Debt Ceiling Deal a Prelude to Ultimate Default
The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.
NEW YORK (TheStreet) -- President Obama wants a big deficit reduction deal -- a long-term solution to the nation's unbalanced finances. Yet, what the president and Republicans propose -- even if both could accept much of what the other offers -- would only delay the inevitable. Like Greece, America's finances will grow worse and worse.
The U.S. is suffering from not enough growth. At 2%, GDP is advancing at the pace of worker productivity; hence, jobs creation is near zero, wages declining and tax revenues lag growth in government expenses. The big budget busters -- Medicare, Medicaid and Social Security -- will continue to far outpace GDP and tax revenue.
What comes out of budget negotiations could buy time through 2012, but make will make the growth problem worse, not better.
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