Nov
17

Quadruple Down Economics: Serious or CYA?

By

With the congressional supercommittee expected to fail in its attempt to find at least $1.2 trillion in deficit cuts over the next decade by next week, another group in Congress is urging even deeper cuts.

WASHINGTON — With the deadline for a supercommittee deficit-reduction deal closing in, more than 150 members of Congress from both political parties made a renewed push Wednesday for a $4 trillion package.

But that doesn’t appear likely to happen, since the Joint Select Committee on Deficit Reduction is struggling even to come up with its mandated goal of at least $1.2 trillion in deficit reduction.

As one of the organizers of the effort, NC-11’s usually media-shy Rep. Heath Shuler (D-NC) has been making the rounds on the Beltway media circuit this week, urging the committee “to be brave and go big.”

The show of fiscal breast beating from 150 members of Congress from both political parties is supposed to convince the public that Congress is serious about pursuing budget austerity. Without raising taxes on the wealthy and corporations, Sen. Saxby Chambliss (R-GA) told reporter John King, even though two thirds of Americans support that. Appearing with Shuler, Chambliss suggested that more corporate tax cuts would allow America to grow its way out of debt. Call it Trickle Down 3.0.

(Fool me thrice, shame on who?)

But if the supercommittee is already poised to fail and if, as some congressmen have suggested, the dreaded triggers may be “reconsidered” if the committee fails to deliver, wouldn’t it be strategic to have a high-minded-sounding stand on principle to wave before voters in the next election?

If the committee fails to deliver next week, you’ve proven your austerity bona fides by publicly pressing for deeper, less politically viable cuts than the smaller package the supers could not agree on.

Alternately, if in a clutch move the committee does deliver an agreement next week, you can vote against it and explain that it was too small to boost the confidence of “the markets.”

In Washington, that’s a win-win.

Comments

  1. Tom Sullivan says:

    Krugman this morning on the supercommittee: Failure Is Good:

    For one thing, history tells us that the Republican Party would renege on its side of any deal as soon as it got the chance. Remember, the U.S. fiscal outlook was pretty good in 2000, but, as soon as Republicans gained control of the White House, they squandered the surplus on tax cuts and unfunded wars. So any deal reached now would, in practice, be nothing more than a deal to slash Social Security and Medicare, with no lasting improvement in the deficit.

    Also, any deal reached now would almost surely end up worsening the economic slump. Slashing spending while the economy is depressed destroys jobs, and it’s probably even counterproductive in terms of deficit reduction, since it leads to lower revenue both now and in the future. And current projections, like those of the Federal Reserve, suggest that the economy will remain depressed at least through 2014. Better to have no deal than a deal that imposes spending cuts in the next few years.

    But this decision, Krugman points out, is about fundamental values, and one best left to voters, not to a committee where half its members believe that down is up.

  2. Orion_Blade says:

    Whatever the SuperCmte does can be seen as a still frame image in an ongoing film.
    The real story isnt the SuperCmte, it is the flimsy ricketyness camped at the core of the American Economy which the Occupy Movement has been forcing attention too.
    Team Obama and his hand-picked Bush Leftovers did not solve our banking crisis: bad bets and gambles by the trillions still sit on the balance sheets hidden behind footnotes. These bets went bad because the business or household uses they stemmed from proved to be not economically viable. A lot of bad loans have nothing to do with derivatives or MBS gambles.
    They’re like the bad loans made by Blue Ridge Savings, and Bank of Asheville, just bigger and more.
    The Great Recession causes more loans to go bad; it laughs at the concept of a credit-driven economy.
    The lack of wage growth by workers worsens the problem when you have an economy that’s 70% driven by consumer consumption. It’s worse when that consumption has to be enabled by consumer debt…which gets defaulted on at higher rates. Joblessness results and yet is also a contributor to the problem, esp defaults on the loans needed to stimulate the economy.
    Wash, Rinse, then Repeat.
    This ricketyness at the bank balance sheets is steel-cabled to the debt crisis in Europe, we’re tethered at the waist and where Europe goes, it’s likely the US will follow.
    The SuperCmte narrative ignore too much of the above.