Monday, July 25, 2011

2012 Is Why We Don't Have a Deal Yet

WaPo's Jennifer Rubin reports what John Boehner and Eric Cantor said to their caucus yesterday about the dissolution of talks on a debt-ceiling deal. We take two points away.

One is that there will be something passed in time to avoid the train wreck, though a slip in the bond rating is probably inevitable anyway.

The other is that the problem is 2012, and it's more a problem for the Ds than the Rs. Ds know that they were decimated in 2010 and face the same in 2012 without a game changer. Getting hung with a fresh "tax-and-spend" label would make matters worse, but pulling Bill Clinton's trick of blaming the Rs for a government-shutdown-type experience could be just enough to get BHO a term to follow his warmup.

Meanwhile, you've got to listen awfully, awfully closely to hear that spending at 24% of GDP is fundamentally higher under Obama than ever before in the post-WWII era, that no matter what we do with tax rates, we've never managed to collect much more than about 20% of GDP in taxes, and so the problem is not that Richie Rich pays too little but that we all, through the patrons we elect every two years, spend too much.


JB in CA said...

We take two points away.

From Slytherin or Gryffindor? And exactly who is who in the debate? I think I've figured out that SWNID is Dumbledore.

Tom_Ky said...

Interesting graph found in the NYT. We are in this soup, not since 2009, but because of policy over several decades. In the 41 years since 1970, the executive branch has been controlled by Republicans for 26 of them. Regardless, both parties are an insult to the America people.

Jon A. Alfred E. Michael J. Wile E. SWNID said...

No one has ever boosted federal spending as far and fast as BHO, as that sadly truncated graph, not scaled to percentages of GDP or reaching back to 1946 as it should, still manages to show. Again, if we only spent what Bush spent in his last year in office, we'd be four years from balance. Tom, we note well that Obama's bar lines are disastrously negative as far as the eye can see.

The "new costs" graph doesn't distinguish one-time costs from baseline costs. It's not the former that are killing us but the latter. Rs constantly attack the baseline, though with little success; Ds add to it. Whenever Ds accused Bush of cutting some vital program, it was never an absolute cut but a reduction in growth that Bush had proposed. Talk all you want about the expense of the wars, but the entire defense budget is still less than 5% of GDP.

In sum, these graphs artfully hide the real issue while still letting the truth seep through.

Remember, gentle readers, the issue isn't deficit spending per se, it's deficit spending that grows the accumulated debt as a percentage of GDP. BHO's policies are a double-whammy on this: spend outrageously while stifling any growth that could adjust the balance.

Hamilton (good) understood what Jackson (bad) didn't: federal debt is itself not the problem. In fact, moderate debt provides a union of self-interest between the borrower and the lender that is beneficial for domestic unity and international cooperation. Jackson's paying off the debt threw the country into recession (or "panic" as our forebears called it).

Further, a growing economy can afford growing deficits in absolute terms. That's why new spending as such is not an anathema. It's growth of debt that is faster than the growth of the economy that kills us.

As if it needed to be said, our point is not to assert any Republican's immaculateness, let alone Dubya's, but to keenly differentiate the two parties' approaches to spending. Both like providing patronage for citizens, but one stands for it as a matter of principle, and acts on that principle with ruinous consistency.

If there is one bipartisan conclusion to be drawn from historical data post-WWII, it's that government spends best when the executive and legislative branches are held by different parties. But all attempts to blame both parties for excessive spending go awry when we realize that Ds have spent more than Rs by an order of magnitude or so, and they're proud of it to boot.

Tom_Ky said...

The graph probably does hide real costs when you consider that W.'s policies are recurring. The Bush tax cuts didn’t just lower revenue for 10 years, but for the foreseeable future, which means this chart is understating their true cost. Similarly, the entitlements are recurring, not just a brief period in time. Who helped to craft, worked to pass, and voted for these policies? Boehner and Ryan, to name two. I wonder what they do for a living now?

Democrats will spend your money - they are the tax collector that at least admits it - but it's the Pharisee that has an (R) next to his name.

More importantly, Portsmouth, OH has a LaRosa's, without the uncomfortable conversation :)

Jon A. Alfred E. Michael J. Wile E. SWNID said...

Still more:

Where would we be if Bush's attempt to reform SS had been successful?

Who put the so-called "stimulus" spending into the federal baseline?

Why aren't we discussing the effects of ObamaCare on the projected deficit?

Who has championed baseline budgeting from the beginning? Who has asked for zero-based budgeting?

Why is the only D in Washington who persists in calling for higher taxes living at 1600 Pennsylvania Ave.? Why isn't his party ready to walk the plank for a "balanced approach"?

Don't make us review again the flaws in the CBO's mandated budget scoring system that assumes a static economic effect of tax increases or cuts, either.

But really, that's all the past. And we'll concede every tendentious point about it for the sake of argument. Right now, we've got a party that's ready to let the government live within limited means, and one that insists on increasing the means. We've got a party that says we should means-test entitlements and one that says we should tax the rich so that we can maintain their government benefits.

"A plague on both your houses" is nice rhetoric, but in the end, there's a choice to be made. As we've said before, all politicians may be dogs, but Republicans are our dogs. "Fetch that tax cut, GOP! Bite that bad guy! Good dog!