Wednesday, August 3, 2011

The Debt Ceiling Deal Farce

UPDATE VI: Not surprisingly, the debt ceiling deal farce "is getting very muted applause from serious fiscal experts -- the ones who actually understand the federal budget.

'No one should pretend that they have solved anything other than an artificial political crisis,' said Bob Bixby, executive director of the Concord Coalition, a nonpartisan deficit watchdog group."

Read CNN, What's wrong with the debt ceiling deal.

UPDATE V: "Democrats should use the Bush tax cuts as a trigger in 2012 to force revenue. Which is not to say they should campaign for raising taxes. They should campaign against an outdated, inefficient, unfair tax code as well as the Washington way of leaving hard problems for somebody else to handle." Read the Washington Post, To govern responsibly, the White House will need to negotiate like Republicans.

UPDATE IV: Did your Congressman vote for the debt ceiling deal farce? If so, s/he would be a Congressional veteran and/or moderate.

"The deal that solved the crisis was cut, over the phone, by two men with a combined 64 years in federal office. [And t]he votes that passed that deal were cast by veterans and moderates." Read the Washington Post, In debt deal, the triumph of the old Washington.

UPDATE III: The final voting "results seem to suggest that Mr. Obama left something on the table." Read The New York Times, What the White House Left on the Table.

UPDATE II: Review some of the other "[n]umerous plans [that had] been proposed by lawmakers in Washington to raise the federal debt limit and address the nation’s growing deficit, at The New York Times, Debt Plans That Failed.

UPDATE: "The first round of cuts include 'only' about $22 billion in reductions in 2012 spending . . . That would reduce 2012 G.D.P. by just 0.1 percent, other factors being equal." Read The New York Times, The Fine Print on the Debt Deal.

The best analysis I've seen so far regarding the proposed debt ceiling deal. Read the Washington Post, A deal that found the lowest-common denominator, which notes:

"The upside of this deal is that 'the debt ceiling will cave in and Congress will create a global financial crisis for no reason' is not one of the potential outcomes. So that’s something.

The downside is that we actually haven’t come that far: we’re still pretending that a deal a few months from now will somehow be easier than a deal today, we’re moving to austerity budgeting -- note that neither unemployment insurance nor the payroll tax cut are extended -- while the economy remains weak, and we’re putting off the decisions about what to cut and how to handle taxes.

And that gets to the truth of this deal, and perhaps of Washington in this age: it’s all about lowest-common denominator lawmaking. There are no taxes. No entitlement cuts. No stimulus. No infrastructure. Less in actual, specific deficit reduction than there was in the Simpson-Bowles, Ryan, or Obama plans, and even than there was in the Biden/Cantor or Obama/Boehner talks. The two sides didn’t concede more in order to get more. They conceded almost nothing in order to get a trigger and a process, not to mention avoid a financial catastrophe.

There’s reason to be skeptical that a trigger and a process will do much to change these basic dynamics. We’ve now attempted to get a deficit-reducing grand bargain by yoking it to both a near-shutdown and a near-default, not to mention a series of negotiations, commissions, and senatorial gangs. None of it has been enough. And that’s because bipartisan commissions and terrible consequences have not been enough to convince Republicans to agree to revenues, and revenues are fundamental to large deficit-reduction compromise.

Perhaps this deal signals the end of the need to actually reach an agreement, however. If the Joint Committee fails, the trigger begins cutting spending. If negotiations over taxes fail, the Bush tax cuts expire and revenues rise by $3.6 trillion. Neither scenario is anyone’s first choice on policy grounds. But you can get to both scenarios without Republicans explicitly conceding to higher taxes or Democrats explicitly conceding to entitlement cuts in the absence of higher taxes. Politically, that’s the lowest-common denominator, and that might mean it’s also the only deal the two parties can actually make. But that’s because it’s the only deal that doesn’t require, well, making a deal."

This reminds me of the game of kick the can that Bush played in Iraq, "we’re still pretending that a deal a few months from now will somehow be easier than a deal today, we’re moving to austerity budgeting."

And beware of the myth of expansionary austerity. But who cares, as I've said before, Republi-cons just want Obama to fail, and the American economy is just acceptable collateral damage to achieve that goal.