The World Next Week: The Budget Battle Showdown

The World Next Week podcast is up.  Bob McMahon and I talked about the possible shutdown of the federal government; the summit of the BRICS nations in China; and the fiftieth anniversary of Yuri Gagarin’s 108-minute space flight.

[audio: http://www.cfr.org/content/publications/media/podcast/2011/20110407_TWN…]

The highlights:

• Just as interesting as the struggle between President Barack Obama and Speaker John Boehner over how deep to cut federal spending for FY11 is the struggle between Boehner and House GOP hardliners. Even if Boehner carries the day and cuts a deal that both the White House and Tea Partiers can live with, the hard part is only just beginning. Next up is the battle over raising the national debt ceiling, after which comes the battle over the FY12 budget, which in turn raises the question of entitlement reform. In all, this week’s showdown is just a tune up for what is to come.
• South Africa has joined up with the BRIC countries to form the BRICS groups. But while the name is catchy, it remains unclear just what the five participants will agree to do together. Their economic interests and levels of economic development vary widely, and two of them (Russia and India) have complicated relations (to say the least) with a third (China).
• Space remains the final frontier but the U.S.-Soviet space race has evolved into U.S.-Russian space cooperation. The space race did have one upside; it helped sparked a surge of federal R&D investment that produced many of the technological breakthroughs that have driven the U.S. and global economies over the past five decades. Unfortunately, federal R&D investment as a percentage of GDP has fallen sharply since it peaked in the early 1960s, raising questions about America’s ability to sustain its technological prowess for the next fifty years.
• In discussing space I waxed eloquently about Lance Bass of ‘NSync traveling into space. Alas, I got the story wrong. Although Lance had hoped to go into space, his financial supporters backed out and he never made it. I guess I missed that issue of Tiger Beat.

Bob and I aren’t the only commentators debating these issues. The New York Times covers President Obama’s late night meetings with congressional leaders, and the Los Angeles Times has details on how a government shutdown would affect you. Reuters previews the agenda for the upcoming BRICS summit, and Jim O’Neill, the economist who coined the term “BRIC” nine years ago, rethinks emerging markets.