Can stalemate over the budget lead to monetary reform? The introduction last week of two bills by the Chairman of the Joint Economic Committee (JEC) that would require a serious look at monetary policy suddenly makes such a breakthrough a real possibility. Progress on monetary reform is the overlooked, all important variable that will shape the outlook for financial markets, economic growth and the prospect for balancing the budget of federal, state and local governments, to say nothing of the budget of the average American family.
The differences between the Republican and Democratic budgets are stark and neither is attractive. The GOP budget seeks to balance the budget 10 years from now by reducing the growth in spending to 3.4% a year, repealing ObamaCare while leaving its $1 trillion in higher taxes in place, and reducing the outlays for Medicare through reform. The Democratic proposal would impose a $1 trillion tax increase on the American people, take another $245 billion out of Medicare, cut defense spending by $240 billion due to the draw down in military operations in Afghanistan, and yet would still increase spending by 5% a year and never achieve budget balance.