Gustavo Ballvé on March 1st, 2011
Corporate Governance, Food for thought, Home, Investment Themes, Mental models, Portfolio Management

David Brooks is writing a series on the need for budget cuts in the US, and some of it reminded us of what we’ve been writing here both about the US and Brazil in terms of governance, the size of governments, runaway spending and so on. It’s also an interesting timing because of the recently-announced budget cuts in Brazil. Finally, the Economist also published good articles on the subject, available in this post.

Mr. Brooks, of whom we wrote previously, first highlights the Wisconsin imbroglio where that state’s governor has taken a hard line against public sector employee’s benefits (which is good), but chose to single out some categories and not others. David argues that, in Wisconsin as well as in the US, the cuts should “make everybody hurt” (far from a sadist, he wants political viability). Next Mr. Brooks analyzes proposed cuts at the federal level and highlights how the Obama budget has interesting proposals in Education. In fact, he points to a speech by the Secretary of Education as an example of pragmatic, results-driven attempt at reducing budgets. For a relatively conservative Republican, it means a lot.

The Economist this week also has interesting contributions to the subject:

Showdown in Madison – Intro. We love the subtitle: “The fight to bring a little private-sector discipline to America’s public sector has begun at last”

Wisconsin and wider – How the Wisconsin imbroglio can shape the debate in the US.

Meanwhile, in New York… – Democratic governor Andrew Cuomo is also trying to shake things up. Just as we were writing this we received an email alert that the NY legislative was able to secure a vote to delay a shutdown for 2 weeks. Yes, a shutdown – that’s how hard the game is being played.

Tick, tock – The federal government is also under threat of a shutdown, that is, of not having an approved budget for 2011.

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