Not a good deal

Really enjoyed Ezra’s analysis of the deal in this morning’s Wonkbook:

It’s not just that Congress waited until the last minute, taking an unnecessary risk in a fragile economy. And it’s not just that the tough decisions got punted once again. This is a bad bill at a time when the economy — and the American people — needed a good one. It’s a bill that does too little now, and too little later, and it comes in lieu of an obvious, achievable solution that would have done better.

The two reigning theories of our current economic moment are not opposed to one another. The economy is weak now, with too little demand and too little growth, and threatened by mounting deficits later. The answer, as any economist can tell you and as many told Congress, is simple: do more to support the recovery now and more to cut deficits later. In the short-term, we should expand the payroll tax cut, make a massive investment in infrastructure, continue funding unemployment insurance, and do more to aid the states. In the long-run, we should cut spending in entitlement programs as well as discretionary programs, and raise significant revenues and modernize the tax code by flattening the base and closing loopholes.

These two priorities don’t conflict. In fact, they support each other. Faster growth now will mean smaller deficits later. And politically, more stimulus now would have helped Democrats agree to more deficit reduction later. But our political system isn’t very good at both/and. It’s more suited to either/or.

Yup.  In many ways the most frustrating aspect of all of this is that it is fairly obvious what needs to be done, but we have a political inability to get it done.   Of course, I would argue that one political party would pretty much make things happen if given the opportunity and the other party seems to be invested in anything– even serious economic damage– that makes Obama’s reelection less likely.  Heck, Mitch McConell basically admitted as much.

Advertisements

Question of the day

Kevin Drum asks:

So who was driving the absolutist view in Congress over the past few months? If it was the no-compromise wing of the tea party, that’s less than 10% of the country. So riddle me this: how did we manage to let 10% of the country bring us to the brink of disaster? It is a remarkable thing.

Good question.  Political Scientist, Jonathan Bernstein, answers:

I think the answer is to see Republican issue positions as a function of elite preferences, not mass preferences. In particular, it’s all about the domination of the GOP by the anti-taxers. Given that, any electoral victory by the Republicans will produce policies that reflect that domination.

Of course, the next question is why a minority preference within the GOP has won out. That’s a harder question to answer. It seems to have something to do with the influence of those with intense preferences; something to do with interest-group politics within the party; something to do with the surface appeal of a simple message (it’s not surprising to me that politicians are easily persuaded that no one wants higher taxes, regardless of what the polls show); and something to do with the lucrative market for certain conservative products, and the mechanisms in which exploiting that market affect actual Republican party policy preferences.

As I like to say to my classes, an intense minority beats an apathetic majority every time.  And when it comes to no taxes absolutism, this is one intense minority.

Obama vs. Clinton

Now this is how you do it. Via Chait:

Republicans were somewhat less fixated on thed ebt ceiling, and also somewhat less destructive and crazy. But they weren’t thatmuch less destructive and crazy:

“Nobody should assume we’re going to have a debt-limit extension,” John Boehner warned. “If the vote were held today, it would not pass.” Sound familiar? This was Boehner in November of 1995, when he was the House Republican Conference chairman and his party was refusing to raise the debt ceiling unless President Bill Clinton agreed to a package of sweeping spending cuts.

The biggest single difference is that the Clinton administration simply refused on principle to get jacked up on the debt ceiling:

Still, even though Clinton enjoyed political and economic advantages that Obama does not, his no-compromises strategy had some clear advantages. Unlike Obama, he refused to let the threat of default set the national agenda. Because he would not enter into negotiations over the debt ceiling, the issue barely roused the public consciousness. On November 9, 1995, a senior administration official told the Washington Post, “Our position is it does not matter what they put on this legislation, we are not going to accept anything but clean bills because we will not be blackmailed over default. Get it? No extortion. No blackmail. What you hear are their screams of complaint as they realize we are not, not, not budging on this.”

Wow.  Of course, today’s Republican party is clearly more radical and intransigent.  But, no reason Obama should not have adopted this as his initial approach.  How it would’ve worked, we’ll never know, but its very unlikely it would have made things worse.  As many, e.g., Chait, pointed out at the time, it was a huge mistake for Obama to come right out and agree to negotiate on the debt ceiling.  A perfect example of where his desire to be seen as a maker of Grand Bargains did him in.

Get a grip

Haven’t checked in on Free Range Kids in a while.  In addition to a 12-year old boy being escorted home because he was walking in downtown Toronto in broad daylight (I’ve been to Toronto– not a scary proposition), this was perhaps the most compelling case of paranoid parents:

Hi Readers — This just in! A creepy old guy was seen taking pix of some young boy in Idaho. The cops were called! The media alerted! Hearts pounded, rage burbled, all because…

Um, a grandpa was photographing his grandson.

He left when some crazy lady started yelling at him. Here’s the story.  – L

Now, I’m no expert on pedophilia, but I’m pretty sure most pedophiles don’t exactly draw attention to themselves by photographing kids in a public park.  If you see an adult taking pictures of kid, chances are pretty good it’s  a relative.  Hoofbeats = horses, not zebras.

Matt Damon takes on Libertarian TV

Financial incentives are certainly important, but they are not the end all and be all.  Especially in a job like teaching.  In this awesome clip, Matt Damon sticks it to the Libertarian TV crew (h/t Big Steve):

Nominal vs. real spending and understanding data

So, I got sucked into a debate on facebook with a Tea Party type today about the fact that government spending will actually continue to rise despite the spending cuts.  Naturally, I won :-).  (I do enjoy getting in political arguments on FB with strangers who have no idea what they’re up against).  Anyway, handy that Kevin Drum today was shooting around the same theme from somebody who should certainly no better from a right-wing thinktank:

This chart [shows increases in nominal spending in future years] has been making the rounds today. It’s from Cato’s Chris Edwards,who’s pretty unhappy about the proposed spending cap in the debt ceiling deal:

Wait a minute, those bars are rising! Spending isn’t being cut at all. The “cuts” in the deal are only cuts from the CBO “baseline,” which is a Washington construct of ever-rising spending….No program or agency terminations are identified in the deal. None of the vast armada of federal subsidies are targeted for elimination. Old folks will continue to gorge themselves on inflated benefits paid for by young families and future generations.

Well, yeah, I guess that’s right. The plan doesn’t eliminate either the Education Department or Social Security. Still, just do a bit of arithmetic on those spending levels: they amount to an increase of 1.9% per year. That’s almost certainly well below the future rate of inflation and population growth. If we actually stick to these caps, they represent a steady and consistent decrease in real per-capita spending, and that’s the only fair way to look at it.  [emphasis mine]

Really not that complicated if you understand how very basic national economic principles work.  Back to my ongoing questions: ignorant or lying?  In this case, I’m just going to go with the former.

%d bloggers like this: