The Chart That Should Accompany All Discussions of the Debt Ceiling
source: http://cdn.theatlantic.com/static/mt/assets/jamesfallows/assets_c/2011/07/24editorial_graph2...
-
-
- letsliveinpeace
- added this
http://cdn.theatlantic.com/static/mt/assets/jamesfallows/assets_c/2011/07/24edit...
It's based on data from the Congressional Budget Office and the Center on Budget and Policy Priorities. Its significance is not partisan (who's "to blame" for the deficit) but intellectual. It demonstrates the utter incoherence of being very concerned about a structural federal deficit but ruling out of consideration the policy that was largest single contributor to that deficit, namely the Bush-era tax cuts.
An additional significance of the chart: it identifies policy changes, the things over which Congress and Administration have some control, as opposed to largely external shocks -- like the repercussions of the 9/11 attacks or the deep worldwide recession following the 2008 financial crisis. Those external events make a big difference in the deficit, and they are the major reason why deficits have increased faster in absolute terms during Obama's first two years that during the last two under Bush. (In a recession, tax revenues plunge, and government spending goes up - partly because of automatic programs like unemployment insurance, and partly in a deliberate attempt to keep the recession from getting worse.) If you want, you could even put the spending for wars in Iraq and Afghanistan in this category: those were policy choices, but right or wrong they came in response to an external shock.
The point is that governments can respond to but not control external shocks. That's why we call them "shocks." Governments can control their policies. And the policy that did the most to magnify future deficits is the Bush-era tax cuts. You could argue that the stimulative effect of those cuts is worth it ("deficits don't matter" etc). But you cannot logically argue that we absolutely must reduce deficits, but that we absolutely must also preserve every penny of those tax cuts. Which I believe precisely describes the House Republican position.
After the jump, from a previous "The Chart That Should..." positing, an illustration of the respective roles of external shock and deliberate policy change in creating the deficit.
http://t.co/KErphYU
-
- groups:
- Community, Culture, Current Cultural Issues, Greatest Depression, 2 more
-
- tags:
- Government, Debt, Graphics, Debt Ceiling, 2 more
-
-
remanns
-
Good grief ! ( GOOD GRAPH ! )
- 10 months ago
-
remanns
-
-
letsliveinpeace
-
-
More: For how the Democrats are mishandling both the politics and the substance of this argument, see Joshua Green on "The Democrats Cave."
For how President Obama could use his inherent powers, in a "This is bullshit" way, see Robert Kuttner.
Obama Holds the Cards -- If He Will Play Them Well
Here are a couple of things to keep in mind as the great contrived national debt crisis enters its final week.
First, the Republicans are starting to lose whatever credibility they had with the broad public, as regular people finally start focusing on this story. The economic stakes are very high, President Obama was willing to give them most of the loaf, and they still wouldn't make a deal.
Second, no matter what the White House and Speaker Boehner claim, there is no way to do a big complex budget agreement between now and next week. The details are far too complex. Even the Gang of Six proposal was nothing more than broad outlines.
Third, as this drama goes down to the wire, and financial markets begin to contemplate the possibility that the United States will actually default on its debts, the pressure on the Republicans by their Wall Street allies will only grow.
At some point this week, stock and bond markets will begin to start swooning, and the usual wise guys will begin making high-risk bets at the expense of financial stability as a whole. Credit rating agencies, which should be accorded zero credibility after their role in causing the financial collapse by blessing junk sub-prime securities as Triple-A, could start downgrading the debt of the United States.
And then things will get really interesting. The President of the United States will be revealed to be holding more of the cards -- if he has the nerve to start playing his hand well (for a change).
At that point, there are only two basic choices. Either the Republicans and the White House agree to some kind of short- or medium-term increase in the debt ceiling, in exchange for some kind of deal with details to be supplied later. Or the president invokes the 14th Amendment and declares that the debts of the United States will be paid.
Under the first option, the deal could include a target figure for budget cuts, perhaps with relative tax increases and spending cuts spelled out -- perhaps not. It could also include some kind of "fast track" process for Congress to give the budget deal an up or down vote after the details are filled in.
One of the gimmicks being discussed is for a "super-Congress" that would come back with a long-term deal for the actual Congress to vote up or down -- a kind of mutant hybrid of the Bowles-Simpson Commission and the Gang of Six, on steroids.
I don't trust that end-game, because it gives too much power to all the forces of austerity that have been too dominant in this debate all year. And it creates too much risk of Democrats being stampeded to give up too much on Social Security and Medicare and get too little in the way of tax hikes on the rich in return.
http://www.huffingtonpost.com/robert-kuttner/obama-holds-the-cards-if-_b_908190....
- 10 months ago
-
letsliveinpeace
