What now? The House of Representatives has defeated a constitutional amendment that would have required the federal government to balance its annual budget, but the issue must still be faced.

The House will vote later this year on specific ways to bring spending into line with revenues, and the outcome will be a serious matter for the bond market. If Congress fails then to break out of its business-as-usual deadlock, we see nothing but high long-term real interest rates and sluggish economic growth.

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