Posts Tagged ‘austerity’

Krugman opposed the stimulus because it wasn’t big enough and he disagreed with the administration’s position that they could always do another one, if need be.

He was, we now know, right on both counts.

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This is your semi regular reminder that our years long focus on the deficit in the face of very high unemployment and tepid growth is both terrible and stupid, having resulted in needless suffering by many.

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I’m just going to pass along this Kevin Drum post in its entirety:

This is just a quick arithmetic reminder. If the sequester goes into effect, here’s how we’ve done on deficit reduction over the past few years:

2010 continuing resolutions: $450 billion
FY2011 budget: $200 billion
Budget Control Act: $960 billion
Fiscal cliff deal: $840 billion
Sequester: $1.2 trillion

Total: $3.6 trillion
The original Simpson-Bowles plan, which is Washington’s holy grail, called for $4.1 trillion in deficit reduction. All calculations include debt service savings, so this is an apples-to-apples comparison.

If you want to move the goalposts, feel free. But facts are facts: by this time next week we will have achieved very nearly the total amount of deficit reduction that everyone was gaga about a mere two years ago—more than 80 percent of it from spending cuts. It’s truly unfortunate that we’ve been so fixated on this, since we would have been much better off investing for the future and leaving deficit reduction for later, but that’s water under the bridge. Love it or hate it, over the past 27 months we’ve accomplished nearly 90 percent of the deficit reduction everyone wanted.

So we’re all happy about this, right? Right?

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Seriously. Just stop.

[Obama] is also open to a bill that would avert the sequester for as little as two months.

Just cancel the goddamn thing. Or just implement it. Or do anything other than this. Constant, monthly fiscal fights and unceasing budget uncertainty prevent anyone from doing anything.

Oh, that’s the point, isn’t it?

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These are not the words of a president serious about cutting the debt. Cutting “waste” in government isn’t going to get you anywhere near what you need. And the president needs to get serious about the burgeoning long-term costs of Medicare. That requires real honesty about real future sacrifice – not blandishments about how we might be able to bend the cost curve slightly.

Can we, please, get something other than typical deficit-scold group think? Andrew seems to think that all we need is more seriousness and more sacrifice and then we’re golden. He decries the President’s desire to raise additional revenue as not serious because it won’t raise enough. Well, OK, I agree it won’t raise a whole hell of a lot. But previously Sullivan complained that the President wanted too much (relative) revenue! 

I would ask how much, specifically, is thecorrect amount? 

More importantly, I would ask how much deficit reduction, specifically, is the correct amount? 

We’ve already done $2.4 Trillion. But I guess that’s just not enough serious sacrifice for the deficit scolds. They won’t be happy until, well, they will never quite say. Is stabilizing the debt to GDP ratio sufficient? We can do that with another $1.2 Trillion. Obama’s “not serious” revenue ask gets us half way there. 

Alas, we will now continue our charade of THE DEFICIT WILL KILL US ALL MORE AUSTERITY NOW I’M VERY SERIOUS AUSTERITY NOW! followed by AUSTERITY WILL KILL US ALL! (remember the fiscal cliff?) and then back again. 

If you’re having trouble making sense of the Very Serious beltway opinion on fiscal matters, its because it doesn’t make a goddamn bit of sense. 

Sullivan finishes:

If you want to go small, Mr President, and leave the real debt cutting to your successor, that’s your prerogative. But it is not the change we believed in. Or voted for.

Well, actually that’s exactly what we voted for. Obama made no secret of his desire to squeeze revenue out of the rich via sunsetting the Bush tax cuts for only high earners and via closing Mitt Romney’s favorite loopholes. In fact, it was the entire premise of his campaign. Voters overwhelmingly rejected Mitt Romney and Paul Ryan’s (conflicting) versions of austerity for Obama’s “balanced” and minimally austere (by comparison) approach. 

I don’t ever recall Barack Obama running on a platform of “serious” austerity. Sullivan has been lamenting Obama’s failure to “embrace Bowles-Simpson” for two years, a lamentation that made as little sense then as now. On spending, Obama actually has (very nearly) embraced BS (in terms of net amounts, if not line items). On revenues, he never intended to. He’s made that abundantly clear for almost two years. 

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This is your semi-regular reminder that we continue to ignore an actual, immediate problem in order to Get Very Serious about a hypothetical, future problem.

That is all.

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You know what would be awesome? 

If we could borrow a lot of money for free, and then give it to people. I’m sure we could find some stuff for them to fix in exchange.

But we won’t do that, because austerity. 

No one was using those bridges anyway, except the 16,284 people who travel across them on an average week day. I’m sure we can fit thousands more cars on the highway during peak commute time, so it’ll be OK. 

Less sarcastically, King of Prussia is the biggest suburban employment center in the Philly metro area, and the only way to get there via train is the Norristown line, which will be the first to lose its bridge this summer. Traffic on the only major route into KoP from the city is notoriously bad, so the plan to bus passengers around the failed bridge will be subject to unpredictable delay. Unpredictability will effectively eliminate the rail line as an option for folks commuting to work, so this really is a big deal.

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Crisis averted for now! The House miraculously did something last night, and the cliff is over!

Until next month.

The deal did not reach a decision over the sequester cuts, just delayed them for two months, setting up yet another crisis deadline next month. It also did nothing about the debt ceiling. Crisis deadline number two. Finally, the continuing resolution for the federal budget expires at the end of March. Crisis deadline number three.

Now that the tax cuts part is dealt with and were on to spending, though, you can expect a return to full on freak out mode over spending and debt. We’ve spent two years hearing about how wonderful and virtuous and Serious austerity is, followed by two months of apocalyptic hysteria because austerity was about to happen, and now its all aboard the austerity train once again.

Because otherwise, there would be no reason to invite the smug assholes at FixTheDebt, and all their Very Serious enablers, onto Meet the Press. That, friends, would be the real crisis.

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Lots of good stuff floating around the tubes today and I’m lazy and have a bottle of wine to finish so I’ll let everyone else speak for themselves.

Yglesias kicks off with the myth of the bond vigilantes!

You can imagine a kind of cult in the ancient Middle East in which the villagers are expected to make regular sacrifices to the gods in order to stave off their wrath. Well one year the proper sacrifices aren’t made and yet no suffering seems to be imminent. The priestly caste now has a problem, since their livelihoods depend on the perpetuation of the cult. So they sneak out of the temple at night, burn a bunch of crops, and the next morning warn that even worse is to come if the sacrifices aren’t renewed. Not because the priests are bad people, mind you, they very sincerely believe that the gods are just lying in wait to destroy the village so they’re actually doing everyone a favor.

Next, Paul Campos exposes Antonin Scalia’s entirely unprincipled hackery. I love it.

Scalia’s theory of constitutional precedent could be summarized as, “Supreme Court decisions should be followed in future cases, except when they shouldn’t be.” Indeed in recent years Scalia’s opinions have come to reflect no discernible legal theory, unless “outcomes that Antonin Scalia likes” counts as a legal theory.

And finally, Atrios perfectly encapsulates the last two years of media narrative surrounding fiscal / budget issues.

After telling us for years that what we need is Austerity Now, austerity is somehow a bad thing, except it’s also good because unicorns.

What’d I miss?


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In my previous post, it seems I misunderstood Jastonite’s post as an attack on Keynesian economics, when he meant simply to make the point that a job is a cost to be avoided rather than a benefit to be realized. I disagree, and I think this goes a long way to explaining why so I’ll outsource (irony duly noted) my rebuttal and instead address some other points.

Jastonite provides an example of a hypothetical factory that can choose to locate itself in either Mexico or Texas. In his example, all things are considered equal except that the Mexico sit would be cheaper. He argues that it is thus the superior choice because costs can be reduced and thus the Texans that buy the product will have more money left at the end of the day, and there are other employment opportunities in Texas anyways, they didn’t need the jobs. He goes on:

If it still feels wrong, replace the work Mexico with Arizona. Does it feel better now? How about replacing the word Mexico with Houston and the word Texas with Dallas? I understand there is an emotional attachment to jobs.

There is, of course, an emotional attachment to jobs, and for very good reason. But, the changing of Mexico to Arizona is important for plenty of non-emotional reasons as well. One of those is mobility. Our unemployed Texan friend will face a lot of very high barriers if she wants to work at the plant in Mexico. She will probably have to stop being a US citizen, and maybe she doesn’t speak Spanish, for example. But if the plant is located in Arizona, these are not problems. It is far simpler to move from one US state to another US state than from the US to Mexico (As an aside, this phenomenon was largely responsible for the comparatively impressive economic situation in Texas that Rick Perry never shut up about).

Next, Jastonite asks:

Does zero percent unemployment sound good? Maybe at first glance, but how does one start a business in that world? Presuming that everybody is doing something productive, the entrepreneur would have to convince people with existing jobs to quit and join him. That would mean the other business that lost its employees would have to cut back on production, potentially closing down. Wouldn’t it be hard to take a risk bringing something new to market?

Well, I agree. Zero percent unemployment is absolutely not a good thing, and for the very reason that Jastonite mentions. But high unemployment, as we are currently experiencing, is not a good thing either. We should do something about it.

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