I think there is a real risk that going over the cliff could cause some panic in the markets and that we might wind up in a cage-match to restore priorities in the budget that have been sequestered. So, I am not this sanguine about the prospect. Still, could it really break the fever?
About The Author
BooMan
Martin Longman a contributing editor at the Washington Monthly. He is also the founder of Booman Tribune and Progress Pond. He has a degree in philosophy from Western Michigan University.
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Real accomplishments.
(1) An end to the Bush tax cuts. Period. Any middle class tax cuts do not have to follow the Bush tax cut model. And it’s done without Congressional action.
(2) Sequestration of $50 billion of military spending, without Congress doing anything.
(3) No, zero, nada change in Social Security, Medicare, Medicaid, veterans benefits, or military pay and benefits.
(4) Some of the discretionary sequestration is of programs that should have been killed long ago.
(5) We get to see which gored oxen and sacred cows scream the loudest from the GOP side, as the discretionary cuts are across the board. If the GOP can’t “man up” and say straightforwardly what they would cut, this automatically forces them to replace what they would otherwise dance around to hold harmless.
I’m with you completely. Obama gets to decide once and for all whether he’s a centrist who will make a bad deal to “get something done” or a brilliant tactician who has pushed Republicans into a corner from which they cannot escape.
I’ve been long advocating the position that Obama’s the latter, but in my heart of hearts, when I really tell the truth, I’ve been giving him the benefit of the doubt. I fear that he’ll cut a bad deal. If he does, I will be aggravated and, further, will admit to my friends who think I’m nuts that they were correct.
My deeper sense, which is driven as much by intuition as evidence, is that Obama will not cave without getting a really excellent deal which will make it all worthwhile — all of which means we’re going over the cliff. Hope I’m right. We’ll see.
I agree completely.
I just don’t see him doing a bad deal. When he agreed to all this, he certainly must have taken into consideration that no deal could be done and the cuts would take effect.
Frankly, I just don’t see a LONG TERM downside to any off this. Let it all go. Yes, it is ‘austerity’, but it’s mainly spread out over ten years (I know, not all of it).
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If it’s an excellent deal then it’s not caving.
4) Includes a projected ~7% cut to the NIH, after years of growth stagnation (which are effective cuts). Speaking as someone who is funded by the NIH, this is not insignificant. The entire biomedical research community – industry included – depends on NIH-funded research.
I agree that the fiscal cliff is not as bad as conservatives are hoping that it will be, but there are real consequences.
The the industry can go breathe down the necks of the House Republicans to put back the cuts come January. The House GOP caucus is the one that has the power of the purse.
Interesting news. The Fed just raised it’s inflation target to 2.5% and lowered its unemployment target to 6.5%. I’m thinking that going over the cliff is going to be offset by a Fed money dump.
The only possible fever-breaker would be a post-2014 Democrat House and filibuster-proof Democratic Senate with the combative version-2.0 President Obama (as opposed to the one who tried to play fair early in his first term.
That, or maybe Rupert Murdoch and/or Roger Ailes dropping dead or being sent to prison for life.
How about creating disarray and infighting that make it impossible to engage in mass delusion in a singular fashion?
No. You seem to want to save the GOP from itself. There is no scenario in which a more effective GOP is good for Obama. There may be some short-term tactical advantage to offering a compromise which ends up dividing the GOP, but it may also end up dividing congressional Dems and put entitlements etc. into play.
But the bigger picture is that this is not about reaching some compromise somewhere around the mid point of current GOP and Dem positions, it is about moving the Overton window altogether. The mid point shifts substantially in the Dems favour once you are on the far side of the “Cliff.”
With an improving economy and accomodative Fed policies, the Cliff need not be very bad from a Dem point of view in any case as Tarheeldem has demonstrated. How else can you get tax increases and Military spending reductions and with the GOP getting the blame?
How else can Obama avoid being held to ransom every time a budget needs approving or a debt ceiling needs raising? What chance has Obama of of getting any of his agenda passed if he gives away the only leverage he will have in the next two years?
This is a war, and in a war you don’t give your adversary a second chance when you have a temporary advantage. You go for the kill while you can. And if you fail to do so you will be treated with contempt by yoor adversaries and despair by your own side.
Obama’s second term would essentially be over before it has begun.
did you read the link?
Yep, and I substantially agree with it. BTW, “the markets” are the least of Obama’s worries in the short term. A correction now is not a problem. An ongoing stagnation/fall due to ongoing budgetary/debt ceiling uncertainty is.
What I am not clear on is ho much discretion Obama has to decide where military/discretionary cuts should fall. Savings due to an accelerated withdrawal from Afghanistan and a reduction in US forces oversea will drive the GOP mad, but need not be deflationary in a domestic context. Savings in military procurement will drive GOP donors mad. Savings in corporate contracts and welfare generally will drive GOP donors mad.
I am also not clear to what extent Obama could replace extended unemployment benefits with low interest loans to alleviate hardship and ameliorate any deflationary impact. After all, any such “loans” would add to individual, not Federal, debt and could always be forgiven if/when Dems get a majority in congress.
The markets will be OK and not panic. They could be down a bit though. Markets also know that “cliff” is a really inaccurate metaphor for this. And retail investors are still not participating as much as they did in the past. Many have stayed out since the last big days of panic selling.
There may be more end of year loss sales. Some investors are holding some cash and see this as a buying opportunity.
Marketwise, IMHO the biggest concern is still the later debt ceiling negotiations and how treasury markets will react to that.
How do Republicans ever expect to gain the White House, if they hold Immigration Reform hostage too. The Republicans, are digging a hole and won’t stop digging.
And it appears Obama is handing them shovels, and clearing the dirt from the edge so they have room for more.
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“Please proceed, Governor”
Screw the markets! If GOP morons dump good stocks, I’m waiting with cash in my IRA looking for a good deal. I mentioned before that I made 24% on Volkswagen because of Chicken Littles crying that the sky was falling. That’s an annual rate of 35.9%. I’m waiting with $33K in cash to buy some more good companies for a song.
Since this cliff panic started I’ve made an annual rate of 134.7% on Northrop-Grumman. I know that AG’s Permagov will always be there for them. Note: I apologize for dabbling in this blood diamond. The devil made me do it.
Correction: I just updated my portfolio quotes and Northrop is up another 2.1% making it 155% annual.
I’d be more impressed with an article about why Boehner and house Republicans ought not to go over the cliff.
Scheiber is just another guy putting the pressure on O and the Democrats, trying to make it our fault.
Even if he is a liberal and it’s inadvertent, that’s what this kind of crap does.
What a jerk.
take it back. wish i could erase.