So we're pleased to announce that Obama's budget proposal was better than expected. But that was mostly because we expected him to put Harry Reid in shackles and throw him into a pool filled with live sharks. Really, this is the type of stone-cold bargaining you get from the 44th President of the United States.
Really, negotiating with Obama is easier than beating a sackful of kittens, provided you're a Republican. It's a simple two step process. Start by abandoning your position. Then, shift your views just to the right of Attila the Hun. Then wait! Obama will inevitably assume your old position, meaning that you get the triple benefit of a) seeing your original plan passed, b) getting to push the American political debate to the far right, and c) being able to excoriate the President as a socialist for having the temerity of trying to pass a plan your originally supported.1 2
Success!
We can't blame Republicans, though. It only worked 1,293,939 times before Obama showed signs of catching on. And today he did, with a plan that was only tilted 3:1 in favor of spending cuts over tax increases, as opposed to the plan Paul Ryan favors, which involves striking the American middle class on the head with a large cartoon mallet before giving out tax breaks to super-rich bankers.
Still, while 3:1 is a marginal improvement compared to a plan that is actively insane, we feel we could do one better. So with no further ado, we present the Strawman Blogger Guide To Fixing America's Budget. You can thank us later.
The Strawman Blogger Guide To Fixing America's Budget: The Short Version
"Dear Americans. What a stupid fucking debate we are having. Truly, I can think of nothing more productive than slashing spending in the middle of an anemic recovery after a crushing recession. Real GDP growth is being revised downward, from 1.9% to about 1.5%. Shit, I thought the first number was bad. It’s like we’re actually scared of returning to full employment."
"Still, much like a crank addict after a four-day dry spell, you demand more of what's killin' ya. So far be it for me to complain. What follows is my edifying and entirely reasonable plan for fixing the budget."
"Our long term deficit is caused by nothing more than Medicare. Luckily, the Affordable Care Act had many promising cost controls that even Ryan recognized and kept in his plan, so I plan to defend and promote that act to help correct the path of the Medicare cost curve.”
“Our medium term deficit is exacerbated by the irresponsibility of the unfunded Bush tax breaks, many for the richest Americans. In this time of shared sacrifice, I’ll let those expire. Social Security, on the other hand, is fundamentally sound. Its minor budget problems can almost entirely solved by lifting the payroll tax cap, so I’ll veto any bill that cuts benefits and puts retirees at further risk of poverty. The non-defense discretionary budget is not the driver of our long term deficit, so while I welcome reforms, accountability, and the right priorities, I won’t accept cuts to the social programs that assist the needy and promote the well being of the our country, like Pell Grants, child nutrition, or funds for scientific research.”
“Finally, our short term budget deficit it caused by the collapsing tax revenues due to this recession. As good, honest, hard working Americans struggle to find jobs, they have more need of programs like unemployment insurance and pay less in taxes. Solving this problem means putting America back to work. So I will follow with plans for short term deficit spending to increase demand, spur jobs, and make it easier for business to hire. I also believe that the Federal Reserve is staffed by of a bunch of arrogant white mincing venal ex-investment bankers who’s minds have long ago been wasted away by the furious pace of their socially damaging rent-seeking, and as a result are too childish, close minded, and blinded by epistemic closure to notice that their slavish ignorance of 8.9% unemployment and below-average inflation is destroying the country. So here are my list of nominations for all vacant Fed chairs.”
“While Republicans may have you believe that we can afford our society, but not accept the adult responsibility of paying for it, I know that Americans are mature enough to believe differently. What we pay for our government has not changed substantially over the last fifty years. Outside of health, the cost of our government has not changed substantially in forty years. But our taxes have changed. We pay less today than at any other time in modern history. Most of all the rich, who have appropriated the fruits of this country's labor while advocating the ridiculous notion that they have no responsibility to pay for its care. That is got to change.”
Then I’d have graphs. I fucking love me a graph.
1Great example of this: The Affordable Care Act, which we prefer to call the Dole/Daschle Health Care Care Plan Of Awesomeness.
2Another great example of this: The 2011 budget fight, which played out like this. REPUBLICANS: We demand 33 billion in cuts! DEMOCRATS: Never! REPUBLICANS: Then we demand 70 billion in cuts! DEMOCRATS: How about 38 billion? REPUBLICANS: Socialists! But ok.
Showing posts with label deficit. Show all posts
Showing posts with label deficit. Show all posts
Wednesday, April 13, 2011
Thoughts That Still Mystify Us, Part 2
Our entire medium-term deficit problem can be solved by repealing the Bush-era tax cuts, which fans of deficit spending will be pleased to recall were entirely financed on the nation's credit card. Not that we're complaining! It takes really committed ignorance to reduce taxes to their lowest levels in modern history.
Monday, February 14, 2011
On The Non-Useful Non-Defense Discretionary Spending Cuts
Better late than never: Our thoughts on last week:
Without making too big a fuss over the spending cuts released by the House today, a few quick points.
First, the cuts are brutal and deep, and they are disproportionately brutal and deep for the poorest among us. It costs relatively little to fund nutrition assistance to the needy, but it does enormous good.
But the cuts are hardest on some of the services we need the most. Education, Labor, and HHS: 7.3%. Transportation: 15%. Energy Development: 11.5%. It's a dystopian future the House imagines for us. Reduced investment in education and infrastructure, increased reliance on fossil fuels, kneecapped environmental protections, and an altogether heavier burden of poverty.
Secondly, let no one argue that they don't know the priorities of the Republican House. This is as much a manifesto as a budget authority. Even as they propose to take a hammer to social programs and regulatory authorities, they find room to increase defense spending by 3%. This is a fundamental debate on what the government should be involved in. The House's opinion? Not in helping the poor. Not in educating our children or building our highways. Not in regulating our banks.
Lastly, and most importantly, all of this highlights the uselessness of a non-defense discretionary spending cut. That type of spending is 15% of the federal budget - less, if you discount the Veterans Administration. And from that 15% comes almost everything we identify as government. The FBI. The Department of Education. Transportation grants. Nutrition assistance. Farm subsidies, if that's your thing. And if we cut every single one of these departments in entirety, we'll still be left with a government 85% as large as it is today.
15%? Christ. The DoD will make up that difference in a decade.
In return for that, we'll get a country that, with a degrading infrastructure and handicapped education system, is less able to meet the challenges of the next century. Something that is likely to make our budget problem worse, not better. It's a wonderful deal.
Maybe all of this would be understandable if taxes weren't near the lowest point they've been in history. But they are. Maybe if investors were demanding massive interest rates in return for purchasing government debt. They aren't. Maybe if the actions of the Fed were sparking widespread core inflation and crowding out business investment. But they haven't. This isn't an act of necessity. It's a choice. And it's a choice that speaks volumes of the eagerness and the ethics of the people who make it.
Without making too big a fuss over the spending cuts released by the House today, a few quick points.
First, the cuts are brutal and deep, and they are disproportionately brutal and deep for the poorest among us. It costs relatively little to fund nutrition assistance to the needy, but it does enormous good.
But the cuts are hardest on some of the services we need the most. Education, Labor, and HHS: 7.3%. Transportation: 15%. Energy Development: 11.5%. It's a dystopian future the House imagines for us. Reduced investment in education and infrastructure, increased reliance on fossil fuels, kneecapped environmental protections, and an altogether heavier burden of poverty.
Secondly, let no one argue that they don't know the priorities of the Republican House. This is as much a manifesto as a budget authority. Even as they propose to take a hammer to social programs and regulatory authorities, they find room to increase defense spending by 3%. This is a fundamental debate on what the government should be involved in. The House's opinion? Not in helping the poor. Not in educating our children or building our highways. Not in regulating our banks.
Lastly, and most importantly, all of this highlights the uselessness of a non-defense discretionary spending cut. That type of spending is 15% of the federal budget - less, if you discount the Veterans Administration. And from that 15% comes almost everything we identify as government. The FBI. The Department of Education. Transportation grants. Nutrition assistance. Farm subsidies, if that's your thing. And if we cut every single one of these departments in entirety, we'll still be left with a government 85% as large as it is today.
15%? Christ. The DoD will make up that difference in a decade.
In return for that, we'll get a country that, with a degrading infrastructure and handicapped education system, is less able to meet the challenges of the next century. Something that is likely to make our budget problem worse, not better. It's a wonderful deal.
Maybe all of this would be understandable if taxes weren't near the lowest point they've been in history. But they are. Maybe if investors were demanding massive interest rates in return for purchasing government debt. They aren't. Maybe if the actions of the Fed were sparking widespread core inflation and crowding out business investment. But they haven't. This isn't an act of necessity. It's a choice. And it's a choice that speaks volumes of the eagerness and the ethics of the people who make it.
Thursday, February 10, 2011
Swing For The Fences
So the House Republicans have sketched their plan to save $40 billion from the budget. It is as awesome as you would expect:
House Republicans sketched their vision for a smaller federal government Wednesday, proposing sharp spending cuts that would wipe out family planning programs, take 4,500 cops off the street and slice 10 percent from a food program that aids pregnant women and their babies. (emphasis added)Family planning and neonatal nutrition? Because that's what's holding America back. Our dangerous undersupply of malnourished babies.
Wednesday, June 30, 2010
Pah!
Obviously, it's been quiet times at the SMB. Again.
We'll kick things off in short order, but until then, play with this. It's a budget calculator that let's you tackle the intractable problem of America's debt.
To make it more interesting, the SMB lays down a challenge - respond by posting your best effort in the comments section. We won't burden you with any rules, but we do suggest you be realistic. If, for example, you decide to take the axe to Medicare, kindly explain how you'll convince Congress to cut a program that's supported by 70% of the population.
It should be instructive, if nothing else.
HT: Matt Yglesias
We'll kick things off in short order, but until then, play with this. It's a budget calculator that let's you tackle the intractable problem of America's debt.
To make it more interesting, the SMB lays down a challenge - respond by posting your best effort in the comments section. We won't burden you with any rules, but we do suggest you be realistic. If, for example, you decide to take the axe to Medicare, kindly explain how you'll convince Congress to cut a program that's supported by 70% of the population.
It should be instructive, if nothing else.
HT: Matt Yglesias
Thursday, April 1, 2010
The Idiocy Of The Common Man
don't ask for nothing!
If you are nothing,
don't ask for something!
- Arcade Fire, Neighborhood
As regular readers of this blog will note, the SMB has always tried to be the voice of reason in the noisy debate about the American deficit.
We're very fond of this role. It's not terribly difficult, doesn't involve a great deal of strenous research, and allows us frequent use of the term "dangerous idiots" along with plenty of time to drink red wine.
So we found this survey interesting. Follow along as we quote Ryan Avent, quoting Matthew Yglesias, paraphrasing the survey in question:
In this economy, voters are wary of raising taxes, even if the revenue raised goes to something they deem important, like paying down the deficit. A majority (51 percent) say that even though the deficit is a big problem, we should not raise taxes to bring it down, while only 43 percent say that we might have to raise taxes to reduce the deficit. This rejection is even more acute among the least educated and lowest income voters, who are being disproportionately hurt by the recession and as such are even more strident in their rejection of a new tax to pay down the deficit.
And by an even wider 2:1 margin, voters reject cuts in Social Security, Medicare or defense spending to bring the deficit down (61 to 30 percent). With nearly three-quarters of the federal budget devoted to these items, exempting them from cuts leaves little room to make realistic progress on deficit reduction...
Nearly half of voters think the deficit can be reduced without real cost to entitlements, with 48 percent believing there is enough waste and inefficiency in government spending for the deficit to be reduced through spending cuts while keeping health care, Social Security, unemployment benefits and other services from being hurt.
SweetfancyfuckingMoses. Pull yourselves together, people. Even in a country with the level of taste necessary to embrace James Patterson, William Kristol, and the musical stylings of Wham!, this is embarrassing. You can raise taxes. You can cut entitlement programs. But you cannot tightly shut your eyes, click your heels together, and wish aloud for the Magical Government Waste Fairy to alight on the CBO Projections with the gift of $1.4 trillion dollars of government waste a year.
Grow. Up.
Saturday, February 6, 2010
In Which We Solve The American Debt Crisis For All Eternity – Part I
There must be some kinda way outta here,
Said the Joker to the Thief
There’s too much confusion here,
I can’t get no relief – Bob Dylan
Spending freezes. Monetary tightening. My credit card balance. Yes, the debt crisis is everywhere these days, to the point where your wandering correspondent can’t safely travel the blogosphere without tripping over threats to raise the Fed fund rate.
Originally, I had hoped to solve this problem in a single blog post. But it seems you’ve gotten yourself in quite the mess. Even my venerable intellect would be taxed to clean it up in a mere seven hundred words.
So instead we’ll take it easy: follow-through is important here. From time to time these posts will crop up, and I’ll explain the basics of our debt problem – its characteristics, its management, its cyclical and structural issues, until, much farther down the line, we’ll arrive at the obvious solution. All written in prose so clear and lucid that even a peasant like you can understand it.
But first, we’ll have to clear up this strange confusion between the debt and the deficit.
Debt and Deficit – Two Entirely Different Ways To Screw Yourself
Details, details. The debt is simple – it’s the measure of the outstanding liabilities of the U.S. government. Like all debt, its value rests on the expectation of timely payments from the borrower. It takes many forms: treasury bills, notes, and bonds, TIPS, and assorted other government securities. Indeed, it is the management and sale of these securities that forms an important part of our monetary policy.
The debt is also, in nominal terms, quite large.
The Deficit – Some Problems Find You
The deficit, on the other hand, is not a current obligation. Rather, it’s the difference between the money our government acquires and the money it spends. It is the rate at which we add money to the debt.
Now, those of you who have been poorly educated, are of weak constitution, or who cannot be ballsed to keep up with current events, will be troubled by this. “Tis Obama!” you cry. “And his terrible, socialist, no good health care policy. Or perhaps the bailouts.” Which brings us quite conveniently to our first important point:
Our First Important Point
Ponder, if you will, this graph:
Here, we find something very clearly demonstrated. That there a two ways to run a deficit – and, in evils, they are worlds apart.
Lesson The First – The Cyclical Deficit
The cyclical deficit. The hurricane in otherwise peaceful financial waters. Like a seasonal storm, it swoops down among our nation’s finances to wreak untold havoc. Like a seasonal storm, it passes quickly, leaving nary a trace behind.
In normal times, the government raises money through taxes, and spends it in the budget. During a recession, tax revenue falls, while our spending remains the same. A deficit ensues.
Falling revenue alone is enough to cause a deficit. But of course our government is not content with a merely passive role, so they engage in assorted types of expensive action designed to bring the economy back to health. And the deficit increases.
Once the economy is chugging nicely along again, the cyclical deficit all but disappears. Tax revenues go up, spending drops back to it’s original level, and cyclical factors – like the much maligned fiscal stimulus and the Troubled Asset Relief program – fade into tiny lines in the future horizon.
Lesson The Second – The Structural Deficit
The structural deficit is an altogether different animal, nasty and full of venom. A structural deficit is not a product of a recession. It is always there. It is simply a feature of the things we cannot afford, and the things we refuse to pay for.
The cyclical deficit ebbs and flow. The structural deficit does not. Like cancer, it just grows and grows. An increasing part of it is caused by health care costs, which will absorb 49% our GDP by 2082.
It’s also caused by programs that have no tax offset. Since raising taxes is so politically unpopular, we stopped doing it – between 2000 and 2008, we simply put everything on the credit card. The wars in Iraq and Afghanistan, the Bush tax cuts, the 2003 Medicare Part D Prescription Drug expansion – all of these were enacted without a single offsetting piece of revenue, in the midst of an already growing deficit.
Truly, people. How the current Republican party became a model of fiscal prudence is insulting in its audacity. They passed a massive, budget busting tax cut that primarily benefited the richest Americans, along with an expansion to Medicare that cost $1 trillion dollars, and did not bother to come up with a single dime.
In closing: What have we learned?
1) When we fix our debt problem, we cannot focus on cyclical factors. We must concentrate on the structural problems that threaten our solvency.
2) Using quick, back of the envelope calculations, the 10-year financial impact of both the Troubled Asset Relief Program and the fiscal stimulus have exactly this much impact: F@%&-all.
3) When passing the largest tax cut in American history, it’s best to find a way to pay for it, first.
Said the Joker to the Thief
There’s too much confusion here,
I can’t get no relief – Bob Dylan
Spending freezes. Monetary tightening. My credit card balance. Yes, the debt crisis is everywhere these days, to the point where your wandering correspondent can’t safely travel the blogosphere without tripping over threats to raise the Fed fund rate.
Originally, I had hoped to solve this problem in a single blog post. But it seems you’ve gotten yourself in quite the mess. Even my venerable intellect would be taxed to clean it up in a mere seven hundred words.
So instead we’ll take it easy: follow-through is important here. From time to time these posts will crop up, and I’ll explain the basics of our debt problem – its characteristics, its management, its cyclical and structural issues, until, much farther down the line, we’ll arrive at the obvious solution. All written in prose so clear and lucid that even a peasant like you can understand it.
But first, we’ll have to clear up this strange confusion between the debt and the deficit.
Debt and Deficit – Two Entirely Different Ways To Screw Yourself
Details, details. The debt is simple – it’s the measure of the outstanding liabilities of the U.S. government. Like all debt, its value rests on the expectation of timely payments from the borrower. It takes many forms: treasury bills, notes, and bonds, TIPS, and assorted other government securities. Indeed, it is the management and sale of these securities that forms an important part of our monetary policy.
The debt is also, in nominal terms, quite large.
The Deficit – Some Problems Find You
The deficit, on the other hand, is not a current obligation. Rather, it’s the difference between the money our government acquires and the money it spends. It is the rate at which we add money to the debt.
Now, those of you who have been poorly educated, are of weak constitution, or who cannot be ballsed to keep up with current events, will be troubled by this. “Tis Obama!” you cry. “And his terrible, socialist, no good health care policy. Or perhaps the bailouts.” Which brings us quite conveniently to our first important point:
Our First Important Point
Ponder, if you will, this graph:
Here, we find something very clearly demonstrated. That there a two ways to run a deficit – and, in evils, they are worlds apart.
Lesson The First – The Cyclical Deficit
The cyclical deficit. The hurricane in otherwise peaceful financial waters. Like a seasonal storm, it swoops down among our nation’s finances to wreak untold havoc. Like a seasonal storm, it passes quickly, leaving nary a trace behind.
In normal times, the government raises money through taxes, and spends it in the budget. During a recession, tax revenue falls, while our spending remains the same. A deficit ensues.
Falling revenue alone is enough to cause a deficit. But of course our government is not content with a merely passive role, so they engage in assorted types of expensive action designed to bring the economy back to health. And the deficit increases.
Once the economy is chugging nicely along again, the cyclical deficit all but disappears. Tax revenues go up, spending drops back to it’s original level, and cyclical factors – like the much maligned fiscal stimulus and the Troubled Asset Relief program – fade into tiny lines in the future horizon.
Lesson The Second – The Structural Deficit
The structural deficit is an altogether different animal, nasty and full of venom. A structural deficit is not a product of a recession. It is always there. It is simply a feature of the things we cannot afford, and the things we refuse to pay for.
The cyclical deficit ebbs and flow. The structural deficit does not. Like cancer, it just grows and grows. An increasing part of it is caused by health care costs, which will absorb 49% our GDP by 2082.
It’s also caused by programs that have no tax offset. Since raising taxes is so politically unpopular, we stopped doing it – between 2000 and 2008, we simply put everything on the credit card. The wars in Iraq and Afghanistan, the Bush tax cuts, the 2003 Medicare Part D Prescription Drug expansion – all of these were enacted without a single offsetting piece of revenue, in the midst of an already growing deficit.
Truly, people. How the current Republican party became a model of fiscal prudence is insulting in its audacity. They passed a massive, budget busting tax cut that primarily benefited the richest Americans, along with an expansion to Medicare that cost $1 trillion dollars, and did not bother to come up with a single dime.
In closing: What have we learned?
1) When we fix our debt problem, we cannot focus on cyclical factors. We must concentrate on the structural problems that threaten our solvency.
2) Using quick, back of the envelope calculations, the 10-year financial impact of both the Troubled Asset Relief Program and the fiscal stimulus have exactly this much impact: F@%&-all.
3) When passing the largest tax cut in American history, it’s best to find a way to pay for it, first.
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