Jonathan Chait, who just a couple days ago was doubting the existence of a grand bargain on the deficit, today comes out with his hair on fire about the grand bargain on the deficit being negotiated in the Senate.
Jonathan Weisman has a great story today breaking the outlines of the bipartisan deficit agreement being discussed behind closed doors. We can’t draw too many conclusions from the report because the agreement is in flux, and its translation via Weisman is probably imprecise. Those caveats aside, this looks like Democrats are giving the game away on the revenue side:
The Senate group’s working plan calls for placing separate caps on security and nonsecurity spending, and missing a budget target in one area would not trigger mandatory cuts in the other. The spending targets would follow proposals laid out by the deficit commission, which recommended cutting discretionary spending by $1.7 trillion through 2020. Lawmakers on the spending committees would draft legislation to meet the targets. But if they were not met, automatic, across-the-board cuts would go into effect.
The tax-writing committees would be given two years to overhaul both the individual and corporate tax codes, with general instructions to close tax breaks and minimize or eliminate tax deductions while lowering tax rates. The committees would be given a target for additional revenues to be raised by the new code. The deficit commission’s version of tax reform would net $180 billion in additional revenues over 10 years.
Chait goes on to say that this deal calls for ten times as much spending cuts as revenue increases, and that this would be a horrible deal for Democrats (to say nothing of the country).
It would. But where has Chait been? This isn’t a surprise at all. The Obama budget has a mix of 2/3 spending cuts and 1/3 revenue. The Republican budget has all spending cuts and is almost impossibly cruel. Bowles-Simpson’s ratio, I believe, was 3/4 spending, 1/4 revenue. Split the difference and you’re up to 5/6 or 7/8 spending cuts. That’s not appreciably different than what’s coming out here. Democrats have always created severe imbalances in these “grand bargain” deals in favor of spending cuts, maybe because they think that’s what can pass or something, maybe because they (or more to the point, their wealthy donors) prefer spending cuts.
I’d love to see just one Democrat come out and say, “You know, just letting the Bush tax cuts expire completely would solve the entire medium-term deficit issue. And we wouldn’t even have to pass anything. Were the Clinton-era tax rates so burdensome?” But to date, that hasn’t happened. So you get these monstrously bad spending-heavy “grand bargains.”
In fact, if you take a look at a comparison between spending cuts in the Obama budget and the cuts in the Republican continuing resolution – not a perfect comparison, but the best data we have – you see plenty of areas of agreement. The cat food commission leadership has come out of the woodwork to push their agenda, too. And with the three-decade campaign to demonize government spending finally paying off, combined with the three-decade campaign to demonize taxes, Democrats have been either beaten into submission or elected on a different platform than their constituents believe.
It wasn’t so very long ago that many economists and even some White House officials were talking about the need for more government spending to address the continued unemployment crisis and preclude a double-dip recession.
The idea, backed up by solid economic theory and decades of evidence, was that if the government spent more money, then at least in the short-run it would create jobs and stimulate growth.
But in today’s Washington, expressing that idea is enough to get you labeled an unserious person. White House and Republican leaders both insist that spending cuts are what the economy needs right now. Their disagreements are over whose cuts make more sense and who’s really willing to make the necessary “tough choices.”
The laws of supply and demand haven’t changed. Nothing has happened to suddenly put Keynesian economic theory in doubt. There is still an entirely plausible argument to be made that government spending cuts are absolutely the last thing this economy needs. So why has the conventional wisdom done a 180?
The answer is that politics has trumped economics.
It’s not a given that there will be any grand bargain, incidentally. John Boehner sounds pretty doubtful, and Harry Reid is still adamant about protecting Social Security. And they are the two Congressional leaders. So maybe nothing happens. But if it does, of course it will be tilted toward massive spending cuts. That’s what everyone in Washington agrees on. Maybe not the rest of the country, but everyone in Washington.




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WORD:
I’d love to see just one Democrat come out and say, “You know, just letting the Bush tax cuts expire completely would solve the entire medium-term deficit issue. And we wouldn’t even have to pass anything. Were the Clinton-era tax rates so burdensome?” But to date, that hasn’t happened. So you get these monstrously bad spending-heavy “grand bargains.”
and any group of senators that includes schemers coburn and chambliss is snake-belly low. To balance it with Conrad and Warner is to offset an elephant with a mouse.
Revolving Door Swivels Again: Regulator Goes to Goldman
Published: Monday, 14 Feb 2011 | 2:36 PM ET Text Size By: John Carney
Senior Editor,
——————————————————————————–
One of the chief banking rescue deal guys has decamped the FDIC for the more profitable climes of Goldman Sachs [GS 167.49 -1.32 (-0.78%) ].
As Eric Dash reports in DealBook: “Mr. Jiampietro was previously a senior adviser to Sheila C. Bair, the chairwoman of the Federal Deposit Insurance Corporation, during the throes of the financial crisis, where he helped coordinate more than 100 government-assisted bank deals.”
“He was also one of the chief architects of the F.D.I.C.’s policies on private equity involvement in the banking industry and was Ms. Bair’s main liaison to hedge funds and the broader Wall Street community. He left the F.D.I.C. in August, after serving for just over a year.”
Dash also reports on the former regulator’s new role: “… Mr. Jiampietro will serve as a managing director in the financial institutions group, where he will advise a range of small and large banking clients.”
But don’t worry: we’re sure the fact that the revolving door continues to rotate so swiftly and effectively will have no impact at all now that we’ve got all those awesome Dodd-Frank regulations in place. And Basel III, too. We’re all safe from regulatory failure and corruption now that we’ve given the regulators so many new powers. Right?
_______________________________________
*modnote: once again, PLEASE provide LINKS to quoted material*
Starve the beast is alive and well, just dont tell the masses till more of the money is distributed to the top 10% and they take that cash offshore….
Austerity today, tomorrow and forever,,yeah,,,,
It seems like our elected representative will not rest until we are all living like peasants,
Thanks David,
This is why we need to throw all the bums out:
They’re just going to make a bad economy even worse.
Thanks! Government Sachs never misses a beat!
a senate full of millionaires are probably going to do stuff that hurts the USA middle class and helps their peers.
Obama developed the cat food commission, so we know he hates the middle class.
Harry Reid probably went out side today, to find out which way the wind is blowing. Old Harry learned that a CAT 5 hurricane is coming to DC in 2012.
Obama just learned that any GOP candidate now ties him in 2012. this should shock no one. because OBAMA is a Republican
23 dem senator up for re-election in 2012, probably don’t like or see the Obama weather forecast helping them in 2012.
Republican-Democrat, the only difference is one of degree and that is slight.
Reap what you sow.
Those legislating these draconian budgets at the federal and state levels were not democratically elected. They were designated as “victors” by the system managers of the black box electronic voting systems.
Because the warnings of the threat of black box voting have gone unheeded, everyone except those at the very top are paying the price.
Not to nitpick, but.
2/3 = .66
3/4 = .75
split the difference and get?
5/6 = .83
7/8 = .875
You just know that the Dems already privately like every single idea the Rethugs have. They meet behind closed doors to try and think up excuses that will sound valid to the sheep.
It’s Obamarithmetic.
It’s not a given that there will be any grand bargain, incidentally. John Boehner sounds pretty doubtful, and Harry Reid is still adamant about protecting Social Security.
If the President demands it, is Reid going to say no? I have my doubts. After all, when has the President not gotten something he’s actually wanted?
We need to be in the streets by the millions shutting down Wall Street and Washington, DC until Obama, every member of Congress, and every member of the Supreme Court submit their resignations and leave town.
There is no other solution and we must do it non-violently.
I’d say probably half the Dems. There is no way that someone like Bernie Sanders would go along with it.
Bernie Sanders came out and said it in plain English on the PBS Newshour last night.
Isn’t Bernie an independant though?
The Republican budget has all spending cuts
2/3 (Obama) = .66
3/4 (Bowles Simpson) = .75
4/4 (Republican) = 1
split the difference between Bowles Simpson and the Republican plan = 7/8 = .875
Just as there was a lot of talk of lines in the sand with nationalized corporatist Romneycare, but when it came time to vote they all fell in line including Sanders.
18 billion a year in additional corporate tax via loophole closing – knowing the loopholes will be back in 24 months – as with the 86 loophole closing.
And to get this we get 170 billion of spending cuts a year.
All the while the $4 trillion from going back to the Clinton tax rates is off the table, and we won’t talk about health cost control (and the annual doctor’s fix that gets passed to pay them more) because that battle is over despite it being the driver of the deficit. Indeed we will pretend the annual AMT fix ends for a 30 billion gain – which is more than the 18 billion corporate tax increase.
The Obama/Democratic Party con job continues as they do their “pre-emptive surrender” to the GOP again.
Ok, I see that now, but it is a little confusing, with the Obama number being listed with the other two.
It seems nearly unbelievable that this is happening…my government attacking the people of my country for a decade now and now this.
Diebold america
quote “I’d love to see just one Democrat come out and say, “You know, just letting the Bush tax cuts expire completely would solve the entire medium-term deficit issue. And we wouldn’t even have to pass anything. Were the Clinton-era tax rates so burdensome?” But to date, that hasn’t happened”
I’m just asking aloud, at some point do we FINALLY come to the conclusion this is a feature, not a bug. That both parties are actively working against Americans and it’s future.
If somehow we can actually get to that point (which is reality regardless of daily shock dems act bad articles) maybe we can discuss forming a new party or joinging,strengthening an existing one…? Crazy talk I know…let’s just keep acting SHOCKED that the dems have sold us out just like the repubs did years ago…
Show of hands, who thinks it can be reformed from within the party (I don’t).
Quick OT,
Wisconsin Democratic State Senators have “sick day” in Madison.
No Quorem.
Go Badgers!
There was a time when democrats stood for the values that the, now, lone voice of Bernie Sanders bemoans the loss of. That democratic party is long gone, thanks in part to an elitist president who can’t do enough for the very constituencies who ripped off the country for a decade. The saddest part in this pell mell to hell race to cut the budget so rich people can get a tax cut is neither party — republicans more than democrats but still both–sees real people who will be made to suffer more by this action.
I think its time to stop using the rhetoric that the Dems are “giving away” things when they come to a conclusion on a given matter. Or that they are getting a “horrible deal”. Instead, lets just call a spade a spade. Most of the time they end up where they want to end up. Pretending they really wanted something better but “aw shucks they just screwed up again” is delusional thinking at this point.
The Dems end up where they end up most of the time because THATS EXACTLY WHAT THEY WANTED TO BEGIN WITH.
I’m with ya, been saying that for a long time (gonna be Bush years in terms of time by 2012)…when everyone will get “confused” again on if Barry is a good prez or not (he’s not btw)
“I’d love to see just one Democrat come out and say, “You know, just letting the Bush tax cuts expire completely would solve the entire medium-term deficit issue. And we wouldn’t even have to pass anything. Were the Clinton-era tax rates so burdensome?” But to date, that hasn’t happened. So you get these monstrously bad spending-heavy “grand bargains.””
Hell yes, where’s Woolsey, did she lose her seat already? Weiner, has he hoovered up enough money already he doesn’t need to squawk out some faux outrage?
What’s up, the rest of you so called dems in congress? Waiting to get down 30% during your next election?
Why would Dems put separate spending cut limits on security and non-security? What better way is there to put Repub. between a rock and a hard place?