the Democrats, to my eternal bafflement, have not stood their grounds," said Ian Sheperdson, chief U.S. economist for High Frequency Economics.

House Majority Leader Eric Cantor, R-Va., said this week Republicans should hold the line on taxes. "We were not elected to raise taxes or take more money out of the pockets of hardworking families and business people," he said.

"Over the next several months, there will be tremendous pressure on Congress to prove that S&P's analysis of the inability of the political parties to bridge our differences is wrong. In short, there will be pressure to compromise on tax increases," Cantor wrote in a recent letter to colleagues.

Even some stalwart Republican strategist, such as former Treasury Secretary Henry Paulson Jr. and former presidential adviser Martin Feldstein, have called for Republicans to consider additional revenues as part of their economic strategy.

But many Republicans seem unwilling to budge.

At a political debate Thursday all eight GOP presidential candidates raised their hands when asked if they would block proposals that called for raising $1 in revenue for every $10 in spending cuts.

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