A Two Year Budget: A Small Christmas Gift from Washington

United States Capitol

United States Capitol (Photo credit: Jack in DC)

While I have liberal leanings, I am more of a pragmatist than a liberal despite what my more conservative friends might think.  This blog is titled American Titanic because I think this nation is navigating through a thick field of icebergs which will likely become more dangerous  in decades to come.

However, much of the danger lies in our inability to steer the ship, some pulling left and others right.  Unable to pull together, we are propelled by our own momentum towards bleaker days straight ahead.

While it is a tepid agreement, the recent passage of a two year budget compromise worked out by Senator Patty Murray (D.) and Representative Paul Ryan (R.) is quite significant given the lack of bipartisan efforts on anything significant over the past few years.  Part of its importance is the bill was passed by a huge bipartisan majority in the Republican controlled House, where hardly anything passes except bills to repeal Obamacare over and over and over again.

Of course, a close look at the bill raises questions, reveals some fiscal smoke and mirrors, including supposed cuts to come later, and pleases no one.  But that’s the way it is with political compromises (for details see Ezra Klein at bottom of post).

Paul Ryan might benefit most from this bargain, especially when it comes to the next presidential election, as he has now shown an ability to get something through congress, while his likely fellow Republican senatorial contenders for THE BIG JOB  – Marco Rubio, Paul Cruz and Rand Paul – all voted against this deal, pleasing their base but also feeding into the naysayer image the Republican party has developed during the Obama years.   For a  Republican to win the White House in 2016 he will have to figure out a way to assuage the base while also attracting much wider support.   With the passage of this bill, Paul Ryan has shown an ability to do just that.

The value to us all is the bill reduces uncertainty in our economic climate in that we know the government will stay open for the next two years, and almost anything that shores up certainty is good news to the business community.   Even when it comes to the much maligned Obamacare, I conclude from various sources that most businesses believe they could thrive under Obamacare if they knew exactly what it is and how it will effect them.

Of course, there remains another bullet to be removed from the gun and that’s the potential stoppage in raising the debt ceiling February 7, or so.   While this raising used to be more or less a matter of course, the Republican tactic of making it a bargaining chip has been another cause of uncertainly since they took over the House in 2010.

From all the comments I’ve seen, they are demanding some kind of budgetary cut in spending in order to raise the ceiling once again, while also repeating the claim that we would be fools to default on our debts and cast doubt upon “the full faith and credit of the United States.”

Though that may seem illogical, their logic is while of course we must raise the debt ceiling, since our debt is our biggest problem long term it only makes sense to shave off a little spending in the process.  As such, they try to appear reasonable making President Obama seem unreasonable in his  unwillingness to negotiate.  If we all agree the debt ceiling must be raised per usual, there should not be any negotiating, but Republicans constantly gloss over that fact.   They believe, and I agree with them, that a majority of Americans like the idea (in the abstract) of less government spending and Republicans continue to play that card even when it doesn’t suit the rules of the game.

How that plays out could get interesting, but my guess is that some sort of deal will be made  whereby the Republicans can claim a spending reduction while the president can claim no important concessions were made.

This game has been played a few times since 2010 and the ceiling has always been raised, so perhaps this isn’t the big deal that it seems on the surface.   Maybe business people interpret it as only more political theater.   I hope so, but that assumes the key actors don’t get clumsy, fall over each other  and somehow ruin the play.   That really would ratchet up uncertainty to new levels.

But let’s not dwell too much on that until next year.

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P. S. – If you want a simple break down of the budget deal,  check out Ezra Klein’s summation in the Washington Post Wonk blog.  Also,  Treasury Secretary Jack Lew makes a plea for  settling the debt ceiling issue before February, for those who want to warm up for the next congressional episode of kabuki theater.

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Krugman, Ryan, Peterson, Stockman and the Debt

In my April 5 post I told of an upcoming panel discussion including economist and columnist Paul Krugman and David Stockman, a former budget director for Ronald Reagan, on Week End with Stephanopoulos.  While I had planned to return to a discussion of this encounter, it struck me after watching it twice that it was not worth it.   Had it just been those two it might have been, but there were three other panelists as well which fractured the nature of the discussion to the point where no points were really developed, just differences emphasized in a scattered fashion.

This is a common problem with such so-called discussions on TV.  They seldom lead anywhere due to the complexity of the issues and the short amount of time that the programming allots.   I thought Chris Hayes did the best of anyone with that kind of format, but he had two two-hour programs on weekend mornings to do it.  Now MSNBC has moved him to a one hour show late week day afternoons and, while no doubt  a promotion, I believe his program suffers as a result.

I’m not here just to gripe, though  (I already did that in a couple of posts last May when Krugman also happened to be on  Stephanopolis).  Instead I think it worthwhile to develop some background information on these issues, so  that I can refer readers to it when writing related posts, as I am about to do right now.

The Governomics page, linked near the top of this home page, gives a thumb nail sketch of my present take on the nature of the huge fiscal problems that appear in store for us over the next 10 to 25 years, let’s say.  Tied to that is a sub-page where I describe three different assessments/approaches to these fiscal problems, one of them with liberal Paul Krugman as the poster boy, another with Paul Ryan and a third with fellow conservative Pete Peterson, probably the least known of the three but by far the richest and spends his money to be influential.  I also include David Stockman, who seems to fit well in the Peterson camp.  This seems a more fruitful way to broach these issues  than a return to the Stephanopoulos verbal merry-go-round.

Obama’s Charm Offensive: Hope Springs Eternal

I don’t know about you, but my previous post depressed me.   When it comes to figuring out a way for congress to actually come to grips with our federal fiscal problems, what comes to mind is the phrase:  You can’t get there from here.

However, I do recall the advice of someone who said:  “Look for the good in everything,”  words that come to mind during situations like this.  So, trying to buck myself up this morning, I’m looking for the positive wherever I can find it.

Paula Abdul Joins Papal Conclave

Paula Abdul Joins Papal Conclave (Photo credit: Mike Licht, NotionsCapital.com)

In terms of the president working with Congress, he has publicly reached out to members of both parties through meetings and dinners.   A common criticism of him from both sides of the aisle during his previous administration was that he made few outreach efforts to congress.

Having Rahm Emmanuel as his chief of staff didn’t help in terms of Republicans those first two years, as his attitude was:  “We have the votes, so F…. them.”   Sure, I know the Republicans didn’t exactly have their hands stretched out, either, and “no” soon became the only word they did no (ah, know).    But these days, I am holding out hope that  “no” may be maybe.

Despite skepticism continuing to abound, the two sides are talking nice, or somewhat nice for the moment.   Also, for once under Obama, both the House and the Senate are pulling together budgets, which is called “regular order”, because it used to be done regularly.  If both come up with budget proposals, at least it provides a place for negotiations to begin  (*1).   The Obama team tried to skirt this process and negotiate directly with House Speaker Boehner in 2011, but those talks broke down which led to the sequester which led to those forced meat clever budget cuts  recently because the two sides could not agree on a reasonable alternative to prevent them from going into effect.

The two new budgets outlined thus far are about as far apart as the edges of the Grand Canyon, with Representative Paul Ryan (R) including the elimination of Obamacare as part of his calculations and Senator Patty Murray (D) outlining a trillion dollars in raised revenue over the next ten years.   Both ideas are non-starters for the opposition.  Those who remain optimistic hope those are just bargaining positions which include hidden flexibility.   Pessimists see those as true positions with little wiggle room and continued stalemate.

As for me, I am hoping for some kind of miracle, but miracles happen some time don’t they?   One group that has a whole list of them is the Catholic church, whose members just happen to be celebrating the election of a new pope, which is what brought the possibility of miracles to mind.

I’m willing to suspend judgement for the time being, and instead ponder the idea of Paula Abul at a Papal Conclave.   Don’t ask me what she’s doing there.  The sight just made me smile.

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(*1)   One reason the Senate has not come up with a budget proposal like the House has been doing each year is that anything the  Democrats would want to pass would be  filibustered by the Republicans, so why bother.   Yes, there were 60 Senate Democrats for about the first 18 months of Obama’s first term, but they could barely muster enough votes in the Senate to prevent a filibuster and pass the stimulus plan in 2009 and Obamacare in 2010.    In terms of the stimulus, of the 61 votes in favor, three came from Republicans and two from independents.

A pet peeve of mine is having to listen to someone say the Democrats “controlled” both houses in Obama’s first two years.   They “controlled” the House, but only “managed” the Senate, in the way one tries to manage a stampede.

The Big Picture of our Federal Fiscal Problems

Rubik's Cube Français : Rubik's Cube Bahasa Me...

Rubik’s Cube Français (Photo credit: Wikipedia)

Typing the above title made me laugh.  The idea of me saying anything useful about the “big picture” in the space of an itty bitty post makes no sense at all.  On the other hand, it doesn’t feel worthwhile to keep tracking a congress which struggles to just keep the government funded on an almost month by month basis.

Common sense would suggest the issues of the sequester and whether to continue funding the federal government past March 27 shouldn’t be issues at all.  Solving those are the bare minimum while the real issues, the REALLY BIG fiscal  issues are not being touched upon.  It’s as if we are busy trying to agree on shoring up some levees while a tsunami is coming at us a few miles away, or in years, 10 or so.

Doug Elmendorf is the Director of the Congressional Budget (CBO) which acts as a kind of referee examining budget proposals developed by congress and the president and “scoring” them as to their actual cost.   I have come to realize this is a sophisticated guestimate at best since there are so many variables involved, but a good faith guestimate is better than nothing, I guess.

According to Elmendorf we are headed towards very rough waters in our fiscal future.  Last year the CBO chief said that even if congress could come together on various tax hikes and spending cuts offered by both sides – A REALLY BIG IF since they barely can agree to keep the government operating for a few months – they might cut around $250 billion annually from our growing yearly deficit (not touch the overall debt, mind you, but just stanch our full speed towards the iceberg field of insolvency dead ahead).

While that would be a plus, Elmendorf  envisions the need for $750 billion annually in tax hikes and/or spending cuts by 2022 to prevent out national debt from climbing to the point of being equal to about 90% of our GDP, a level which scares most economists.   To reiterate:  Under what seems a best case scenario, we still fall  $500 billion short annually of swinging this big ship of state away from a treacherous ice flow in the 2020s. (*1)

Of course, Elmendorf’s vision would be challenged by some on the left and the right, with economist Paul Krugman the poster boy on the left and, let’s say, Congressman Paul Ryan on the right. (*2)   However, if Elmendorf is close to being right, certainly those on the right who see a solution shaped by only cutting taxes and spending are particularly delusional.

Our ship of state seems to be heading directly towards a huge iceberg in 10 years, or so.  And both parties have their hands on the wheel trying to pull it left or right, which keeps us going straight forward towards, if not disaster, to an America that is no fun to imagine.

Considering the complexity of all this reminds me of Rubik’s Cube, a puzzle I tried unsuccessfully to solve as a young man.  This seems infinitely harder to solve, and so complex it is hard to know even where to begin.  But I’m willing to put in much more time.

There is something about the impossible that has always attracted me.

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(*1)   I drew the Elmendorf material from Red Ink, a book by WSJ economics editor David Wessel.   Short (162 pages) and easy to read, it provides a good ball park sense of our fiscal Rubik’s Cube.

(*2)  In case you haven’t bumped into him, Paul Krugman is a liberal, Noble laureate economist who probably has more influence than most in his trade because in addition to knowing his stuff he’s everywhere, through his column at the New York Times, frequent political chat show appearances, several books and a blog which he updates sometimes three times a day, which can be found in my Blogroll to the upper left.   He’s sharped tongued to say the least and argues that while the debt is important, we should forget about it right now and deal with unemployment and strengthening the economy first.    A stronger economy would generate more federal income and begin to reduce our yearly deficits.  Then we could work on cutting down spending.

Everyone knows Paul Ryan, who generally speaking, is the polar opposite of Paul Krugman.   He is all about reducing our annual deficits and later our debt.  He has just unveiled a 10 year plan to balance our budget which seems like a Tea Party fantasy.  For one thing, it assumes Obamacare will be abolished, which is definitely not going to happen over the next four years and quite likely never (though I do think it will be altered over time).   Krugman, though rough tongued to make an impression, seems to be arguing what he believes.   I don’t know what Ryan is up to.

Laughin’ Joe and the Kid

I saw only the first one-third of the debate last night because I had a meeting to attend.  I taped the program, but will not bother to watch the rest.  I saw enough, and I have a pretty good idea of what I missed by watching some post debate coverage on both MSNBC and FOX, and from reading  several editorials today.

It seems that if you favored Biden and the Democrats, you liked his feisty  ways.  If you favored Ryan and the Republicans, you saw a”grinning, grimacing, condescending Joe,” as Carl Rove put it on FOX.  Chris Wallace said it was the most “openly, disrespectful” performance he had ever seen in a VP debate.   In contrast, someone on MSNBC called it a “superb performance” by Joe, maybe Chris Matthews, who gleefully added:  “This was a Joe Biden night.”

I imagine Biden did energize the Democrat base who have probably upped their orders on anti-depressants since Obama’s mail-it-in effort in the first debate, but I also imagine Republicans believe Ryan held his own – held serve, so to speak, for Romney in next week’s debate.

So, fine, both VP candidates found approval from their bases while dissed by the other side, but it is the undecided’s that interest me at this point, as indicated in my previous post.  I ponder:  Who are they and what are they waiting for?  How much swing do these swing voters have and will only a slight breeze be required to  push them in one direction or the other on Nov 6?  Or will they feel little wind at all and just stay at home or waft to the movies?

As with the last debate, Frank Luntz had a focus group of undecided’s on FOX, but unlike the other group, this time they seemed to end up decidely undecided.

As a piece in Newsmax.com stated:  “Some of the 26 interviewed by Luntz said they were put off by what they described as Vice President Joe Biden’s “condescending” and “disrespectful” attitude towards the younger Republican vice presidential nominee Paul Ryan.

Others in the group said they didn’t understand why Ryan couldn’t be more specific about how GOP presidential nominee Mitt Romney intends to implement his “five-point” plan to get the economy back on track.”

In the end, the swing voters seemed to feel little wind in either direction. Another focus group of undecided voters on CNN split their votes evenly: 1/3 Biden, 1/3rd Ryan, 1/3rd Undecided. While that group seemed to feel small gusts in both directions, it still seems that Frank Luntz summarized the undecideds in general when he said: “We’re going to have to wait until next week’s debate [Oct. 16] to see when the undecided decide.

“One added thought. Though supportive of much what Joe Biden said, and not put off by his 82 interruptions as tallied by FOX (he needed to make up for Obama’s ennui), I was one of those put off by his frequent imitation of chuckles the clown.

I liked Biden better just listening to him on the radio en route to my meeting. One Democrat suggested those smirks and Cheshire cat grins were Joe showing outrage at the falsehoods spun by Ryan. I’d say most of us would think that is an odd way to show outrage. A serious demeanor and intense stare would have been less off putting to those capricious swing voters.

But, as we so often hear, Joe’s gonna’ be Joe.   And, all told, I doubt this debate will be much remembered by anyone by election day.

Say Anything……. And if it Works Say It Again

I could comment on a number of incidents and events at the just finished Republican Convention, but I don’t think most of it holds much significance in the grand scheme of things election-wise,  If I’m wrong I’ll get back to it later.  However, I do want to say something about the Paul Ryan speech Wednesday evening and the media reaction because it relates to the central issue this blog is concerned with which, in case I’ve confused you, I’ll reiterate:   “….this blog is about becoming an informed citizen in the age of misinformation (as stated in my HEY! page above).

speaking at CPAC in Washington D.C. on Februar...

speaking at CPAC in Washington D.C. on February 10, 2011. (Photo credit: Wikipedia)

We’ll get to Ryan vs. the media in a moment, but  in terms of “post truth politics” (*1) more significant than Ryan’s speech was what Romney pollster Neil Newhouse said at an ABC News/Yahoo panel in Tampa on Tuesday. His comments regarded an ad accusing Obama of cutting the work requirement in welfare.   This attack ad was harshly criticized by several media fact checkers, but that didn’t phase Newhouse.  According to the Huffington Post he said  ” that the campaign doesn’t care its ad attacking Obama’s waiver policy on welfare has been labeled false by several media outlets.”

As Newhouse elaborated:  “We stand behind those ads and behind the facts in those ads…. And you know what? What these fact-checkers — fact-checkers come to this with, you know, their own sets of, you know, thoughts and — and beliefs. And you know what? We’re not going to let our campaign be dictated by fact-checkers.”

Of course, what he’s saying is the fact checkers are all too liberal to be believed- i.e. the enemy – so if we Republicans think some talking point is true, we’ll go with it (or more cynically, if we think we can convince others it’s true, we’ll keep going with it).  In other words, a research tradition “sifting and winnowing” in search of truth going back centuries was just cut off at the knees when it comes to politics.   In terms of the notion of post-truth politics, Newhouse has crossed the Rubicon into no-truth politics.

In other words, we have entered the wild, wild west of political knowledge and thought.  There are no sheriffs or judges we can rely on to referee accusations, no honest brokers, arbiters with sufficient impartiality to make a judgement worth listening to.  All of that is implied in what Newhouse said.   One thing he neglected to say is that the Republicans themselves have referred to those same fact checkers when it has suited their purposes, in the primaries and in the general election.

Now to Paul Ryan’s  speech Wednesday evening that got media fact checkers buzzing around like hornets trying to sting him with accusations of falsehoods.  It is just a guess, but perhaps the checkers were even more vigilent than usual after Newhouse called them irrelevant the day before.   In a Huff-Po piece Michael Calderone captures the gist of this fight nicely, including several links for those who want to delve deeper into yet another issue that could require a book to really sort out.  For the truly obsessive, you will find additional sources by Googling:  Fact checking Paul Ryan’s speech.

Here’s a couple of things to keep in mind if you wish to explore the issue further.   Most of the media opinion sides with the idea that Ryan took liberties with facts and made misleading statements in his speech.  The handful defending his speech are on the political right and their defenses tend to be narrow ones, meaning they defend him from charges he “lied” at various times.   I would say they are often right literally, but wrong figuratively.   He may not have lied strictly speaking as often charged, but he was often misleading enough to have the same impact.

Ah, but I’m spending too much time parsing this issue of truth when the real issue between now and Nov 6  is whether either side can sway enough voters to dislike or fear the  other candidate more than their own.

So, truth be damned!   The operative rule is:   Say anything………………………And if it works say it again.

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(*1)  Maybe Paul Krugman came up with “post truth politics” as he used the term in an editorial last December.  There he attacked the Republicans for their distortions, but I would say the Democrats have come to match them on occasion since then.   And they still have time to catch up.