As the outlines of the deal start to become clearer, I still don’t think this is that bad of a deal. If you stop dreaming about stimulus for a moment and look at what is on the table, it’s unlikely to result in some fiasco. First, there’s the $900 billion in cuts that Biden signed off on during the negotiations. These cuts are probably specifically designed to do little harm to the economy over the next two years, just like the cuts in the spring. Then there’s the joint committee, tasked with raising another $1.5 trillion over the next decade. If it fails, automatic cuts will happen that affect Medicare providers and the Pentagon equally on a one-to-one basis. Additionally, programs designed specifically to protect the poor and veterans are protected.
Much attention will be focused on the debt committee and the prospect that they will urge cuts in Medicare, Social Security, and Medicaid. They probably will look to give a haircut to those programs, but the Pentagon will be on the chopping block as well. I honestly expect modest changes that are pushed out far into the future, and I always expected some modifications. I don’t think we’re going to see a major facelift.
To me, there are two big downsides. The first is that we’ve now established a precedent that we will negotiate with terrorists, so we’re going to be living with this bullshit for a long time. It’s easier to let them shoot the hostage when the result is the National Zoo is closed than when it destroys the global economy, so expect more pushback over the budget.
The second downside is that we couldn’t extract any stimulus at all, as far as I can tell. So, this won’t hurt the economy much, but it certainly isn’t going to help it.
Politically, we came out far ahead in this battle. We’ll see how we come out around Thanksgiving when the debt committee presents us with their work.
And, hey, at least the debt didn’t increase so we can stop wasting money on more interest payments. Even though I understand the need to deficit spend in times of high unemployment, there’s still nothing I like paying for less than interest.
Deal made, cue flood of the sky-is-falling from the Cenk Uygur/Jane Hamsher Co-Prosperity sphere.Back here in reality, however, this whole episode does nothing but underline to moderate voters what a train wreck the GOP has become. There are great political benefits here for the Democratic party….provided progressives don’t shoot themselves in the foot by re-booting the Nader 2000 campaign.
Pelosi isn’t signed off, yet. Progressive Caucus having emergency meeting tomorrow at 2pm.
Now would be the time to withhold support. But we could wind up with World War One all over again.
I’m surprised you’d say that. You seemed to think there was nothing more to get. What would be g
Nah, If Pelosi wants to play hard-ball, she can probably extract something from Boehner. He needs her votes desperately. Now is the time to play coy.
“emergency”
It’s such an “emergency” they’re waiting 30 hrs before they actually convene.
Yeah, yeah, you know how Congress defines “emergency.” As in, “emergency appropriation.”
No Congressman has ever had the phone ring at 2 AM and hear “You have to get down here and legislate right now!”
George Will said the deal was a GOP win : “Conservatives are saying it’s imperfect, to which one must say, the Sistine Chapel is probably in some sense imperfect.”
Howard Kurtz: “If there are $3 trillion in cuts and no tax hikes, Obama will have to explain how it is that the Republicans got 98 pct. of what they wanted.”
Grover Norquist: “Sounds like a budget deal with real savings and no tax hikes is a go.”
Greenwald: “So: 1) the Presidency is a weak, impotent office before almighty Congress; 2) the urgency of re-electing Obama to that office outweighs all!”
But, go on Boo, blame the left for 2010 and for not being thrilled about having spent all that time and effort in 2008 electing a President who: put cuts to Social Security, Medicare, and Medicaid on the table; endorsed Supply Side Economic principals throughout 2011; issues assassination orders for American citizens (even Bush didn’t do that); did nothing to address climate change while opening up new areas for off-shore and arctic oil drilling that even Bush didn’t dare do; reinforces the John Yoo interpretation of the US Constitution; and ignores the Democratic economic advisors and doing nothing since February 2009 to address the severe unemployment problem in America.
Yeah, keep blaming the left. He’s after all, THE GREATEST PROGRESSIVE PRESIDENT EVER. Just keep saying that again and again — that’s how the right wing works, after all.
which “American citizens” did he order assassinated?
Surely, you have the list handy.
al-Alawki, American-born Muslim, maintains his American citizenship, now head of al Quaeda in the Arabian Peninsula, operating in Yemen. That’s the one with the most notoriety.
under US law, you forfeit your citizenship when you join a foreign organization at war with the United States.
http://www.law.cornell.edu/uscode/8/1481.html
it’s only common sense.
I thought only countries, not organizations, could legally declare war.
I guess bin Laden broke the law when he declared war.
Pretty much. Actually, he had no right to issue fatwas either, since he’s not clergy. He just never was one to let little details like that get in the way.
Did nothing to address climate change? Did you even notice the deal he made 2 days ago with American Auto manufactures to increase engine efficiency and reduce emissions over the next 15 years, that will cut fuel use, fuel emissions, and save American drivers 2 billion dollars?
Yeah he did that WHILE fighting the Republican bullshit. Maybe some credit for that might be in order?
Where did Booman ever call Obama “THE GREATEST PROGRESSIVE PRESIDENT EVER”. I read this site every day and I’ve never seen it.
And while we’re at it, I’d sure be curious who this left-enough-for-you politician is who can, you know, like get elected? If there is a realistically electable more progressive Presidential candidate out there for 2012 please let us know. In the mean time, realize that Obama (who ain’t half bad) is a lot better than your other options. Some would call that eating your peas….
I know I called him a candidate for second best. Unless he gets four terms, he ain’t ever gonna beat FDR.
Second best to FDR ain’t half bad either…
Bullshit, bullshit, bullshit. It shows moderate voters that Obama is a total pussy, and has no principles.
Big Question I guess if will Boehner’s caucus go for it, and I’m not really worried, but I’m enough of a cynic to think that it’s possible that members of Dem caucus who are more left leaning voting against bill
If tea partiers bring it down, the next compromise will be further cuts. If progressives bring it down, the next compromise will be more stimulus. What’s wrong with this logic?
Especially when default is not possible when you run a fiat currency by which the fed can simply create more reserves ex nihilo? (equivalent to printing more money…)
So does that mean that either way voting it down would be better?
I admit to not being as informed as some on this, but at this point isn’t this it? Based on time left alone, I’d assumed that this would be it and the next stop is default or Obama using the 14th ammendment.
I have tried to explain to Booman about monetary policy to no avail. That the FED prints money all the time. He has a preconceived vision about how printing money is a disaster (despite the fact that this is exactly what QE is all about) He has invested a lot of personal emotional attachment to the idea that Obama is not a bad president and that only he can see it through. I agreed with me that until now, Obama was not the bad president most people on the blogs made him,although not including the debt-ceiling during tha Bush tax cuts was a huge failure on his part. I thought, however, that it was good for the left to scream and cry and demand more. It is the only way to advance. Ask for more.
But now this deal, the data in front of us, and any rational assessment of it indicates that this has been a blunder of epic proportions by the president. It has been his own making. From firing all the Keynesian team, no listening to economists (krugman, DeLong..), introducing austerity in the discourse, being awful at the pulpit, taking this without the seriousness it required, not fighting the republcians when they decided to take the debt ceilin, not making it a question of principle, being naive (as Krugman show in his last post). It hurts me a lot to say it, but Booman emotional attachment is clouding his judgment.
If this deal does not fail, Obama is a disaster,. If it fails, then I was wrong and he is a master of 11-dimensional chess.
A pleasure.
You are equating printing money to buy an asset or a bond to printing money to retire debt. These are not the same things. They have different consequences.
But more than that, you aren’t just asking him to print 2.4 trillion dollars, you’re asking him to invite his own impeachment. And he would be impeached without question. He wouldn’t be convicted, but he’d be impeached.
And this would settle the markets, allow for more stimulus, and cause job growth?
C’mon. Will you please wake up and drop this silly argument?
Not in a liquidity trap. Actually, the assets the FED is buying with QE are long-term private and public debt. And this is done by printing money.. this is, by acting on the balance-sheet. And this assets have, most of them, almost no value.
If you check the balance-sheet results of both operations now, it is the same with coins or without coins. The coin is the excuse to change the balance-sheet number.
We agree on something important though. I have to say that even if legal, I have no doubt Republicans will impeach him. I also happen to believe he will be impeached anyhow. So this does not change my framework at all. Something like your idea that 2012 is going to be a disaster no matter what. It really changes the perspective.
A pleasure
I meant.. “no-present value”.. like the coins.. in the future they will have value.. and in the future, coins will be substituted by normal debt… because I hope one day we will get out of the liquidity trap and to normal open-market operations with unemployment at 5%.
A pleasure
You’re not understanding BooMan’s argument, which I finally got. There are two discounts on bonds: an inflation discount and a risk discount.
BooMan’s argument is that the asset swap is so unorthodox that the market will instinctive react to it as uncertainty and increase the risk discount. It is not a logical reaction on the part of a market, but as Srully Blotnick of Forbes used to say, “Markets are psychology plus cash.” Markets don’t read economics monographs.
I tend to disagree in that the bondholders will be more assured of receiving interest payments and payment of principal at maturity. But not even the market watchers can predict how the herd will act. Or even enough of them to trigger the algorithms.
I don’t think the Asian markets are open yet, so there is no early market reaction yet to the news of a “deal”. The question is how they will act to the further contractionary forces on the US economy.
Plus when the Fed Issues bonds, people have to actually buy them. Its not guaranteed…
And it’s an exchange of something for nothing, not nothing for nothing.
Then let’s look at the argument. The Congress, composed of a Democratically-controlled Senate and a Republican-controlled Senate couldn’t agree on something so I’m going to break the law and take over their responsibilities. It’s not like the House refused to raise the debt ceiling. The Senate just refused to agree to their solution. This is not a solid legal basis to break the law.
You know what’s going on? A lot of liberals are in denial about the consequences of bashing the president for a year and a half leading up to the midterms and what it meant for turnout, motivation, enthusiasm. And they’re in denial about how much power the Republicans have. They know how evil they are, but they care more about the only force blocking their schemes from taking full fruition.
It’s as if England spent all of 1941 bitching about what a shitty ally France turned out to be instead of killing Nazis.
Yes!! Exactly!!
Elections have consequences especially when you elect crazy people to Congress.
QE is an exchange of money for nothing. this is the legal way to do the same.
As CNBC reported, the treasury can have a debt ceiling, but not an spending ceiling, it can print the money. This is what it did via FED with QE.
If you claim that, since it is unorthodox, as QE was, market will put a risk premium then why QE did not make it so? The reason is that QE was printing money for the market, and this is for the government… unless the FED uses the money as a part of QE, selling some assets if there is any risk or any inflation. Which puts you back on square one.
No, there would be no disruption in the markets whatsoever. The only disruption comes if the president does not issue the money legally and decides not to pay any bill.
A pleasure
The Nikkei on opening is UP slightly more than 1%. And rising at the moment. The market there is focusing on some Japanese government moves re: the yen. So it is likely to be another uneventful (dare we say deliberately uneventful) day in the markets.
You really think there are enough sane/grownup/responsible Reps in the House that he won’t get impeached irrespective of the debt bullshit? I think fear of impeachment is the very worst of all reasons to give into the Reps on anything at all. How is this different than negotiating with hostage takers that you rightly bemoan above? Sigh — we’re still basically in the Resistance/Vichy debate.
Am I the only one who thinks impeachment would be the best thing for his reelection prospects?
Hmm, it appears not. Steve M:
http://nomoremister.blogspot.com/2011/07/at-this-point-impeachment-would.html
Obama hasn’t tried enumerating all the compromises he’s offered?! He’s barely talked about anything else for three weeks.
I guess it’s not just “centrist” pundits and Tea Baggers who will cling to their prefered narrative no matter what the actual evidence indicates.
PLEASE, PLEASE, PLEASE, REPUKELISCUM, IMPEACH OBAMA.
I love this. Yes, let’s all embrace an impeachment. An insane impeachment brought on by insane financial arsonists. That won’t make this country more fucked up. That’s won’t make people nervous about investing in America. Surely, that will bring peace to the budget appropriation process. We’ll get so many judges confirmed. Oh, it will solve everything!!
hee hee hee
That’s won’t make people nervous about investing in America. Surely, that will bring peace to the budget appropriation process. We’ll get so many judges confirmed. Oh, it will solve everything!!
Bush v. Gore proved how much of a banana republic we really are. So that ship has sailed. And how is Goodwin Liu and Peter Diamond working out for you?
Wow — the comment was only a few lines and you couldn’t bother to read it first? The question was not about whether impeachment would be a good thing. The question was, what makes you think kowtowing to the crazies on anything will stop them from bringing an impeachment vote anyhow, no matter what he does? You apparently make the strange assumption that they’d need a rational reason to try impeachment. You and Obama may be the last Americans who don’t know better by now.
You really think there are enough sane/grownup/responsible Reps in the House that he won’t get impeached irrespective of the debt bullshit? I think fear of impeachment is the very worst of all reasons to give into the Reps on anything at all. How is this different than negotiating with hostage takers that you rightly bemoan above? Sigh — we’re still basically in the Resistance/Vichy debate.
Sorry, Boo, but modern monetary theory wouldn’t agree with you. The debt ceiling is an entirely artificial figment of the Feds imagination. Much of the money in the debt is “owed” by the Treasury to the Fed and can be retired simply by creating additional reserves to cover it. The long term consequence may be inflation if the amount of new money=reserves exceeds the increase in GNP, but this could actually be a progressive development as inflation differentially effects the rich more than the poor.
Wall street knows this, and while it may throw a strop, it may have no more effect than QE1 or QE2. Certainly much less than a “default”, which in a fiat currency regime, is simply a political decision not to pay your bills – and therefore rightly causes consternation.
Of courses the Teapartiers haven’t got a clue about this and will threaten all manner of hell fire including impeachment. But in this sense Obama may have played his cards astutely. If they vote the Bill down now, he can claim he had no option but to create new money to cancel T-Bills as the alternative – default – would be in Breach of the 14th. Amendment.
But this is the political battle progressives should actually want – Tea Partiers trying to impeach a President who is merely doing his job and upholding the constitution because they are too ignorant to do theirs. You would be surprised at how sanguine global markets would be at that prospect. They know that impeachment will fail and that Obama is the only adult in the room in that context.
The problem K. Curie is highlighting is that you are accepting the Tea-partiers paradigm as a given – that money is still a real thing, in and of itself – when, since the abolition of the gold standard it is no such thing – it is simply something people exchange in return for real things and whose value is inherently variable over time and the amount of which in circulation is entirely at the discretion of the Fed.
Either Obama is economically illiterate and doesn’t understand this, or he is using the teapartiers ignorance against them to sucker them into forcing him to do what he wants to do anyway. The defining moment of his Presidency is about to come.
Funny how white “liberals” love to call the black guy “illiterate” this or “illiterate” that.
what makes you think I am white or liberal or have your racial hang-ups?
For the record, only one of the above is true.
Well-said.
He is economically illiterate.
The 14th amendment approach implies that the Treasury continues to pretend that it has to sell bonds to spend money, like a state or local government.
And in reality, the government will still be “borrowing back” the money it created by spending it.
There are no net new interest payments, until the Fed starts to sell bonds to drain reserves from the finance sector ~ all interest payments on bonds held by the Fed go straight back to the Treasury account, once the FRB has covered its operating cost.
I meant that I agreed with him until know. I did not think Obama was a bad president at all. Like Booman thought.
The truth is that now I do think so. The blunders here are of such an epic scale.. the same epic scale than his smart moves leading to the successful health care reform. But I am afraid the implications for the future of the US make the past accomplishments moot in comparison. This was the fight he had to take on.
A pleasure
I’ll have to read the details, but my cautious comment is that it could have been a lot worse, as the fact the defense cutting is actually on the table is actually progress.
the wingers in Texas are really upset that their government pork, disguised as defense, is on the block.
Well, you’re a lot more civil about it than the jerky “People’s View” types, and I appreciate that. I shouldn’t be taking all that stuff personally, but I am. Oh well.
I should also add that I highly value that perspective here.
Really Booman please.
How do you know the 1.2 trillion cuts do not affect the short-term, really? I think they do. Check it!!
And the deficit commission will propose immediate spending cuts.. and if not, the trigger would do it. We are talking about spending cuts of the order of 200-400 billion from now till the election, which guarantees 8.5% unemployment (if we are lucky and the multiplier is not too large, which could very well be)
But the worse aspect here is that it no longer matters if we win or lose the house. The Senate will dictate economic policy by filibustering. There is nothing, I repeat nothing worse than that. Not even the Carter-meme, not even the destruction of macro 101, not even this fiasco.
This is the end of a certain type of World. It is certainly the end of any chance of center-left or centered government in 2012. And it blows my mind that you can not see it. I had you for a very smart guy.
A pleasure
Maybe you haven’t been reading me for long enough or something.
I’ve already factored in the fact that we’re fucked. That’s baked in the cake. Like a stock price. Same thing.
This doesn’t change a thing in that regard. We have nothing to hope for from the 2012 election. Nothing. All we have is something to fear.
Depressing? Sure. But the fear is still rational and we will be under attack whether we choose to shoot at ourselves or not.
I really don’t think we’ll see much cutting from this in the budget for ’12 and ’13. The world won’t blow up, so that’s good. And we’re done real damage to Republican cohesion and their brand.
It’s not the end of the world.
Upss..
I am sorry, I really did not read that. Now everything makes some sense.
I have to rethink what I said about you. It is really different if you see it that way.
A pleasure
And it’s not because of Obama. It’s because of the Senate.
Absolutely agree.
I had not reached the point where that was a given. I am not sure I agree with you that this was a given before. That’s why I think this is an absolute disaster, because now I think like you.
But I know where you are coming from. It makes sense from your perspective. It is internally coherent. I do not agree but I understand you. Good. This is why blogs are for.
A pleasure
Booman, This is a bit of an aside: It has struck me many times that there is something very unique about your way of thinking about our politics, something that is such a relief about your clear-eyed, non-wailing (but that doesn’t mean we aren’t fucked) way of looking at things. How did you get that way? What’s your background?
Okay, as you were..
My background? Born and raised in New Jersey. Lived in Princeton from the time I was one. Most of my closest friends are/were sons and daughters of Princeton professors. Went to Los Angeles when I graduated from high school and did a couple of years working and going to Santa Monica College. Then I transferred to Western Michigan University, in part because my grandparents lived there and my granddad was ailing. And I graduated from there with a BA in philosophy. Then I started working in the real world for a while until I was radicalized by the impeachment of Clinton and, eventually, I got involved in the Bill Bradley campaign. By 2004 I was working for ACORN.
Thank you. Not sure what I was looking for or what would’ve made me think: “Aha! That explains it!” Your mode of thinking just seems unusual. And I can’t imagine why you haven’t been named Sun King by now.
Anyway, thanks for answering.
I agree — more and more lately, I turn to Booman when I want to find a principled but sensible position, clearly argued and based on rational facts. Thanks, Booman.
Five years of global austerity and you say “the world want blow up”. I’m not so sure about the world. But I agree that there is little chance of Americans doing anything but hunkering down more. If there is any positive news it will likely come at the state or local level.
it certainly won’t come out of Washington DC. Not with the Senate we’re stuck with for the next four years.
You are totally wacked, Boo. There are OTHER DEBT CEILING RAISES TO COME. Unless this has ended deficit spending.
Which it has not.
And what will happen then? Obama will fold and concede before the fight, and we will lose more.
(Your emphasis.) That means these providers will be less likely to take Medicare patients, thus making obtaining health care more difficult for them. But, hey, this’ll “show the moderate voters what a train wreck the GOP is”, as if that hasn’t already been evident for the past 30 years. If 8 years of George Bush couldn’t convince them, what makes us think this debacle will?
Regarding interest on the debt – a serious question. Are we currently paying off any of the principal of the debt or are we just keeping pace with the interest?
This is one issue where I’m finding myself disagreeing with progressives. How are we supposed to lower health care costs if we don’t, I don’t know, start paying less for procedures? Do you propose we keep paying them unlimited amounts until single payer comes?
Absolutely right.
When this argument is made in any other context – We can’t reduce the profits going to our Overlords, or they’ll go Galt! – it is subject to mockery and scorn by progressives.
But, for some reason, the idea of keeping the size of checks the government writes to highly-paid health care providers suddenly turns them into devout libertarians.
Until we get a paying mechanism where health care costs start going down by procedure (all-payer, single-payer, Obama’s exchanges, etc), it’s either we start cutting money from doctors — why doesn’t the right wing ever attack the AMA, one of the largest unions out there? — or we kick people off of Medicare. Take your pick.
Attack the AMA? The Republicans have taken the lead in passing every “Doc Fix” in history, just as they take the lead in making sure that agricultural subsidies keep flowing to big agra.
Why don’t they take the lead in cutting the size of government checks paid to a wealthy, right-leaning constituency?
Hmm….I’m drawing a blank. Little help? Anyone?
You might not notice, but the MDs seem to be on the Republican side of the aisle – Coburn, Broun, Barrasso. They all seem to be specialist providers. And they all hate Medicare and Medicaid. They are already devout libertarians. And from what I see locally they are not alone.
What will happen is that some will go Galt and refuse to treat Medicare and Medicaid patients. Some will add on charges through creative coding that Medicare will stick to the patient or to Medicaid that states have to pick up. Those patients not dropped will reduce their health care visits and stretch out their medicines.
And hospitals will claim they will go broke if they cannot raise their prices. So they will micro-cost additional charges.
So patients will be stuck with charges that Medicare determines that the patient does not owe, but the provider will still dun the patient for those charges. And the patient will be caught between two large institutions.
The way that providers will be hurt is through less use by beneficiaries. So really the beneficiaries will be hurt.
Aren’t hospitals required to take Medicare patients?
Not sure, but we don’t want people getting care from hospitals.
Don’t know about hospitals, but I’m pretty sure private practice providers can choose whether to take medicare patients or not. Many don’t.
And that’s where this easy answer about cutting back payments is naive. Most hospitals have to take Medicare patients, I think, but doctors don’t, and in many places there’s a crisis developing already over lack of doctors, period. Unlike most of the folks who get most of the money — bankers, hedge-fund managers, lawyers, for example — doctors actually perform a vital function that is not a consequence of our own human errors. There are urban and rural hospitals that are barely hanging on because they accept the uninsured and make up for some of it with medicare and medicaid patients. They’re not the ones who deserve to pay for the idiocy of the country they live in.
County taxpayers here were asked to shoulder some of the local paramedic providers’ financial burden several years ago. The county pays the hospital around 500K a year from a local income tax surcharge. Our county is rural, with an overabundance of elderly. Medicare and Medicaid patients make up 40 – 50% of emergency runs, but Medicare and Medicaid reimbursements are not nearly enough to meet salaries and other expenses, so, either the buck stops with the patient, or in this case, local government, local taxpayer. Without true health care reform, those of us at the bottom of the food chain will pay one way or the other.
Congress crows about “savings” of programs and services shoved off on state government, and state legislators crow about the “savings” of unfunded mandates to counties, cities and towns. In the end, we pay anyway, or are just forced to do without.
“That means these providers will be less likely to take Medicare patients.”
Won’t happen. They depend on seniors. It’s basic common sense, seniors visit the doctors office more frequently than 30somethings.
If they’re gonna depend on young and middle aged patients then they’re gonna have to sell their Saabs and vacation homes.
Where I live it’s harder and harder to find doctors who take Medicare — they say the money just doesn’t make up for the bureaucratic mess they have to pay staff to try and straighten out. Only a whole new system can fix the healthcare disaster that’s creeping up on us in the near future. Just cutting money without reform is no answer.
medical school. I think that was in one version of ACA but may have been cut in the end. Still that is the best way to make it easier for physicians to accept lower payments.
Also we need to look at tort reform and/or subsidize malpractice insurance. I know progressives scoff at that but malpractice insurance is a big expense. Not to mention defensice medicine is a fact and drives up costs.
Malpractice INSURANCE is a big expense. Tort reform won’t fix that.
If tort reform keeps the lawsuits down then MI costs won’t grow like they have been
But it won’t. Tort reform will just kill patients’ rights. It’s already been enacted in several states, and it didn’t do anything. Regulation of the malpractice insurance companies has shown some results in California I think.
Tort reform just allow incompetent doctors to remain incompetent.
I agree.
It’s not an answer to the long-term problem, but if we’re going to cut Medicare spending it’s all we’ve got. It’s going to drown itself if we don’t. Medicare already pays double for a lot of the same procedures that Canadian doctors do…
I’m not sure what kind of reform you have in mind, but most reform is going to cause doctors to take a substantial paycut regardless.
We can stop the first downside by kicking the tea baggers out of office and getting a better majority in the Senate. This terrorist hostage stuff will stop when they start losing elections. And they won’t lose elections with wing nuts on both sides blaming the president.
I hate it but I’m also tired.
I will say that this debacle has hardened my hatred for Republicans to the nth degree. That alone is enough to get me to vote Dem again and again.
As for Obama, bleh.
I’m not going to develop an opinion about this until I see what the cuts are. But still….even the first $900 billion seems huge to me, assuming this is $90 billion a year cut out of a discretionary budget of $800 billion. That’s an 11% cut in education, research, transportation, housing, energy, etc.
And that’s before the next tranche of cuts, proposed by the commission.
I assume there must be some accounting trick here I don’t know about, because even the first tranche seems murderous.
On the other hand, if this allows us to finally pare down the cold war+GWOT from it’s current bloated levels, I’m delighted. We currently pay as much for defense as we did at the height of the cold war. It’s ridiculous.
assuming this is $90 billion a year cut out of a discretionary budget of $800 billion
I’m not sure that’s a safe assumption. The TPM report says “discretionary” not “non-defense discretionary.” The military budget is over $700 billion per year.
Here is the link
“House Speaker John A. Boehner was attempting to scale back the $350 billion in immediate Pentagon cuts that would be included in the initial $1 trillion in spending cuts. Democrats said Mr. Boehner was also trying to minimize the amount of automatic cuts to defense spending that would occur if a special congressional committee was unable to reach a broader agreement later this year.”
http://thecaucus.blogs.nytimes.com/2011/07/31/reid-hopes-for-sunday-night-debt-vote/?smid=tw-nytimes
politics&seid=auto
Ok, if this is true, it is 65 billion drag per year on average (supposing the Defense budget is cut on wars)
Now if this is phased in linearly Booman is right, this would have almost no effect during the elections.. provided the commission does not add any further cuts. If it hits 2012 with 65 billion, we are in deep trouble
I think the commission will provide the same amount of cuts at the end, and all of them will apply to 2012. So it will be around 120-140 billion spending cut in election year for 2012.. this is the definition of craziness.
A pleasure
It’s $900 billion, not $1 trillion in the first round, so that would bring us down to $55 billion per year in non-defense cuts.
Also, they have been including reductions in interest payments caused by actual deficit reduction in their calculation of cuts, so that brings us down below $50 billion per year in non-defense cuts. It doesn’t take a whole lot of back-loading to make the first couple of years irrelevant in the sense of Keynesian stimulus/retrenchment.
and all of them will apply to 2012
I don’t see why you’d assume this.
The most optimistic scenario would be a 40 billion defense cut upfront, with 50 billion in non-discretionary. This is a 5% cut of discretionary spending. If it is pushed in linearly, then the fiscal drag will me minimum before the election. Not something that the FED can not compensate with QE3.
if it is equally distributed even 50 billion is very important. On the other hand 90 billion starting in 2012 plus the winding down of the stimulus is a disaster. I see less than 1% growth with certainty. This means around 9% unemployment during the election.
Words fail me. It would be awful. And if you add that the commission adds another 90-140 billion in 2012, we are entering double dip recession territory.
A pleasure
I did the same math as you. This is not only a huge blow to the middle class, as expected when you elect a republican congress.. if these cuts are implemented in 2012 and 2013 it means a fiscal drag which is very large. Unless these cuts are implemented with a smooth ramp I really do not expect unemployment to reach below 8.5% after this deal. If I would have to bet, I would say 9-9.5% by election day.
From what I read, the cuts will be equally distributed during the ten-year period. I would like to have confirmation though.
A pleasure
I like the possible $950B cuts to defense. That is something we all should celebrate. I get possible $950B from the $350 included in the first round of cuts (35-40% of the cuts ) and the possible $600B (50% of $1.2 trillion) in the second round.
I like that the second round raise will happen one way or another without another vote
I like that programs for the poor and veterans are exempted from cuts
I like that the second round includes possible revenues and that it doesn’t take letting the tax cuts expire off the table
I am not sure on providers for Medicare. If that is taking on prescription drugs that is good. If that is encouraging hospitals to not bill by procedure and test but rather take a more wholistic approach that is good. If it cutting payment rates to doctors, in particular primary care, that is bad. As a side note the way to get doctors to accept less is to subsidize their education. That would be penny wise
I really hate that revenues are not included in the first round
. The moment the polls closed last November the only operative question was ‘how bad?’
There’s a third downside — I’m still not married to Emma Thompson, which event the bookies have quoted at the same odds as ‘more stimulus’.
well, we might have extended the payroll tax holiday, at least. I think that ought to be possible.
rate kept on.
That’s been neutered. The Left decided months ago that’s actually an SS cut.
my heart bleeds….
And once again the Democrats inability to eliminate the filibuster is used against them and gives power to the minority over the negotiations when with majority rules, they would have very little in Senate.
Check back with me on the wisdom of the filibuster in March of ’13.
In March 2013 the Republican-controlled senate will eliminate the filibuster.
We all know it’s true.
before because they know what goes around comes around.
And because they know that if the left had a chance to truly govern as they saw fit, the GOP would never touch power for another 30 years.
GOP will totally eliminate the filibuster once they control the Senate. I am totally OK with it being eliminated regardless of political although I would not like outcomes of GOP. 41 members out of 100 should not have complete veto power over the whole USA government from doing anything.
No .. they didn’t need to bother with it .. why would they .. when Max Baucus and Kent Conrad(among a few others) would vote with the GOP if they controlled the Senate?
“it’s not the end of the world”
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It depends on who you talk to.
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“Not the end of the world” HAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHA
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That’s great. “not the end of the world”. You’re right though, it DOES depend on who you talk to: if you’re a very rich person, you probably don’t have much of a problem with it. Anyone else is just fucked. Including the president, who’s going to have to explain to his supporters how it is the republicans got everything they wanted, AGAIN.
“not the end of the world”. Holy SHIT. That’s like my new catchphrase.
“who’s going to have to explain to his supporters how it is the republicans got everything they wanted, AGAIN.”
Shouldn’t be too hard. The blogosphere has never supported Obama.
It’s kinda hard withhold support he’s never had.
http://www.boomantribune.com/story/2008/1/10/10557/7242
my mom and dad are in their 60s. Both of them have been politically active for forever; until recently, my dad was a delegate to the Democratic party from his county in NJ. I pushed them to vote for Obama. Although they both favored Clinton, slightly, they eventually came around to Obama. They have been democrats forever.
My mom and dad are old new york city people. Dad was born in 42, mom in 48. my mom grew up in jackson heights, the 1st american generation of german/swiss immigrants. I have these really old memories from when I was 3 of the cemetery that was in their back yard. My dad grew up in flatbush in one of the affordable houses Donald Trump’s dad built for middle class families: his parents were first generation americans. My grandma grew up in the jewish slums of the lower east side, her parents were poles and russians.
My dad sometimes reads blogs, but his real frame of reference is the New York Times, and cable TV news (excluding fox, which he refuses to watch). he doesn’t really like blogs that much. My mom reads the NYT and has had to force herself to stop watching the TV news.
They are not elites: my mom the housewife never did much college after high school, my dad has a masters in math or something and worked for IBM as a programmer most of his life. Both of them are thoroughly disgusted and angry with the president and the Democratic party, for reasons they will gladly articulate to you.
it’s not just the blogosphere.
what is particularly maddening to me is that I have seen this trick before. We went through this with our Mayor two years ago when he wanted to close the libraries and pools. he held these fake-ass town halls where participants were given a variety of choices of where to cut, but somehow all sorts of funding streams weren’t provided. You could only choose from the selections the mayor’s people offered. it is much the same here: the president exhorted americans to call their reps in support for one of two entirely awful economic plans. So now, no one can complain. After all, it’s what you wanted. we’re all hoover now!
And I bet your parents are proud that you were dancing with glee and celebrating this deal because you thing it makes Obama look bad.
And I wonder who your parents are getting their opinions from? You.
Unless of course its yupicly “Goddam Obama!” “Uh huh, what do you want for dinner?” “I’m so glad you agree with me!” “Uh Huh. So, Lasagne?”
He’s not celebrating the deal because it makes Obama look bad. Are you out of your mind?
So you missed the full page of HAHAHAHAHAHAHAHAHAHHAHAHHAAHAHA at the top of the thread there then.
He’s laughing because Booman’s phrase “It’s not the end of the world” was completely ridiculous to him.
Siranus has reading comprehension problems. It’s typical O-bot behavior: everything boils down to “Obama can do no wrong, and if you disagree with him it’s because you hate him and want him to fail”.
That’s absurd on its face, and anyone who believes what Siranus believes is an IDIOT. The fact of the matter is I voted for Obama, and convinced my parents to vote for him too. It took some work, since it seemed like a rehash of Bill Clinton’s “man from hope” campaign, and we know how THAT turned out. But Booman personally, as well as other commenters here, got me on board. I gave some money. Put a sign on my lawn. Got my parents to flip. Got in huge fights with other bloggers, who I believed were being unfair to the Obama candidacy. I Voted. I actually WAS hopeful, for the first time in years. And after all that, I didn’t just wake up one morning and decide “I hate Obama”.
Some people, Seabe, think on a very shallow level. Siranus is one of them.
Same here. Sure, Obama wasn’t my first choice, but my first choices are always the ones who drop out after New Hampshire or Iowa when they win 2.5% of the vote; so I’m ready as anyone to get behind the nominee.
I registered well over 200 voters in a district where Obama won by 1,200 votes; I worked 40 hour weeks ON TOP OF an engineering schedule. In fact, I failed an entire semester for Obama (it’s why it took me 5 years to graduate instead of 4). I made calls in Pennsylvania for my friend Colin who was head of Obama’s campaign in a major swing region; I made calls in Nevada for the director of the state, although I still don’t know her real name because she posted on FB under a pseudonym so as not to get in trouble from the campaign. Etc etc etc. So I don’t need anyone questioning my loyalty, either.
Reminds me of home. People move here because its a nice, scenic, quiet place to live, but within 6 months, a few of them are whining at the county commissioners because their little dead-end road is dusty, or some other complaint because we’re “rural and obviously (to them) stupid”. My advice to them – get to know the neighbors just a little first. Funny, I didn’t have a bit of trouble getting your meaning.
wow, you’re really fucking stupid aren’t you? I don’t care is “obama looks bad”, what do you think I am, a 14 year old child?
what i care about, and what anyone with a functioning brain should care about is that this deal won’t help anyone. it’s a piece of shit, and my parents hate it too. They are approaching 70 and don’t beed me to make their opinions.
Tell you what Siranus, come back when you have an understanding of politics that goes beyond a high school popularity contest.
The name is Suranis. Its a deliberate mangling of the gaelic Sur and Anois, which roughly comes to together as meaning “be sure of now”
And you accuse me of reading comprehension problems. rolls eyes
i know what I’m doing with your name. It’s deliberate.
And yes, you DO have a reading comprehension problem. You also have a problem with attributing motives to people you know nothing about. As my other response demonstrates, I was an Obama supporter. I got other people to vote for him. This idea that I just magically woke up one day, and decided to hate obama, is stupid. And anyone who would take that position is also, by definition, stupid.
O.k., so you are deliberately making yourself look like an immature homophobic prat. Fair enough.
May I suggest that you have a problem with attributing problems to people you know nothing about?
This is a very nice post. See how this contrasts with your prior posts.
Reflexively blaming Obama for everything like Greenwald doesn’t solve anything.
Let’s remember who we’re dealing with. 15 years ago, the republicans shut down government twice. Not once, but twice. They paid a minor political price (only losing 6 seats in the 1996 election), but the people who were denied government services paid a greater price.
This time they wanted to crash the economy. In the end the would have paid a price, no doubt about that, but the unemployment rolls would have swelled by 5 to 10 million.
Using the 14th amendment is fine, but without some reduction package, the credit rating would have downgraded forcing up interest rates. A spike in interest rates would have been a regressive hit on average and indigent Americans.
Some people say if you played to public opinion they would have folded. But there’s no evidence to support that. Just this year they all voted to kill medicare even though the polls were overwhelmingly against it. On the eve of the 2008 election they cut their own throats by tanking the first TARP vote damaging an already wounded economy. In 2006, they all stood behind Bush and Iraq even though they both had 60 percent disapproval ratings.
If you’re demanding an explanation why republicans get everything they want, then it’s sad to see you’re repressing the meaning of repealing DADT, saving Detroit, preventing a 2nd great depression, challenging DOMA, raising CAFE standards to 55 mph, withdrawing from Iraq, passing a landmark food safety bill and nuclear arms treaty, increasing coverage of SCHIP by 4 million, authorizing stem cell research, passing the Lilly Ledbetter act, the Matthew Shepard act, landmark student loan reform, the ACA, the Consumer Protection Agency, increasing Pell grants 31%, and on and on.
Obama’s biggest flaw may be not promoting the breath of his accomplishments in such a short period of time.
The blogosphere is polluted with Obamabots.
And it depends on who you are. This is a net loss for the Democratic paty in my humble opinion. Hide and watch and you will see. Obama made the bad hand he was dealt even worse by playing poorly. Booman is deluded.
Here’s a real Dr. Pangloss take on it.
Democrats howl. The press say that Obama rolled over. Republicans celebrate how good it is….and Republicans own it.
To the interviewers in six months who ask Obama how he could let something like that happen, he says that’s what the public said they wanted in the 2010 election. Elections have consequences that last minute phone calls cannot undo.
Is there anything less impressive than the forced-laughter thingy in an blog comment thread? You know, like “You really think Coke is better than Pepsi? ROTFLMAO!!!!!11!!”
There answer is, yes, there is: the forced-laughter thingy in a blog comment thread, followed by an unexplained link to Glenn Greenwald.
You really should ask yourself why you are celebrating. Were you secretly cheering when the Dems lost in 2010 too? Are you hoping that the country falls apart so you can blame Obama? If so, whats the difference between you and Rush Limbaugh?
Do you kiss your little picture of The Messiah, His Holiness, the Barack BEFORE or AFTER you fall on your knees and thank the almighty for the gift of Barack?
Just wondering if your adoration can get ANY more slavish and nauseating?
… of a total disaster.
Yes, that’s very, very heartening.
We came out far behind the Republicans, of course, and the ‘baggers have shown they have more influence on the White House than the dirty hippies, but I guess we have to be realistic and politically astute and shit.
That’s because the Tea Party has a caucus that will vote in lockstep with them to get their objectives as far down the road as possible.
But Democrats are saddled with Kent Conrad pocketing legislation in the Budget Committee and Max Baucus pocketing legislation in the Finance Committee. Now that he’s tried to destroy the Democratic Party and the country, in 2012 Kent Conrad is retiring. Isn’t that sweet.
Conrad gets to retire in the vacation home that the Banks got him a zero interest loan on. Aint Life Grand
…do the dirty hippies hold?
We came out far behind the Republicans
That’s not actually true. Did you, by any chance, bother consulting any polls about how this is playing before drawing that conclusion?
Or did you just check your gut and/or some blog comment threads?