Let’s just stipulate something for the record. If the Congressional Budget Office were asked to step in and score John Boehner’s “Plan B,” it would score as an increase to the deficit by about $4.9 trillion over ten yeas. If CBO scored the Obama plan, it would score as an increase to the deficit by about $4.1 trillion over ten years. That’s because current law dictates that America goes over the cliff and stays there. It doesn’t contemplate any changes to the law. And if America went over this cliff, the resulting austerity would be so great that it would swing the economy into recession. It would also virtually wipe out the long-term deficit gap, even while it would probably increase it a bit in the near term, because of increases in automatic stabilizers. But over the long-term, the deficit would essentially be wiped out.
|By: David Dayen Friday December 21, 2012 5:51 pm|
|By: David Dayen Thursday December 20, 2012 11:22 am|
House Republicans will wait until tonight to pass “Plan B,” and while I think ultimately it will pass, the reason they’re waiting so long is that they have to figure out what to put into it to get conservative votes. Erick Son of Erick has a whip list of 34 no votes and 12 leaners, and Republicans can only lose 23, assuming no Democratic crossovers. So leadership must sweeten the pot if they want to win the vote.
And the way you sweeten the pot for House Republicans is that you kick the poor a bit more while handing out some aid to Wall Street and Lockheed Martin.
|By: David Dayen Thursday December 20, 2012 9:19 am|
While the nonsense continues on the fiscal slope, which increasingly looks like something the nation will have to weather, the Senate has been working on an appropriation for states suffering from the disaster caused by Hurricane Sandy. The parallel has to be understood: in one part of Washington, they’re trying to put in a deficit deal to replace politically driven forced austerity, and in another part, they’re trying to respond to a national emergency the way the federal government must in these cases, by spending money. Look at these two things together and you’ll understand a lot about Washington – the compartmentalization, the forced blindness, the lack of knowledge about the economy, everything.
And both sides of the Senate are taking up their predictable positions in the matter. Specifically, Senate Republicans want to nickel and dime disaster relief victims.
|By: David Dayen Thursday December 20, 2012 8:00 am|
Republican craziness has stopped a deal from happening on the fiscal slope, and really nothing else. Because here’s Nancy Pelosi yesterday on chained CPI, a benefit cut to Social Security recipients that happens to be regressive and more painful as people age…
|By: David Dayen Tuesday December 18, 2012 6:54 am|
The headlines here is that the Obama Administration narrowed the demand they maintained for four years, for tax rates to increase above $250,000, and they would agree to a benefit cut for Social Security and $400 billion in unspecified Medicare cuts, and in exchange they would mostly extend current law on a few fronts (but not all) and get an unspecified amount, no more than $50 billion, in infrastructure spending.
|By: David Dayen Monday December 17, 2012 12:45 pm|
To say that “we have a budget deficit” is no different than saying “we’re in the middle of a recession.” The correlation between deficits and economic growth is very tight. A large part of deficits are composed of reduced tax receipts from less people working, and increase in utilization of automatic stabilizers like unemployment benefits, Medicaid and food stamps, which recedes in better economic times.
|By: David Dayen Monday December 17, 2012 6:57 am|
The offer apparently paired $1 trillion in tax increases with major social insurance cuts. Assuming that the spending cuts match the tax hikes dollar-for-dollar, all Boehner is saying is that his rule, where every dollar of debt limit increase must be matched by a dollar of spending cuts, remains in effect. So he’ll honor that with a $1 trillion increase in the debt limit. Tax increases do not count as deficit reduction in Boehner’s equation; only spending cuts will register for increasing the debt limit.
|By: David Dayen Friday December 7, 2012 12:25 pm|
This describes a textbook drop in consumer confidence. We saw it during the debt limit deal and we’re seeing it now. The problem is that the media has described what’s actually happening so poorly that the consumer doesn’t really even know what the problem is or what they should advocate.
Do they get that the “fiscal cliff” means a combination of tax increases and spending cuts that would wreck the economy?
Do they have the conception of budget cuts being bad for the economy, after three years of non-stop panic about high deficits?
This confusion makes it very difficult to reach a solution that works for the economy.
|By: David Dayen Tuesday December 4, 2012 7:09 am|
In trying to make a quick understanding of the Boehner counter-offer on the fiscal slope yesterday, I knew that his reference to the “Bowles plan” was not a reference to Bowles-Simpson but rather something Bowles wrote or said in November 2011. It turns out that it came from testimony before the failed Super Committee, where Bowles basically spitballed a reform measure totaling $2 trillion by averaging out each sides’ initial offers.
|By: David Dayen Thursday November 29, 2012 4:48 pm|
In the context of doing a deficit reduction deal at all, this is an extremely strong bid that Tim Geithner delivered to John Boehner today. Now we know why Boehner whined and cried all afternoon.
Let’s walk through it.