The Debt Ceiling will be an election issue, and jammed more #austerity down our throats.First, they participated in negotiating an informal deal where they compelled $1 in spending cuts for every new dollar of borrowing. This plan reduces the overall size of the deficit.
Then, having secured the #austerity framework, they backed out – insisting on cutting spending on poor people instead of cutting spending on the military.
This forces the Debt Ceiling to be a campaign issue for 2012, because the Debt Ceiling will be breached in the lame duck period between the November Elections and the January 2013 Inauguration.
h/t Matt Yglesias.
It seems very likely the upper echelons of the republican party are fully aware of the ability of governments to deficit spend beyond a balanced budget according to the MMR/MMT/MS/Post K view of the world. Hmm.
This may be smart politics since polls show that the public is concerned with the deficit and debt, but maybe not since they also think that that the issue needs to fixed by raising taxes at the top rather than cutting social benefits.
Moreover, it creates a problem for the GOP if it wins control, in that the public will be expecting austerity but if it is delivered, then the economy will contract and they will get bashed in the next election.
That old rock and hard place.
I agree with your points but I will bet that if Willard is elected the republicans will do a 180 and will not cut spending much. I think their will be much more spending under Romney than if Obama is reelected precisely for the reason you mention. Republicans will not want the economy to crash and burn if Willard is president but are perfectly willing to do so if Obama is president. The republican leadership doesn’t care about the debt. They only want to use it as a fear tactic to forward their agenda.
Unfortunately, but they do have to be concerned with their base. In the next election for the House, for example, count on serious primarily challenges to remove “defectors.”
There is a real split in the GOP over this that threatens to rip the party apart. It looks like Ron Paul and the TP may be mounting a challenge to Mitt at the convention, unless Mitt appointed a TP VP and makes some iron-clad promises.
Grover Norquist on Bill Maher said the europeans are not actually cutting spending, although in this very short exchange his only specific was that the UK raised the top tax rate from 40% to 50% and alluded to them doing nothing else. So that is likely to be the pseudo logic they’ll use to continue to promote the “value” of austerity. Norquist’s life’s mission is to cut taxes to force the Gov to cut spending… and his followers believe there is no such thing as good gov spending (not sure how he personally feels about the military since we know everyone else in the GOP doesn’t see the hypocrisy of ever larger military spending).
They are OK with military spending, viewing it as a cost-effective economic advantage since it promotes the perks of empire. They realize that the outsized US military is actually a protection service for US interests (read business and financial interests). so even while some in the GOP may oppose certain practices and uses of the military they regard as wasteful, they recognize its necessity overall for maintaining and extending US economic dominance (“hegemony”) globally, which is required to maintain and improve the US standard of living vis-a-vis the ROW.
The US military budget is higher than the next 20 countries combined (China, Russia, India, Pakistan, UK, South Korea and on and on). So I don’t acribe any altruistic motives to the GOP… “cost effective” isn’t something I can imagine any of them even thinking about. It is just the only spending and gov jobs that they haven’t painted themselves into a corner on. Romney claims Obama is gutting the military, and his plan is to dramtically increase military spending (which merely doubled in the past 10 years). As with just about everything else Romney says it is utterly ridiculous on so many levels. The “cost effective” and “protecting business interest” arguments were old many billions of dollars and a couple of wars ago.
I think the deficit will actually be higher under Romney that it would have been under obamas 2nd term. Mitt will succeed in cutting taxes but fail at any major cutting or reform initiatives. Obama would be forced to compromise and we’d probably end up with a bowles Simpson type deal between him and a Gop Congress. Therefore mitt is the better choice from an mmr perspective.
Bush raised the deficit yet crashed the economy…. Romney wants to double down on most of those policies.
Interesting post at Angry Bear on that today. http://www.angrybearblog.com/2012/05/balancing-budget-with-tax-cuts-and.html
The deficit was already increasing when Bush took over due to tech bubble popping and the ensuing recession. The deficit was only about 1.5% of GDP in 2007, no surprise that the recession started that year. A much bigger deficit may have been enough to offset the effects of the housing bubble.
Meanwhile, back at the Hall of Justice, the Superfriends regroup…
America’s Looming Default Crisis
House Republicans just reneged on the debt-ceiling deal, making a default in 2013 almost inevitable. By Matthew Yglesias…
On occasion I’ve raised the possibility to administration officials of financing the government with large-denomination platinum coins, always receiving laughter in response”.
http://www.slate.com/articles/business/moneybox/2012/05/debt_ceiling_fiasco_house_republicans_just_reneged_on_the_debt_ceiling_deal_making_a_default_in_2013_almost_inevitable_.html
[h/t Clonal & Tom Hickey]
Traveling today or I’d make this a separate post, but I’ll just cross-post what I wrote at MN….
Hmm, what does this [Yglesias quote] remind me of?
Oh yes…
“About 11 years ago, James K. “Jamie” Galbraith recalls, hundreds of his fellow economists laughed at him. To his face. In the White House….
“I said economists used to understand that the running of a surplus was fiscal (economic) drag,” he said, “and with 250 economists, they giggled.”
http://www.washingtonpost.com/business/modern-monetary-theory-is-an-unconventional-take-on-economic-strategy/2012/02/15/gIQAR8uPMR_story.html
Has there ever been any question that nothing will come of this (trillion dollar coin and/or MM*) until a GOP administration decides to laugh last?