GRIM ASSESSMENT – AT 8:58 A.M. ET:  A number of assessments of the debt deal are now being published.  One that reflects a common-sense, probably prevailing view, comes from Bloomberg:

The federal government looks to be getting out of the business of trying to spur the economy just as the U.S. expansion shows increasing signs of faltering.

A deal struck over the weekend to cut $2.4 trillion or more off budget deficits over a decade marks the beginning of a prolonged effort to put the government’s finances into better shape. While the immediate economic impact from the agreement is likely to be small, it will add to a reduction in growth next year of 1.5 percentage points coming from the expiration of past stimulus programs, according to economists at JPMorgan Chase & Co. and Deutsche Bank Securities.

“Over the next 10 years, there will be further spending cuts and higher taxes, and that’s not good for economic growth,” said Paul Dales, senior economist for Capital Economics Ltd. in Toronto. “It is the start of a meaningful move toward fiscal consolidation.”

The shift from stimulus to austerity coincides with a slowdown in the two-year recovery. A report last week showed that gross domestic product grew at an annual rate of 1.3 percent in the second quarter of the year following 0.4 percent in the first three months, prompting economists to warn of possible relapse into recession.
The economy will suffer another blow next year with the expiration of a temporary 2 percent payroll tax cut, an end to extended unemployment benefits and completion of the $830 billion stimulus program that President Barack Obama signed into law more than two years ago. Obama will press Congress to extend a cut in payroll taxes before the end of the year, White House press secretary Jay Carney said yesterday.

COMMENT:  It's perfectly clear that our economic distress will last for years, maybe for decades.  Reagan used to say that it's always morning in America.  Well, maybe now it's a few hours before dawn.

While it's wrong to blame President Obama for all that has gone wrong with the economy, and everything else, it is perfectly reasonable to point to this country's general decline on his watch.  A second term could even be worse.  Free of political constraints, he could try to take this country even further to the left.

Only a robust economy, not government manipulations, can get us out of this.  In the fact of economic competition from abroad, I'm not sure we know how to build that economy.  But I never lose faith in the United States of America.  We always, in the end, come through.

August 2, 2011