This Week’s Mtg: Deficit Reduction, Round II

Didn’t the politicians just do deficit reduction?   Yeah, but now comes Round II.  To refresh your
memories, in July of this year, the Congressional GOP graciously agreed not to destroy the economy; i.e., they reached a deal with President Obama to raise the federal government’s debt ceiling through 2013 so the U.S. government could pay its past bills.  (Most of which had
been run up by the Bush administration’s tax cuts and unpaid-for spending; and the recession.  But, never mind that).

This agreement set up a special deficit-reducing “supercommittee” that is supposed to recommend by November 23 at least $1.2 trillion in deficit reduction measures.  If the 12-member panel (made up of six Democratic and six Republican members of the House and Senate) fail to reach agreement and the Congress fails to pass it into law, then enormous spending cuts would automatically kick in in January 2013, after the election.  One-half of these cuts would be to defense spending and the other half to other federal programs, excluding Social Security, Medicaid and some other poverty programs.  The idea was that the looming defense cuts (and, separately, the looming expiration of Bush’s tax cuts – all of them) would incentivize Republicans members of the supercommittee to compromise on taxes, and the catastrophic cuts to non-defense discretionary programs would incentive Democrats to compromise on spending.  The supercommittee has been quietly plugging along and it’s hard to tell where they are at.

So, what’s to talk about?  Well, I promised you something novel.  It occurred to me that I could explain in plain English what’s in the many different deficit-reduction proposals that have been floating around: The House’s Paul Ryan plan, the Simpson-Bowles plan, and Obama’s own ambitious deficit reduction proposal of September.  Since this could get a little dry, I’ll keep it very big-picture, and add a little background.

I’ll focus my intro on:

  • How we got here:  What’s causing the deficit, and what has already been done by Obama and two previous agreements Obama has made with the GOP.
  • The Supercommittee: What its mandate is and what will happen if no agreement gets passed.
  • The op. cit. competing plans that supercommittee might use as a template.

Just so you know, most observers think the supercommittee will fail to reach agreement.  All six GOP members of the panel have signed Grover Norquist’s “no new taxes” for any reason pledge and show no public sign of budging.  In addition, every single GOP presidential contender has publicly stated that a ratio of 10:1 spending cuts to tax increases would be an unacceptable supercommittee “compromise.”  So, we’re realty beyond the looking glass here.  Still, you never know.

DISCUSSION QUESTIONS

  1. Is the supercommittee for real, or is it just for show and doomed to failure?
  2. What kinds of compromises would be acceptable to you?  Why?
  3. What does the public really want?  Could reasonable people (as opposed to our politicians) reach any compromise on this stuff?
  4. Would Obama and the Democrats be better off politically accepting another lousy compromise, or should they reject one that is bad?
    .

LINKS –

Finally, having bashed the Right, I feel the need to make one more point:  We need to keep in mind not just what we (mostly liberals) would want in deficit reduction, but also what the public will accept and what our leaders might actually compromise on.

See you all there…

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3 responses

  1. Bush ran up $6 trillion of red ink in eight years.

    Obama has run up $3 trillion in debt in 3 years. He is every bit as bad, and on pace to be much worse.

    1. Your numbers sound roughly right. There’s a major difference, though. Bush started with a surplus and slashed taxes and raised spending irresponsibly. His tax cuts went mostly to upper income households, at a time wqhen their incomes were rapidly rising anyway, and he did not raise any more revenue to pay for the wars or his Medicare prescription drug benefit. What we got for these policies was a decade of stagnant wages and incomes for almost all Americans, plus a gigantic budget deficit that crippled his successor’s ability to respond to the crisis when the big recession began in 2008. Since then, Republicans in Congress have refused to do anything to reduce the deficit except for trying to gut popular social programs like Medicare that they hate for ideological reasons. Obama cannot act without congressional approval. That is why there is a supercommittee.

      In contrast, Obama’s spending increases were almost entirely automatic stabilizer spending to combat the recession; e.g., increases in unemployment insurance, increased enrollment in Medicaid, and the stimulus to arrest the collapse (which worked by the way). We will see if the GOP is serious shortly: Will they continue to refuse any tax increases of any kind, even for millionaires and billionaries? Since 80% of federal spending goes to five big, popular programs, it’s just posturing to be for deficit reduction while simultaneuosly being against any and all tax increases.

      I’d love it if you would read the two posts of mine I linked to in this post. they provide the evidence for what Im saying,

      Still, thanks for commenting. If you’re in San Diego, we’d love to hear your views at a meeting sometime.

  2. I agree with David’s comments. Also, the poster assumes that deficits are bad; in a time of economic recession, this is not necessarily true. Bush ran up his deficits during a time of expansion, during which he should, as Bill Clinton did, have thought of reducing the deficit.
    Now is surely not the time to do so.

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