I don’t want to keep fighting this, but people really want to believe that Democrats and the President didn’t get played on the 2011 budget deal. They’re clinging to this notion that the cuts are mostly smoke and mirrors and won’t affect anyone personally. Kevin Drum exemplifies this take in at least a slightly more intelligent way:
It’s true that, macroeconomically speaking, this is the wrong time to be cutting spending, but let’s face it: $38 billion in spending just isn’t that big a deal at a macro level. It may have a negative effect, but it’s a pretty small negative effect.
So let’s put the macro-level considerations aside for a moment and just look at the cuts from a pure budgetary perspective. There are a couple of things we can say. First, domestic discretionary spending has gone up about 4-5% a year in real terms over the past decade (and a bit faster than that in the past few years), and it’s difficult even for a hardcore liberal to pretend that this level of growth leaves no room for even modest cuts. Second, given the amount of smoke and mirrors in last week’s budget agreement, the level of actual spending reductions it contains is probably no more than about $20 billion. Maybe not even that much. This is just not Armageddon, and pretending otherwise doesn’t do much except wreck our credibility with the public on fiscal issues.
$38 billion is such a “small negative effect” that it’s 2/3 of the total stimulus spending in the tax cut deal that wasn’t merely an extension of current law. Without speaking to the past decade, discretionary spending has gone up the past few years in relation to a Great Recession, when such spending needed to be increased. With tens of millions still out of work, reducing government spending by even $1 is a foolish enterprise at this juncture. And the recent slashes in GDP forecasts speak to that.
The smoke and mirrors discussion is a lot of smoke and mirrors. While it’s true that a lot of the cuts reflect accounting changes and one-time reductions from increases meant to only last a year, and in general terms the budget could use a spring cleaning every now and again, the truth is that this mainly speaks to the hazards of putting together continuing resolutions year over year, which inevitably lead to these problems. There’s a huge opportunity cost in scoring these as cuts. Money reduced from an already completed Census can be put to use elsewhere; money from unspent transportation earmarks can be excised and shifted into program budgets. This would be a matter of routine in any normal budget year. Turning them into cuts is not “smoke and mirrors”; it’s real-dollar losses that will magnify over time as these numbers become the new baseline.
And then there are the inexplicable policy changes ushered in with the bill, which are both unnecessary and indefensible:
At a quarter till midnight last Friday, with a deal to avert a government shutdown barely an hour old, Senator Harry Reid phoned a fellow Democratic senator, Ron Wyden, at home and startled him with some bad news. “You lost free-choice vouchers,” Mr. Wyden recalls Mr. Reid telling him.
Even delivered in shorthand, the call’s meaning was clear to Mr. Wyden: a health care plan he had succeeded in getting passed months earlier despite furious lobbying by big business and labor had been pulled out of the blue and killed as part of the broader budget deal struck between the White House and Congress. What was most perplexing was that it had little to do with budgets or government shutdowns.
Wyden is super-pissed about this rescission, and still doesn’t quite know who’s responsible, though he suspects the Business Roundtable. And free choice is far from the only policy rider included. Funding for a National Climate Service and catch-share fishery programs out of NOAA were excised. Grey wolves were removed from the endangered species list. And if you think nobody will be affected by anything in the budget, ask women in DC.
At least the Obama Administration has the decency to mention “tough choices” they made in the budget. Those who would downplay these choices are simply not being honest. They should also take into account that a budget deal could have been struck with the tax cut deal in December 2010, and all of this could have been avoided with as much as $60 billion back into the budget, and the overall economy.
Drum is correct that the 2011 budget deal is minor from a long-term perspective, especially compared to what’s in store for 2012. But that’s a different argument, and given how 2011 was handled, it doesn’t bode well for the next time. Furthermore, pretending that the deal carries no pain doesn’t do much except wreck our credibility with the public on accurately perceiving reality.
By the way, I don’t believe for a second that Republicans are “scrambling” to round up votes for the bill. They’ll find all the votes they need somehow. I do believe that Rand Paul is kooky enough to force a one-man government shutdown, however. Even if he doesn’t have the votes to sustain a filibuster, all he has to do is deny unanimous consent and force a cloture vote, and he’d ensure at least 30 hours of delay. We’re at Wednesday morning, and the short-term CR passed last week runs out Thursday. Ol’ Rand could get his government shutdown yet.




47 Comments

Support this site!
Subscribe to the newsletter
Advertise on Firedoglake
Send
us your tips
Make us your homepage
About FDL News Desk
Ah, science by legislative fiat. Wonderful.
Coming up next week: pi is rounded off to 3.
That’s right. Either the spending cuts matter or they don’t. Obama declared victory and said they did. His ass-kissers now say they don’t. Their game — repeated throughout the HCR battle — of rationalizing every dumb move he makes is smoke and mirrors.
My bold
Bought off.
Yeah, unless you happen to be one of the people that depends on these programs or whose job will be cut.
I’m so fucking sick and tired of people whose jobs won’t be touched by budget cuts saying they’re no big deal. Those programs and that spending are there for a reason. Now many jobs and perhaps someone’s lifeline is gone. But, K. Drum can live with the budget cuts.
The worst of it
Without at all disagreeing with the argument here that the cuts themselves were bad, we shouldn’t lose sight of the fact that the big disaster here was the legitimization by our side of two dangerous ideas.
One is the notion that it is perfectly legitimate to make or unmake laws with only the majority in the House, well, at least if it’s an R House majority. The Constitution says you need majorities in both chambers plus the president, or 2/3 in both to override a veto, if you want to pass a new law or repeal an old one. The Rs didn’t get those majorities last year, but they want to make and unmake laws anyway, so they used this vestigial budget reconciliatioin process to take the govt hostage. We agreed that that was perfectly legitimate by negotiating with them, by compromising with them, by meeting them half-way. So of course they’ll do it again, only harder, over the next set of budget reconciliation bills, and over that even more valuable hostage, the debt ceiling. We won’t be able to simply refuse to negotiate with the hostage-takers next time, because we’ve already said that hostage-taking is perfectly kosher, not a problem at all. And once bargaining with them, we will have no bargaining chips at all, no credibility in this game of legislative chicken over default, because we’ve established that we will blink first over even the lesser value hostage of a shutdown. They can write their own ticket over the the debt ceiling raise. If you don’t like what they wrote this time, you are really, really not going to like what they write on that ticket.
The second disaster we created by reaching this deal with the Rs, was that we made unanimous between the two parties both the insane idea that we have a hair-on-fire national debt emergency right now, and that this deal saved us from that brink of fiscal disaaster. We have 62% of the electorate thinking that we should not increase the debt ceiling. Duh! Of course we shouldn’t! We have a hair-on-fire debt crisis! We just had this big deal that both parties are congratulating themselves over reaching and thus saving us from fiscal annihilation. Surely that solved our debt problem!? You can’t seriously be proposing that we backslide, that we increase the debt again, when we just achieved a miracle, last-minute save from fiscal Armageddon!?
Oh, what a tangled web we weave, when first we practice to deceive.
i don’t want to believe it, but i think the evidence is that the president and party leaders have played us.
is looking at this budget deal via a D-vs-R prism the most accurate way to view what is happening? i don’t think so.
Apparently there’s a hunger strike going on to protest the real hunger this mess will create in American lives.
Why 30,000 People Are Fasting
If we only had a media that works
Amen.
g*d forbid we should do that by, for example, explaining the real role of and need for gov sector deficits… and why the banksters, and therefore the D party, are so dead set against us knowing the truth.
D messaging has been to show what big liars the Rs are about reducing the deficit while implying (or at least leaving unsaid) that the Ds are the grownups and can be trusted to actually reduce the deficit.
bat-shit-crazy all around.
from james galbraith (march 2010), In Defense of Deficits:
True. The only thing is I hope we don’t end up with 30,000 less protesters due to starvation.
second that… except i’m not sure it’s only 2.
It won’t be a comprehensive budget deal or reform if the GOP refuse to give a bit on the Bush tax cuts. Reform must mean to take more from the US treasury as they just did in the shutdown showdown when they gave ADDITIONAL funds to the already bloated, top-heavy, wasteful and obese US military/security. The two words are actually oxymorons.
It looks to me like Obama played a poor hand well.
After he threw away his aces, you mean?
LOL! I doubt they’ll take it that far.
A little fasting never hurt anyone, just be careful how you break it.
You’ve written yourself, OG, that you favor getting out of Afghanistan, allowing the Bush tax cuts to expire, and reviving the economy through job creation. Well, if that is done — all up to Obama to do or at least try — there is NO fiscal crisis. Period.
So, with all due respect, [edited by moderator]
[Mod note: Attack the argument, not the commenter. Thanks.]
Thanks, gtomkins and selise !!!
It’s the wolf thing that really gets to me. Well, that and what he’ll be gutting further out of Medicaid/Medicare.
I wonder if the right wing evangelical crazies ( they really are!) next door to me will like a bit less “socialism” with their health care?
In fact, had he pledged to do what you favor, we would still control the House.
I wouldn’t get into debt right now if YOU paid ME.
Kee-rist! the banks want 20% on their free $$$ from the Fed
which of obama’s plays do you see as the best examples of this?
(i’m currently in major disagreement, but i really don’t know the counter argument… and would like to. thanks.)
Last December, after years of lobbying by wilderness advocates, the Obama administration reversed the Bush “no more wilderness” decision. Secretary of the Interior Ken Salazar issued an order restoring the policy (established by Congress in 1976) that allows the Bureau of Land Management to protect wildlands.
A sneaky rider in the budget deal prohibits any FY 2011 funds from being spent to implement Salazar’s order.
ding! ding! ding!
do we really want a society built on debt peonage to the banksters? that’s what deficit fear mongering (by both parties) is all about.
Yes. I have disagreed with President Obama on the size of the stiumulus, his policy in Afghanistan, keeping Geithner and other matters.
That said, I think in this particular round of this ongoing budget battle, he did about as well as he could have. But, this was a mere skirmish as compared to the war that looms ahead.
The main themes I see running through the bill:
“Environmental” issues and women. Not only the DC issue, but cut to family planning in State/Foreign policy, reduction of Title X appropriations across the board, and WIC, women, infant and children program cut. That’s a lot of cuts that effect mainly women. Poor women at that.
And monies already earmarked for public transportation and urban development. Those, several of them, protect oil, and oddly enough, cut potential jobs. I think, have thought for a while, they have been holding, these so-called “green jobs” hostage, until the cards are stacked to make sure all the corporate tax breaks are in place.
Perhaps they are holding these jobs hostage too, stacking the cards, that women are on the hit list for the initial round of slave labor. Anyone else see these themes?
My wife is a USDA research scientist (vegetables).
The Obama Administration will close several USDA vegetable research facilities, including obesity research centers, and keep the cattle / forage research facilities open. So much for Michelle Obama’s anti obesity / healthy eating campaign.
My wife will soon be unemployed, her research on vegetable nutrition, how to help diabetics, curb obesity, gone down the drain.
We campaigned for Obama, even though he was a corporate America candidate, but we never imagined he and the Democratic Party would screw the American middle class the way they have. Big disappointment.
I’ve resigned from my post as a Democratic Party county secretary, and it’s unlikely that my wife and I will ever support, or vote for Democratic candidates again. Local candidates, probably, but definitely not any Democratic Party presidential candidate.
Sorry for your losses. Completely understand your position.
All of it, of course, was avoidable if we had elected a president who just followed the lead of millions of his supporters — rather than kiss the asses of his corporate overlords.
And the union busting needs to be complete before these “green jobs” are released.
Galbraith’s goal of economic growth is reflective of another time before the post-industrial phase the U.S. economy is now a part of. Organic low (or no) economic growth under these conditions can’t be remedied by government spending, especially at a time of historic federal deficits. So the need is to cut spending.
Exactly. “Getting played” implies snookering, President Lip-Service was a willing participant. Talk this morning that his ‘centrist, bipartisany’ STARTING position will be – surprise! – the Catfood Commission plan.
Oldgold says
“It looks to me like Obama played a poor hand well.”
LOL
oldgold you make me laugh daily!!!
where do you come up with this crap?
Obama will go down as the biggest idiot to ever enter the WH Fact.
Oldgold? you and I could have been become super presidents of the USA with the hand OBAMA was given!
You and I would have stayed focus on 1 thing the Economy and putting Americans back to work!
Everyday we would have been in some state, showing USA citizens how we are putting them back to work.
I would never have paid the GOP nut cases any attention!
After 1 year the GOP would have been no more
selise says:
This is an excellent point and needs to be remembered. As mad as we are with the filthy coward Obama we have to also remember that this is Theater being played out in front of our eyes to keep us focused on the simple fact that its the Corporations/Oligarchs that are pulling the strings in the background.
I love the line by Cornel West: “Obama has been another black mascot of the Wall Street Oligarchs.”
You don’t have to feel powerless. You don’t have to put your foot through your TV today. You can go to http://www.epicstep.com and join the “Obama needs a primary challenger” bus ad campaign in D.C. Let’s show the Washington Politicos and the media that covers them that we will not be going along for the ride in 2012.
antoine22 said:
I’m so sorry to hear this -
As an unemployed Botanist I appreciate your plight. As a diabetic I see how short sighted this is but we have a weak and cowardly president and a bunch of hate-filled crazy Republicans that smell blood. This creates the perfect playground for the folks that run the show in DC to push the country back into the past.
Re: your actions about the Democratic Party. You’re not the only one to leave the Party. I refuse to support it any further. Don’t disappear though – there are still a few decent Democratic candidates around – support them and let the establishment know you won’t be supporting the sold-out wing of the Party. They may not want to hear you but but your words will linger and in the long term have an effect.
“Bankers don’t like budget deficits because they compete with bank loans as a source of growth. When a bank makes a loan, cash balances in private hands also go up. But now the cash is not owned free and clear. There is a contractual obligation to pay interest and to repay principal.”
When the government borrows money to engage in deficit spending, isn’t there still the same obligation to pay interest and to repay principal?
for people who care about the state of the planet, here some of the fine work done with
“Dr. Obama’s scalpel”
Mercury News:
These people are so full of shit it’s beyond comprehension.
Thanks for the input. However, I would not depict Obama as weak. A liar, yes, a hypocrite, yes, has callous disregard for his constituents, yes, will sacrifice America’s well being for the benefit of billionaires and corporations, yes, also.
And, as for cowardly, yes, because he doesn’t have the courage to speak the truth, probably because he’s enamored with the White House and doesn’t want to leave, at least not yet.
S
yes, brilliant work by all involved.
The American Federal government is currently run by morons.
not really because the government produces the money by fiat, and can choose to pay interest and dividends, or not, to itself as it sees fit. Unlike a normal household or family, which does not have its own printing press and does not control its own personal money supply, the government operates on an almost infinitely larger economy of scale.
The current situation since the liquidity crisis of 2008 has seen the Fed Reserve essentially printing money and giving it away to the banks for free – no interest is being charged, it is a free loan to Bank of America, Goldman Sachs, Citi, Chase, and the other to big to fail banks. They then loan the free money to the US Treasury for 3-4 % interest payments. It is a direct subsidy to the banks at the expense of the economy because they’re not lending it to anyone, just sitting on the cashpile.
The Bush tax cuts would have expired if President Obomber had done nothing.
In your view, the federal government can finance deficit spending at any level, indefinitely, by printing more money? Do you see any long-term impact from printing more money?
Long term, hyperinflation becomes a consideration. However, that doesn’t change steveo67′s basic premise that the government and a household/family’s money supply are NOT equivalent. Trying to bring down the deficit solely through spending cuts when we have such a fragile economy is ludicrous.
Correction: Trying to bring down the deficit PERIOD at a time when so many citizens are hurting and the economy is fragile is ludicrous. The focus should NOT be on deficit reduction at this time.
$38B over 315M citizens is $121 per citizen in money that will not be in the economy, or $484 per family of four. Further, if you remember that the budget was going to increase $40B before the new Repubs came in, then the reduction from what we thought was going to happen in late December is $78B or $247 per citizen, or basically $1,000 per family of four. That’s is _not trivial_.
just got back from a meeting – hyperinflation is a concern, but the hyperinflation model of 1930′s Germany that everyone points to occurred during staggering periods of unemployment (stagflation of the 70′s on steroids)when the Germans also were essentially tithing a large chunk of GDP to other countries to pay for reparations. They had very little control over their currency compared to the US today.
Not to say that we wouldn’t be screwed if the dollar wasn’t the de facto world’s currency, and that is a concern over the long haul (especially if oil is no longer traded in dollars), but it isn’t a concern of the current bond market. If and when the bond markets punish us for the deficit will only occur when interest rates rise dramatically – and since interest rates are at ridiculously historic lows – that is not a current issue.
Our current economic situation is sluggish economic growth that isn’t creating enough jobs to match population growth. The very best way we get out of it is create demand driven jobs. More jobs means more taxes, and more revenue, which can be used to pay off long term deficits. Since the banks are refusing to lend and corporations are refusing to hire, government needs to step in and create this demand by short term deficit spending.
think of it this way, money sitting in a bank account does not have a multiplier effect on producing more money if that money isn’t spent on goods and services in the local economy. If it sits in the vault it collects dust. If it is invested in the local economy that creates jobs, which creates wages which are spent by the newly hired person on other goods and services, the multiplier effect continues, and everybody benefits.
Now if that money isn’t invested locally, but instead is invested overseas like it currently is (China, India, etc.), it assists the economies of those localities but does very little for anyone except the owner of that bank account. That’s also the situation we’re facing, because our corporations and banks aren’t investing in our economy, they’re investing and making loans and hiring people in China, and India and other overseas countries. The phenomenon of outsourcing helps explain why banks and wall Street are posting record profits but folks on Main Street aren’t sharing in them.
because we don’t have enough unemployed and depressions are so much fun?
seriously, can you give me some link to justify your assertions? have you written any diaries on the topic? i’ll read ‘em if you’ll link ‘em.