Deficit Talks Fail

[Admiral Yi]

And the GOP had no intention of tackling them until they thought they could hit Obama with it.

This has convinced me: Obama has been a monster megadeath deficit hawk.

So what's the GOP proposal again?

There were a few.  The Ryan proposal, which the House passed and the Senate I think did not consider.  Then there was the $4 trillion and change package during the debt limit hostage negotiations.

[Sheilbh]

Except it's not. As our European friends are discovering.

The yield on 30 year treasuries is now lower than it was for 1 months in January 2008.  The market's pretty sanguine about US debt - not least because it's spinning out about European debt (even the spread on the Dutch is increasing).

My view is that it's worth kicking the can down the road.  It's really not the time for massive spending cuts and tax rises - as our experience shows.  You've got the market desperate to buy US debt precisely because the world economy looks so unstable.  I think you should have short-term stimulus - payroll and unemployment extension, some infrastructure - with laws enacting medium to long-term reforms.  So, I'd say, phase out certain tax deductions for income and corporate tax, phase in tax increases starting in a few years and have Social Security and (most importantly) Medicare reforms.  While that's going on also have a look at other discretionary spending - I imagine there's stuff that can be cut.

Having said that despite the Eurocrisis I think there's been some positive noise out of the US economy lately so, God-willing, we'll be in a situation that has growth playing its role in deficit reduction.

So they are making a lot of noise about making deals, but cannot actually come through. The Dems should rape them over this, but will likely screw it up instead.

I think this is true.

So while certainly it isn't good - isn't it not so bad that we're actually now facing more in automatic spending cuts for the next ten years than any of the proposed plans by either party?

Not really.  I imagine there'll be enormous pressure to roll back those cuts and save certain things - though Obama's apparently threatening to veto any bill that does that.  But my understanding is that those cuts just apply uniformally across the board.  That's an insane way to cut government.  You'll end up cutting worthwhile stuff by just as much as programs that should have perhaps have attracted greater attention.

[garbon]

So while certainly it isn't good - isn't it not so bad that we're actually now facing more in automatic spending cuts for the next ten years than any of the proposed plans by either party?

Not really.  I imagine there'll be enormous pressure to roll back those cuts and save certain things - though Obama's apparently threatening to veto any bill that does that.  But my understanding is that those cuts just apply uniformally across the board.  That's an insane way to cut government.  You'll end up cutting worthwhile stuff by just as much as programs that should have perhaps have attracted greater attention.

Yeah but if it was politically impossible to actually get relevant cuts in just crap programs then it might be better to just take an all around haircut than unabashed increases in expenditure, no?

[MadImmortalMan]

Yes, I think the Democrats have advanced actual, concrete proposals and the GOP has made it clear that they won't agree to any program with a tax hike.

No, no - I mean during this WHOLE mess.

So, 1965 to the present then?

[MadImmortalMan]

The yield on 30 year treasuries is now lower than it was for 1 months in January 2008.  The market's pretty sanguine about US debt - not least because it's spinning out about European debt (even the spread on the Dutch is increasing).

My view is that it's worth kicking the can down the road.  It's really not the time for massive spending cuts and tax rises - as our experience shows.  You've got the market desperate to buy US debt precisely because the world economy looks so unstable.  I think you should have short-term stimulus - payroll and unemployment extension, some infrastructure - with laws enacting medium to long-term reforms.  So, I'd say, phase out certain tax deductions for income and corporate tax, phase in tax increases starting in a few years and have Social Security and (most importantly) Medicare reforms.  While that's going on also have a look at other discretionary spending - I imagine there's stuff that can be cut.

Yes the can has to be kicked to allow time for any actual solution to be implemented. That's pretty clear. The biggest problem with any long term budget reduction plan is sticking to the plan. The next President or the next Congress will decide to do something completely different and then we're back to no solution.

[Sheilbh]

Yes the can has to be kicked to allow time for any actual solution to be implemented. That's pretty clear. The biggest problem with any long term budget reduction plan is sticking to the plan. The next President or the next Congress will decide to do something completely different and then we're back to no solution.

That's possibly true of a budget reduction plan, but your system's resistant to change once it's been made.  In the UK I think you'd be more right because any government can, by definition, pass any legislation it wants - if it can't it's not the government.  But in the US once a law's been passed through Congress I think the institutional conservatism reasserts itself.  The difficulty of passing legislation also makes it difficult to abolish it.  I think the O'Neill-Reagan deals on Social Security and income tax (though the latter wasn't that great a reform) are examples of that. 

Maybe that's changed now your system's got more partisan though?  If so it seems like you'll have all our flaws without the advantages

[Sheilbh]

Yeah but if it was politically impossible to actually get relevant cuts in just crap programs then it might be better to just take an all around haircut than unabashed increases in expenditure, no?

You're probably right.  Who knows maybe (and I hope Obama sticks to this) the pain of Congress not being able to roll back unpleasant universal cuts will focus their mind.  Who knows though.

[DGuller]

The Ryan proposal

[Capetan Mihali]

No, no - I mean during this WHOLE mess.

So, 1965 to the present then?

So the Great Society caused this catastrophe?  Really?

[DGuller]

No, no - I mean during this WHOLE mess.

So, 1965 to the present then?

So the Great Society caused this catastrophe?  Really?

I think it's safe to say that the roots of the latest political fracture did originate in 1960ies, when Democrats enforced the power of the federal government over apartheid states in the South.  Ever since then, Democrats gained the black votes, while Republicans gained the radicalized racist votes.  Republicans got the better end of the deal by far.

[Berkut]

No, no - I mean during this WHOLE mess.

So, 1965 to the present then?

So the Great Society caused this catastrophe?  Really?

I think it's safe to say that the roots of the latest political fracture did originate in 1960ies, when Democrats enforced the power of the federal government over apartheid states in the South.  Ever since then, Democrats gained the black votes, while Republicans gained the radicalized racist votes.  Republicans got the better end of the deal by far.

Comments like this make Raz's rant about how Republicans think Dems are evil kind of funny.

[DGuller]

Is there anything factually inaccurate in what I said?

[Berkut]

Is there anything factually inaccurate in what I said?

What relevance does that have to my comment?

[Razgovory]

Is there anything factually inaccurate in what I said?

What relevance does that have to my comment?

Your comments have no relevance.  So he can't make a comment that is relevant to yours.

[MadImmortalMan]

No, no - I mean during this WHOLE mess.

So, 1965 to the present then?

So the Great Society caused this catastrophe?  Really?

Uh. No.