Despite Budget “Deal” Most Cuts Minor-Not Til 2014
Despite the late weekend news of a “deal” between the Obama Admin. and Congress on a budget that includes cuts, most of them would have little economic impact.
According to information released by a Senate Democratic Panel, only about 7 billion of what is called discretionary spending (social security, medicare, welfare and other social programs) would be cut next year, and 3 billion the next. That is a small portion of the 14 trillion budget of the US. According to the plan about 917 billion would be shaved off over the next ten years. Unfortunately, a number of economists, including Wells Fargo Analyst Mark Vitner, these cuts are too small to have significant positive impact on the economy. The stock market, after a quick rally due to the deal, plunged again on news that the cuts are basically insignificant.