Thursday, June 2, 2011

Obamalaise?

7 comments:

Patrick_L said...

The question is- how seriously do we take this perspective?

The President has put forth a comparable approach on deficit reduction to House Republicans. It has slightly less detail(and I mean slightly, Republicans have discussed very little how they'd achieve their spending reduction targets- both sides have basically just set top-line goals so far). It achieves slightly less deficit reduction than recommended by the plan put forward by members of the President's bipartisan fiscal commission or the House Republican approach. Why does it have less deficit reduction than say the President's fiscal commission?

Obama has about $620 billion less discretionary security cuts than the Commission (or the House Republican approach) recommended. He has $10 billion- yes, that's ten- less on nonsecurity discretionary cuts. He has $300 billion less on Social Security (because he, like House Republicans, has proposed nothing specific as a position yet). He has $60 billion less on health care. He's the same on other mandatory program savings. He has $460 billion less in revenue increases than the Commission members' proposal. Those differences result in Obama also getting $110 billion less in interest cost savings. What does this say about Obama? What are the significant differences? He is right of the commission proposal when it comes to security/defense spending and revenues. He is left on Social Security- (or more accurately, on Social Security he acts like a politician facing an election). It’s that simple.

What about the House Republican approach? House Republicans propose spending $220 billion more on security than Obama and $840 billion than the fiscal commission. They propose spending $1.23 trillion less on nonsecurity discretionary than Obama, who you remember only proposed spending $10 billion more than the commission. They are the same as Obama on Social Security. They get $1.87 trillion more in health cuts- by repealing ACA’s insurance coverage expansion for 30 million Americans and cutting Medicaid by over $750 billion. They get $690 billion more in other mandatory spending cuts than Obama or the fiscal commission- which from what limited details we have so far- comes in part by Republicans cutting food assistance by $127 billion. House Republicans get $2.18 trillion less in revenues than Obama and $2.64 trillion less than the fiscal commission. This results in House Republicans getting $140 billion more in interest savings than Obama and $10 billion more than the commission proposal. Compared to the fiscal commission, House Republicans are right on security spending (cut less), nonsecurity discretionary spending, health spending, and other mandatory spending (all cut more), right on revenues (less revenues), and left on Social Security. Compared to Obama, they are also right on everything and the same as Obama on Social Security. It’s that simple. Who is more extreme? Note that Obama’s approach is far closer to the fiscal commission recommendation that got the support of five of its 9 Republican members (compared to six of its 9 Democratic members, though both only got 3 of their 6 sitting-in-office elected officials). Arguably, Obama overall is to the right of the fiscal commission proposal that got the support of three Republicans, including arch-conservatives Tom Coburn and Mike Crapo (for goodness sake!).

Patrick_L said...

There was always going to be political jockeying on this issue from both sides- just as there has been on both sides. The scary thing is Ryan’s proposal has now become a litmus test- in which any questioning is considered blasphemy. This is a problem when it looks like nothing any bipartisan or nonpartisan group was recommending just six months ago, and Obama is already so close- and in many ways to the right, of all of these reports. Obama politicizing the deficit debate- which should be a serious issue that neither party seems able to address rationally and politically- shockingly!- is either a) a false charge, or b) a hypocritical charge coming from Republicans due to their actions during the health care debate- an area we all know by-know, as reinforced by the dramatic steps the Republicans take on these programs- is the most important factor driving our long-term deficits. (Though demographics are a larger problem for at least a little while still due to the baby boom). If Republicans want a comprehensive deal with support from the President and Democrats, why don’t they do what they attacked him for NOT doing- and get out in strong support of the fiscal commission proposal?

Contrary to wacko-conservative economists’ claims- there is no evidence that the stimulus is a drag on the economy. Now or ever. At this point, you’re almost talking about- What stimulus? It started years ago. Some money is still filtering through, but largely on functions the private sector has never done- so there’s no “crowding out” there. It’s like the money being spent on finishing up stimulus projects is needed in the private sector- which includes businesses sitting on unprecedented trillions and trillions of dollars. The health care critique is getting old- namely because it has a) not been implemented yet so any significant business actions would be irrational, particularly because the bill largely skips over this element of the American health care system. Similarly, Dodd-Frank is not fully in force- and the two critiques you can make of it are that it doesn’t regulate enough or regulates too much. Guess which side Republicans are on? Is it any surprise, since admitting the need for better and more regulation would force them to admit that it was their party’s deregulatory policies that allowed the financial crisis to occur.

Which brings us to the point that financial-sector driven economic declines have always resulted in very sluggish growth afterwards. We don’t fully understand why yet, but if you are looking for an explanation for our struggling economic recovery, look to the financial sector crisis. If you want to blame someone, look to those who allowed the financial sector crisis to occur in order of importance and responsibility for crisis- a) the private sector actors involved b) President Bush and his Treasury and other regulatory agencies, c) Alan Greenspan and his Fed reign; and d) Congress back then. Smart people with a brain and understanding of a) economics or b) the policy literature on the field know that presidential actions rarely have significant or even observable impacts on the economy immediately or even that quickly. When they have an effect, it’s lagged.

The President and the Administration are not the driving force behind the “complex regulatory scheme” on the housing-sector crisis, the state attorney generals are. And someone who derisively refers to efforts to fix the sector’s “business model” clearly knows nothing about the “business models” he’s talking about, or he’d know to shut his mouth before he says something stupid… again.

In short, this article is an epic fail, ignoring evidence, economics, and sometimes basic facts to attempt to make its point.

Patrick_L said...
This comment has been removed by the author.
Patrick_L said...

Oh, and the Republican Party's stance on monetary policy offers a great example of why their party is not pro-jobs.

TJE said...

PL, I think you are being far too generous about the President's "plan" to reduce the deficit.

Well in to the third year of a presidency and approaching an election with 9% unemployment (the real rate is much higher), "it's all Bush's (and others) fault" doesn't strike me as a winning message.

Patrick_L said...

My numbers for both sides come from their set spending and revenue levels. Neither side has offered many, let alone all, of the specifics needed to get to that point. I am being equally "generous" to both sides. (just as I am being equally generous to the President's fiscal commission proposal- which also lacked many specifics). The most detailed, but still not explicit in every detail, was the Bipartisan Policy Center's taskforce (i.e. Rivlin-Domenici) proposal.

The historical evidence is quite clear that the Bush administration's economic mismanagement was one of the key factors enabling the financial crisis. A financial crisis, which like past financial crises, has resulted in a halting and slow economic recovery. I'm not excessively Bush-bashing. I'm appropriately Bush-bashing. It's not my fault it's an accurate critique.

You're right- it's probably not a winning (political) message. Shockingly the American people doesn't respond well to facts and evidence because they're too busy drowning in our stagnant economy. And like they have throughout history, they irrationally lash out at current elected officials for things outside the officials' control.

I don't see a lot of hope for anything the government could do- whether acting more or less often depending on your political persuasion- that could significantly improve the economy. It's just going to be a long, slow slog.

TJE said...

http://online.wsj.com/article/SB10001424052702303745304576361852357390230.html