Senators Ponder 2012 and a GOP Senate Majority

By mw | Related entries in Democrats, Divided Government, News, Senate, Virginia, Webb


Egypt was not the only regime change story last week. As discussed previously on the Donk, on my blog, and elsewhere, the Democrats were already facing a huge uphill climb to hold their Senate majority past the 2012 election:

“Of the 33 Senate races up for consideration 23 seats are currently held by Democrats. Moreover, many of those Democrats are among the putative moderate/conservative class of Democratic Senators that won narrow races in red states on the strength of the 2006 Democratic wave election. Among that class are Webb in Virginia, McCaskill in Missouri and Tester in Montana.”

That climb just got a whole lot steeper, as incumbent Virginia Democratic Senator Jim Webb announced last week that he will not run for a second term. This is not a surprise. Webb has been quite open about his frustration with the Democratic leadership. As a consequence, the Republicans are licking their chops and Democrats are grasping at straws.

What seemed likely last fall is now a virtual certainty – the Republicans will retake the Senate majority in 2012. The only way to retain our happily divided government and avoid a rerun of One Party Republican Rule in 2013, will be to re-elect Barack Obama.

Another Democratic* Senator, Republican Roy Blunt (R-Mo), is also reading the 100 POINT ARIAL BOLD writing on the wall and finds some good things to say about divided government:

“With a growing number of Democratic Senate colleagues worrying about their political futures, a Republican led House, and even a president willing to reach to the other side of the aisle, U.S. Senator Roy Blunt sees opportunity for bipartisanship. “Divided government gives us the opportunity to do hard things, but both sides will have to be willing,” Blunt said Wednesday afternoon to a news conference with Missouri reporters. “If we’re going to get things done, it’s going to require bipartisan support.”

Of course, in addition to divided government giving Congress the “opportunity to do hard things”, it also gives the Congress the opportunity to not do stupid and bad things, like:

  • Squander our blood and treasure to occupy Iraq (One Party Republican Rule)
  • Pass wildly expensive stimulus legislation that does not stimulate (One Party Democratic Rule)
  • Pass wildly expensive and complex Health Care Reform that does not reform the health care system (One Party Democratic Rule)
  • Irresponsibly increase spending and the deficit to insane record levels (One Party Republican Rule), then increase the spending rate to even more insane levels while exploding the deficit to even more irresponsible record levels (One Party Democratic Rule)

We’ve now had divided government restored for only a little over a month. It is still early, but as President Obama moves to the center, and Republicans move toward fiscal sanity, I am optimistic.

So far, so good.

==========

*CORRECTED – Hat tip – Jim S in comments. Also removed “Democratic” from the title. My bad.

X-posted & excerpted from Divided We Stand United We Fall.


This entry was posted on Sunday, February 13th, 2011 and is filed under Democrats, Divided Government, News, Senate, Virginia, Webb. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

48 Responses to “Senators Ponder 2012 and a GOP Senate Majority”

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  2. Anna Says:

    Considering you can’t stand Obama, no matter how much you “claim” to love divided government, color me skeptical that you want him re-elected. Back in 2008, you were the one calling him another Jimmy Carter. Pardon me, but what a crock!

  3. mw Says:

    Such a simple concept. And yet…

  4. JHawk23 Says:

    Just one hitch in all this: With the prospect of controlling both Senate and House in 2013, why will Republicans — who have demonstrated in recent years that achieving progress on the nation’s issues is of far less concern to them than blocking anything on Obama’s agenda (including ideas that originated in Republican heads) — why will they suddenly decide that now is the time for bipartisan cooperation?

  5. Jim S Says:

    Roy Blunt is not and never has been a Democrat. He is a hard core conservative Republican.

  6. Jim S Says:

    Apparently in MW’s mind the deepest recession since the Great Depression shouldn’t have required any additional government spending. He also lies about the stimulus. He also somehow never criticizes Republicans for their ideas on health care which largely consist of do nothing except for that which is cosmetic and won’t really help people who can’t afford modern health care. And JHawk has it right about the willingness of the Republicans to actually be bipartisan. Blunt is a hack of the lowest order and would never dream of actually doing something creative and useful.

  7. mw Says:

    @Jim S
    You are right about Blunt’s party affiliation. Sloppy on my part and embarrassing. Fixed in the post.

    You are wrong about pretty much everything else. On the Health Care question, my views were explicitly detailed here, here and here.

    Which I guess, by your commenting ethos, also makes you a liar.

  8. kranky kritter Says:

    With the prospect of controlling both Senate and House in 2013, why will Republicans [rant deleted] suddenly decide that now is the time for bipartisan cooperation?

    We all know that both parties will make their decisions and take their positions with at least one eye on the next election. Anyone who can’t accept that should avoid undermining their own sanity by following politics. Take up knitting instead.

    The answer to your challenge is simple. Elementary. Now that the GOP has a legitimate power stake in the house, they have lost their luxury status as the minority party with no real power. When the other party has the Presidency and both houses of congress, the minority script is pretty easy to write: you just say that everything wrong is the other side’s fault. That’s just Politics 101, chapter 1.

    The revised dynamic requires different behavior. Same thing happened in 1994. When the president extends a reasonable-sounding olive branch representing ideas that have popular support, you now have to give him roughly half a loaf, or you look like an ugly collection of boil-covered smelly a-holes.

    It’s been pretty obvious to me for at least 4 months that the GOP stands a great chance of taking all of congress come 2012. But that’s subject to change in relation to, you know, how Americans feel about what unfolds in the interim. 18 months is far too long to try to simply run out the clock

    Those who reflexively oppose all things conservative and Republican will remain steadfast in their view that no GOP move can have the best interests of the people at heart. Fortunately, neither the make-up of our next congress nor the identity of the President come 2013 will hinge on the views of those folks….any more than it will hinge on those who reflexively oppose all things progressive and Democratic.

    It’s we independents who will decide which political actors are making responsible good-faith efforts to move our nation back onto more solid ground. Independents want solvency and sustainability and responsible, responsive actions, not revolutionary wholesale dismantling. The fringy rightwing rants that progressives love to boogeyman us with? They’re not going to happen. They’re non-starters.

    What are a few things we can count on? Lots of budget cuts at the municipal and state levels. A wind-down of federal debt levels that’s too slow to please many. And a broadening of the tax base along with a cut in rates. Just like Reagan did, Obama will step in with a plan that cuts the corporate tax rate while getting rid of lots of special interest, crony capitalism loopholes. The GOP will go along with this. There will be showy petulant symbolic fights. And plenty of progressive demagogging about how it’s unconscionable to cut the corporate tax rate. But it will get done because the closing of loopholes will lead to more revenue collected. On entitlement reforms, I have no prediction. But my guess would be that it does not get seriously broached until 2013.

    The more uncooperative and aggressive the GOP is in response to Obama, the more it casts Obama in the role he needs to be in to get re-elected: the role of the important check on draconian conservative changes. If the GOP fails to cooperate on substantive moderate changes that the people support, it will definitely cost them the white house. And it could even cost them that nearly certain re-capture of the senate.

    Why? Because we independents say so.

  9. Jim S Says:

    I just think there’s a strong possibility that the incoming far right Republicans will succeed in alienating enough people by November 2012 that the taking of the Senate shouldn’t be a foregone conclusion. If the hard core budget slashers actually got their way the chances of the recovery stalling because of thousands of people losing their jobs would be pretty good. Lots of teachers as well as school administrators would be fired. So would state workers in many departments in lots of states. Federal jobs would also be lost and empty slots would not be filled. Contractors doing work on government sponsored projects such as roads, water plants, sewers, etc. would also be out of work. Some would consider this an unmixed blessing. They do not seem to consider government jobs real work or consider that those workers are just like any others in terms of spending money and constributing to the economy. But those workers make for more competition in an already shaky job market. The loss of their spending power affects other businesses the same as any other person who loses their job. Of course it’s highly unlikely that they will completely get their way. But two other things are also possible. One, they throw a big enough tantrum to force a shutdown of the government. Two, even what they do manage to do is still enough to have a negative effect on the recovery. Either one of these would not bode well for them come 2012 or 2014.

  10. Jim S Says:

    My apologies to MW. The Wyden-Bennett act is better than I thought it was now that I was able to track down the text (The link from the old article is broken.). But what worries me is whether the subsidy for people who, for lack of a better term, are the working poor would be adequate in the real world. Also, there are no details of how it would work for the unemployed. But wouldn’t it be interesting to ask some of the Republicans saying they want to repeal and replace how they would feel about Wyden-Bennett as a starting place? Espcially since most of the current crop was happy to see Bennett lose his job?

  11. gerryf Says:

    While I think the last two years may not be a good indicator of what the Republicans have in store for us–as Kranky Kritter notes, it’s easy for the minority party to simply say no without owning the success or failures of the majority–I don’t see that the first month is giving us any reason for optimism.

  12. Jim S Says:

    Look at the Republican response to Obama’s budget. Is it really any different than what they would have done in the last two years?

  13. mw Says:

    @gerry, @jims
    I don’t know what you guys are thinking. What I am seeing is Obama and the old school Republicans arguing about how deep the this first set of cuts should be. I see old school Republicans arguing with the new breed freshman Republicans about how much deeper the cuts need to be, and the new breed is winning. There will be compromise, because there is no choice – the Democrats can no longer dictate policy on partisan votes. Compromise, by definition, means the these first moderate cuts will be deeper than those proposed in the Obama budget.

    This is all very different than the last two years.

    It is a really good start. I couldn’t be happier.

  14. Jim S Says:

    The question is whether or not the new breed will be willing to force a government shutdown or have the power to do so. I think they’re perfectly willing to do it, not being real big on anything but sticking to principles that are woefully misguided.

  15. kranky kritter Says:

    That’s not a question for me. The debt ceiling rise is going to be used as brinksmanship, as a vehicle for seeing who blinks, who the public perceives as right, and for how deep the budget cuts end up being.

    Concurrently, there’s going to be a cut in the corporate tax rate that is coupled with a closing of loopholes. A lower rate but more revenue collected, just as Reagan did. That’s not a budget change per se, but revenue relates to the size of the deficit. Collecting more revenue will close the gap, and that’s a good thing, regardless of the fact that progressives will spin it as another giveaway to those who need it least.

    I am happy to simply agree to disagree with anyone who thinks that aggressively narrowing the budget gap and attacking structural long-term budget issues is “woefully misguided.” I find it right on target, a necessary although not sufficient change we need to undertake. It encourages me greatly, because the scope of overspending since the final bush budget has not been a little unsustainable, but rather utterly unsustainable. It was perhaps defensible in the short term to stave off greater calamity, but it has to be curtailed right now.

    I’ve got no doubt that the final number on cuts will be spun as evil, draconian and unnecessary by progressives. Nor do I doubt that the final number will be spun by conservatives as wholly inadequate and indicative of Obama’s lack of seriousiousness.

    So it goes.

  16. Lit3Bolt Says:

    Austerity cheerleading in full force, I see. Good to see those good old political comedians, the “centrists,” out in force doing their clown routine in order to run cover for the political status quo. We’ll cut taxes and tighten our belts out of this recession, yes siree bob. Meaningless cuts to Pell grants and the EPA water infrastructure? Yippee!! No mention of war spending or healthcare inflation or raising taxes? Double yippee! Those have bipartisan support, so those views must be good. Indeed, I couldn’t be happier.

  17. Jim S Says:

    I consider them woefully misguided because they are largely not that serious about actually making cuts in defense and intelligence and their cuts are more ideologically driven than being guided by actually looking at the issues. Also, it needs to be considered whether or not immediately cutting as much as the newcomers want would cause more problems by causing the ranks of the unemployed to swell again when it is already a bad problem. John Boehner today lied about how many federal workers had been added since Obama took office as he said he couldn’t care less how many government workers lost their jobs if he and his fellow Republicans slashed as deep as the new Republicans would like. But I can promise you one thing. None of this is really going to make a bit of difference to our economy. There will not be more private jobs as a result. The businesspeople saying that it will are just using it to get things they want out of the government.

  18. gerryf Says:

    Happy so far?

    Happy that the GOP wasted a day reading the constitution (but leaving out the embarrassing parts)?

    Happy that we can balance the budget if only we stop funding NPR and PBS?

    Happy about the all out assault on a Woman’s Right to Choose?

    Happy that in a time when deficits are staggering, the GOP thinks the best way to cut them is to cut revenues?

    Happy that the GOP is proposing cutting community health center funding

    Happy that the HOUSE GOP is passing meaningless bills to repeal the health care act, which actually will reduce spending over the next decade, or scheming ways to defund the healthcare act?

    Happy that the GOP plans to cut education spending?

    Happy that GOP reprentatives across the country are STILL saying they don’t know if Obama was born in the US?

    Happy that Speaker Boehner is running around saying Obama has added 200,000 federal jobs without a shred of evidence as support for the GOP austerity program?

    Happy that the GOP in South Dakota wants to make murdering physicians who perform abortions “justifiable homicide”?

    Happy that the GOP is willing to risk global financial meltdown by shutting down the government so Rep Steve King can “stare the president down”

    Happy that GOP House Candidates that ran on a platform of jobs, has not had one thing to say about jobs since taking power?

    Happy that despite strong evidence that man is contributing to global warming, the GOP steadfastly ignores science and works against even minor efforts to improve the environment.

    Happy that … well, you get the point.

    There is not a shred of evidence the the GOP is interested in doing anything but getting back into power. Now. I KNOW that some of this is just rhetoric, pandering and politics, but the GOP has not done anything to make me take them seriously since the early 1990s.

    I hope you’re right, MW, but I doubt it….any one or any group that supported extending the Bush tax cuts for the wealthy does not deserve to be sitting any the adult’s table during budget discussions.

  19. Tillyosu Says:

    But I can promise you one thing. None of this is really going to make a bit of difference to our economy.

    Actually, there are some 150 economists that disagree with you.

  20. Jim S Says:

    Tillyosu, so what? Seriously. Economist friends of John Boehner. Big whoop. People from conservative institutions. How shocking that they agree with the Republican program. I think they agree with the crowd that just doesn’t think government jobs are real jobs and anyone working for the government or anything government funds is less worthy than the private sector. Some other people have other opinions. I think theirs are just as valid.

    http://goo.gl/tW96y

  21. mw Says:

    Yeah I get it Gerry, after massive increases in spending and expansion of entitlements over the last two year that are 2 -3 times greater than the massive increases that occurred in spending and entitlement spending during the Bush administration, I have the temerity to suggest that I am happy with what I am seeing now in DC on the budget. Happy that we are finally getting started down the right path with the very modest cuts promoted by the Republicans in the House, and even happy that Obama is talking a good game, despite the more modest, some might suggest – virtually unnoticeable – cuts in the proposed Obama budget. We’ll wind up somewhere in between, of course. It is nowhere near enough, but it is a start. The real action will be in the next budget.

    BTW – Well done – you got the Dem talking points down and that great progressive righteous indignation pitch perfect. Kudos.

    Look I understand that you are really a reasonable centrist, but that it is only because Republicans are the spawn of Satan that your vote on the federal level for the last 20 years is indistinguishable from a mindless partisan automaton. I know that you are not one of those. You just vote like one.

    It’s ok. You are in good company. I figure 85%+ of the electorate are pure partisan voters at the federal level regardless of what they call themselves. Since the partisan vote is so dominant, it doesn’t matter how partisans (explicit and closet) vote, that’s a known known. It only matters whether partisans votes. Hence we get the Axelrods and Roves setting the electoral tone for our elections, where it is all about using whatever tactics necessary to GOTV, not about rational discourse on the issues.

    The good news is that both sides are so good at it now, that the partisan vote seems to be reasonably balanced. So long as it stays that way, that 6-12% of the electorate willing to change their vote at the federal level on an election by election basis, will – as KK points out – decide the elections. I’m also really happy about that.

    Obama got that vote in 2008 as reaction against the Bush administration, and because as a candidate he represented that he would govern in a fiscally responsible way. He did not. He governed as the biggest borrow and spend liberal of all time, and as a consequence he lost that vote in 2010. He can still win the indies back by 2012 and I hope he does, but he’s going to have to do one hell of a lot better than this budget.

    I don’t know where I heard this, but I think it was in early ’09…

    Elections have consequences.

    Oh… And be sure to vote in 2012. We need you to balance one of those Partisan Republican votes.

  22. gerryf Says:

    As usual, MW, your blind allegience to a farcical contrarian voting strategy and your right leaning leads you to miss the point entirerly.

    Might as well get this out the way first–don’t profess to know my voting history. I’d list it again, but as usual you will simply ignore in an effort to paint me as a lock step progressive so you can ignore the bigger point I made.

    To whit–you like the right because you’re either buying into the lie or you’ve been mislead that it really stands for any kind of fiscal responsibility.

    Fiscal responsibility does not mean spending cuts and tax cuts…it means doing the right thing at the right time.

    My post was not a talking point but an illustration that the right (the CURRENT RIGHT) could care less about fiscal responsibility. These are the same people who never uttered the words fiscal responsibility for 8 years. The facts are indisputable…Reagan, Bush I and Bush II are responsible for over 70 percent of the federal debt. The only president to pay down the debt since 1980 was Clinton.

    And please stop with the canard about “massive increases in spending and expansion of entitlements over the last two year that are 2 -3 times greater than the massive increases that occurred in spending and entitlement spending during the Bush administration” crap.

    Talk about a talking point. It’s a lie, plain and simple. It ignores the necessity of spending when trying to avert the catastrophe created by the right over the last 35 years, but especially the Bush Administration.

    It ignores the fact that the best assessment of the health care reform legislation (which is crap, because it could have been far better) actually SAVES money over doing nothing.

    And finally, it takes a lot of gall for someone who simply votes for the out of control party to achieve some magical divided government equation to criticize either a RIGHT or LEFT partisan who at least seriously believes in a party’s cause.

    I am not one of those people. You find me a reasonable Republican (sadly, the tea baggers have chased them all out of the party) and I will vote for him. I may not agree with the the left or the right but at least they stand for something–as a proponant for “divided government” you stand for nothing.

  23. Mike A. Says:

    mw: ” He governed as the biggest borrow and spend liberal of all time….”

    Yes and borrowing and spending have absolutely nothing to do with the financial climate of the times. Nor does it have anything to do with what occurred during the previous 8 years.

    Your statement, presented as a fact independent upon circumstance, is nothing but partisan.

    Considering that the second, third and fourth biggest “borrow and spend liberals” after Obama would be conservative presidents (Bush II, Bush I, Reagan), I would have thought you would have been kinder to him.

  24. Mike A. Says:

    Oops, gerryf beat me to the response a few hours earlier…I need to hit refresh before I post a comment

  25. kranky kritter Says:

    I consider them woefully misguided because they are largely not that serious about actually making cuts in defense and intelligence and their cuts are more ideologically driven than being guided by actually looking at the issues.

    To the extent that GOP cuts can be described as ideologically driven, I’m with you. If the GOP wants to cut in some areas that are very dear to democrats while sparing their own pet areas, that’s a problem. I’m not opposed to defense cuts, for example.

    Also, it needs to be considered whether or not immediately cutting as much as the newcomers want would cause more problems by causing the ranks of the unemployed to swell again when it is already a bad problem.

    Sure, that’s a fair point. Where it really leads to is the big problem of unsustainable cost increases in “non-discretionary” spending on social security and medicare/medicaid. Neither party shows any real will to attack those, which are the core part of the deficit problem. The meter is running out on our ability to ignore those. We’re going to need to means-test social security. We can probably do some things as far as tweaking up the retirement age, but not very much, really.

    NO ONE has viable solutions on healthcare cost growth that don’t involve rationing. IMO, we’re rationing now, in ways that aren’t especially fair.

    Austerity cheerleading in full force, I see. Good to see those good old political comedians, the “centrists,” out in force doing their clown routine in order to run cover for the political status quo.

    Haha haha haha haha haha haha haha.

    Haha haha haha haha haha haha haha.
    Haha haha haha haha haha haha haha.
    Haha haha haha haha haha haha haha.

    So, do you have any actual, um, content? You know, insight. Or is the full extent of your schtick composed of whining and insults?

    miscellaneous contentions about the budget deficit

    Here is a government table on the size of the deficit in recent times

    It shows quite clearly the drastic and ballooning scope of overspending in the last 3 years. No one serious can ignore how very unsustainable deficits in the trillion+ range are in comparison to past spending rates.

    Fiscal responsibility does not mean spending cuts and tax cuts…it means doing the right thing at the right time.

    It means spending within your available means. While it can include judicious borrowing (“investment in the future”), it can’t mean spending at a level that undermines solvency. If you borrow at a level that’s “the right thing to do,” and that level undermines the entire enterprise, you’re not doing the right thing at all. You’re just kidding yourself.

    It ignores the necessity of spending when trying to avert the catastrophe created by the right over the last 35 years, but especially the Bush Administration.

    No enterprise, whether a family, a company, or a government can spend substantially more than it has over a long term. Judicious borrowing is fines, but it has to be paid back. Necessity, as you call it, simply bears no relationship whatsoever to solvency. None. Creditors don’t really care about why you are spending. They care only about your ability to re-pay. That’s what all this boils down to….policies that protect our ability to re-pay what we’re borrowing. Creditors will not continue to tolerate the United States continuing to spend 5 dollars for every 3 it collects for much longer. At all. They will not accept “we really need the money” as an explanation.

    It ignores the fact that the best assessment of the health care reform legislation (which is crap, because it could have been far better) actually SAVES money over doing nothing.

    I for one don’t believe this for a second. Not one second. If there was a way for me to bet $10,000 against HCR saving money, I’d do it in a heartbeat. The savings claimed are based on the presumption that the government really will cut medicare reimbursement rates as the law claims. They won’t do this. They can’t. Doctors won’t provide services at prices below their cost of providing them. The claim that this law saves money is a unicorn fart. You can’t control costs by increasing demand. Period. The bill expanded access, and I support that as a matter of moral fairness. But there’s not way I’ll pretend that the new law has solved the cost issue. No way.

    borrowing and spending have absolutely nothing to do with the financial climate of the times

    I cannot think of a single sense in which this is even remotely true.

  26. kranky kritter Says:

    Re-posting becuase I screwed up my blockquotes:

    I consider them woefully misguided because they are largely not that serious about actually making cuts in defense and intelligence and their cuts are more ideologically driven than being guided by actually looking at the issues.

    To the extent that GOP cuts can be described as ideologically driven, I’m with you. If the GOP wants to cut in some areas that are very dear to democrats while sparing their own pet areas, that’s a problem. I’m not opposed to defense cuts, for example.

    Also, it needs to be considered whether or not immediately cutting as much as the newcomers want would cause more problems by causing the ranks of the unemployed to swell again when it is already a bad problem.

    Sure, that’s a fair point. Where it really leads to is the big problem of unsustainable cost increases in “non-discretionary” spending on social security and medicare/medicaid. Neither party shows any real will to attack those, which are the core part of the deficit problem. The meter is running out on our ability to ignore those. We’re going to need to means-test social security. We can probably do some things as far as tweaking up the retirement age, but not very much, really.

    NO ONE has viable solutions on healthcare cost growth that don’t involve rationing. IMO, we’re rationing now, in ways that aren’t especially fair.

    Austerity cheerleading in full force, I see. Good to see those good old political comedians, the “centrists,” out in force doing their clown routine in order to run cover for the political status quo.

    Haha haha haha haha haha haha haha.
    Haha haha haha haha haha haha haha.
    Haha haha haha haha haha haha haha.
    Haha haha haha haha haha haha haha.

    So, do you have any actual, um, content? You know, insight. Or is the full extent of your schtick composed of whining and insults?

    miscellaneous contentions about the budget deficit

    Here is <a href="http://www.census.gov/compendia/statab/2011/tables/11s0468.pdf"a government table on the size of the deficit in recent times.

    It shows quite clearly the drastic and ballooning scope of overspending in the last 3 years. No one serious can ignore how very unsustainable deficits in the trillion+ range are in comparison to past spending rates.

    Fiscal responsibility does not mean spending cuts and tax cuts…it means doing the right thing at the right time.

    In very large part, it means spending within your available means. While it can include judicious borrowing (“investment in the future”), it can’t mean spending at a level that undermines solvency. If you borrow at a level that’s “the right thing to do,” and that level undermines the entire enterprise, you’re not doing the right thing at all. You’re just kidding yourself. Borrowing because “we really need to” and hoping it would be ok is not a plan. It’s wishful thinking.

    It ignores the necessity of spending when trying to avert the catastrophe created by the right over the last 35 years, but especially the Bush Administration.

    No enterprise, whether a family, a company, or a government can spend substantially more than it has over a long term. Judicious borrowing is acceptable, desirable even at times. But it has to be paid back. Necessity, as you call it, simply bears no relationship whatsoever to solvency. None.

    Creditors don’t really care about why you are spending. They care only about your ability to re-pay. That’s what all this boils down to….policies that protect our ability to re-pay what we’re borrowing. Creditors will not tolerate the United States continuing to spend 5 dollars for every 3 it collects. Not for much longer. At all. And they will not accept “we really need the money” as an explanation.

    It ignores the fact that the best assessment of the health care reform legislation (which is crap, because it could have been far better) actually SAVES money over doing nothing.

    I for one don’t believe this for a second. Not one second. If there was a way for me to bet $10,000 against HCR saving money, I’d do it in a heartbeat. The savings claimed are based on the presumption that the government really will cut medicare reimbursement rates as the law claims. They won’t do this. They can’t. Doctors won’t provide services at reimbursement rates that are below below their cost of providing services. They can’t.

    The claim that this law saves money is a unicorn fart. You can’t control costs by increasing demand. Period. The law expanded access, and I support that as a matter of moral fairness. But there’s no way I’ll pretend that the new law has solved the cost issue. No way.

    borrowing and spending have absolutely nothing to do with the financial climate of the times

    I cannot think of a single sense in which this is even remotely true.

  27. WHQ Says:

    I cannot think of a single sense in which this is even remotely true.

    Are you agreeing with Mike, kk, because I’m 99.999% sure he was being sarcastic?

    Here’s what seems to be missing: “the government” (generically) does not have total control over what it spends or what it brings in. They pass budgets. The money it spends goes into the economy and some of it comes back as revenue. It cuts spending over here, and revenue goes down over there. How that all balances out depends on the specifics, of course. But don’t think that if “the government” makes the wrong choices in what to cut that it can’t make the deficit worse than it would have otherwise been. And if “the government” removes money in the form of taxes from the wrong places, or, conversely, cuts taxes in places where it won’t do much to help the economy, thus failing to offset the rate change with additional revenue from added activity as well as it might, that can also do more harm/less good than expected.

    “The government” can cut spending (on what it can control) and raise taxes (tax rates, not necessarily revenue) and still end up with an even bigger deficit than it would have if it had done nothing, because the macroeconomic effects can be such that revenue goes down, despite the hike in rates, and that spending goes up, despite the cuts, due to rising unemployment, crime, ill health (mental and physical) from substance abuse, failure of families and their accompanying support systems, and so on.

    Until firms start spending the money their sitting on, banks start lending the money their sitting on, and households stop trying to pay down the debt that partly fueled the economy for several years, there is a serious risk that what I’m describing can happen. Depending on what the private sector does, what I will call “the spending/revenue feedback loop” can be positive or negative.

    There are both aggregate net spending/taxation considerations and, within any given aggregate stance, distributional considerations. I think some bad choices are being made right now.

  28. WHQ Says:

    “they’re,” not “their” darn it! This regards my just-posted but currently moderated comment.

  29. Mike A. Says:

    KK: “You can’t control costs by increasing demand. Period.”

    Of course you can. Are you saying that a colonoscopy has an inherent cost that can ever reduced?

    Look at all the markets that we take for granted, where increased demand has reduced the costs and made them affordable: automobiles, computers, cell phones, internet access, airtravel…truly the list is endless.

    Increased demand creates competition. Increased competition creates a cost competitive environment, which attracts more attention. To remain competitive industries find ways to improve, scale up and cost reduce. All procedures, equipment and medicines have opportunities for cost reduction. Even the cost of professional expenses can be reduced in the right environment.

    I’ve worked in industries that develop both, the high volume low cost equipment and the low volume, high cost equipment. The drivers for cost are directly tied to the volumes produced. Not the only driver, but a damn strong one.

  30. gerryf Says:

    I think KK had too many of those fine craft beers from the other thread–so glad he sobered up enough to repost his post because I gave up 6 or 7 brackets down….

    Anyway, I confess–I’m not sure the healthcare reform will “save money” either. I am also not sure that the estimates under the previous system were all that accurate, either–they sure hadn’t been close for the last 15 years.

    However, by the only non-partisan measure we have the reformed system will leave us in better shape than the non-reformed system according to the congressional budget office. You cannot agree with the CBO when it suits you and reject it when it does not–as Boehner and the GOP have done.

    I also don’t disagree with most of what you are saying regarding the importance of the ability to repay the debt.

    My contention, though, is that the GOP is deliberately ignorent of the reality of the situation, or, they are playing games.

    I am not sure that Obama and the Dems are the ones to fix the economic problems–in fact, I am pretty sure they are not. But I simply cannot take the GOP seriously anymore. Not “this” GOP.

  31. theWord Says:

    Perhaps something we can all agree on Jim Webb and Rand Paul have two of the worst hairpieces known to mankind. They look like merkins.

  32. gerryf Says:

    That’s not Jim Webb’s hairpiece–that’s William Shatner’s hairpeice from the old TJ Hooker show….Webb bought it on ebay.

  33. kranky kritter Says:

    KK: “You can’t control costs by increasing demand. Period.”

    Of course you can. Are you saying that a colonoscopy has an inherent cost that can ever reduced?

    No, you can’t. Not in the sense I mean. If only demand goes up, then prices must go up.

    IF, and that’s a giant IF, the increased demand eventually leads to an even greater increase in supply, then costs can eventually go down. In the case of HCR, the primary substantive change has been to increase access. In other words, to greatly increase demand for healthcare while not doing anything substantive to help increase supply. As I’ve said, I am in favor of access to affordable healthcare as a moral imperative, so I support improving access. But I WILL NOT pretend that such actions are going to save money by themselves. They won’t.

    Sure, we can hope that the greatly increased demand will lead to an even greater supply increase eventually. But in the interim, we’re not even close to a break-even equilibrium. So until the greater supply materializes, costs will be higher. Unfortunately, we can’t quickly manufacture an increased supply of healthcare like we can with say, cell phones.

    However, by the only non-partisan measure we have the reformed system will leave us in better shape than the non-reformed system according to the congressional budget office. You cannot agree with the CBO when it suits you and reject it when it does not–as Boehner and the GOP have done.

    Let’s leave aside Boehner and the GOP for a moment. Sensible people surely can look at the facts about HCR and the limits upon how the CBO can evaluate things. It’s clear (at least to me) that the CBO’s judgement is not something we should be relying upon without question. Any reasonable person knows that judgments are based on premises. If one of the premises turns out to be mistaken, then the judgement can prove to be inaccurate. Every non-dunce understands this. Let’s not avoid accepting it.

    The CBO is required to judge the cost of policies like HCR by presuming that the actions described in the policy will in fact occur. So, if any component of the policy does not unfold as promised, that can adversely effect the accuracy of the CBO’s judgement.

    To my knowledge (and I’m open to correction here, I’m no expert), the primary mechanism for cost savings in HCR is to cut medicare/medicaid reimbursement rates to doctors over the next decade. If these cuts happen, then HCR will save money for the government. If these cuts don’t happen, then the CBO’s judgement simply does not apply. It’s no longer relevant. Because their judgement was based on the cuts really happening.

    The other cost “saving” I know of in HCR reform is begin collecting revenue for it for several years before beginning to pay out money to fund care. Such an action may be warranted in the short term. But we shouldn’t therefore pretend that the plan saves money on a daily “money collected versus money paid out” basis.

    If you ask me, HCR expanded access for many Americans, and that’s a good thing. But it pretty much kicked the can on how to finance it in a fiscally responsible manner. The fact that Jim Boehner and other Republicans also believe this doesn’t make it wrong.

  34. WHQ Says:

    If only demand goes up, then prices must go up.

    That depends on the shape of the supply curve. Either way, they teach stuff that way in Econ class so that people can understand the concepts, not because the world actually works according to ceteris paribus, so the relevance is questionable, I think.

  35. kranky kritter Says:

    Here’s what seems to be missing: “the government” (generically) does not have total control over what it spends or what it brings in. They pass budgets. The money it spends goes into the economy and some of it comes back as revenue. It cuts spending over here, and revenue goes down over there. How that all balances out depends on the specifics, of course. But don’t think that if “the government” makes the wrong choices in what to cut that it can’t make the deficit worse than it would have otherwise been.

    I’m happy to stipulate that’s possible When the government makes changes in spending and taxation policy, there is no way to know with certainty what all the effects will be upon “the economy.”

    Reducing the deficit may lead to some adverse economic effects. Those may in turn lead to decreases in government revenue that are even greater than the spending cuts previously made.

    And that’s worth worrying about. No doubt. What is also worth worrying about is the opinions of America’s creditors about our progressively decreasing ability to re-pay the money we’re borrowing. Please take a look at federal receipts and outlays over the last decade and at previous reference points back to 1960. Generally. we’ve run deficits roughly between 5% and 20%, at a ballpark estimate.

    The 2009 and 2010 deficits were close to 70%. In other words, historically, for every $100 collected, our government has usually spent between $105 and $120. And managed to get away it in the eyes of our creditors.

    In 2009, the government spent $167 for every $100 collected. In 2010, the government spent $172 for every $100 collected. Our creditors are not stupid. They have serious (and legitimate) doubts about the wisdom of continuing to finance this behavior. Those doubts are likely to manifest as higher interest rates and inflated costs for goods due the huge increase in supply of US dollars. Interest rates have begun creeping up for the last 6 months or so. Oil, priced in dollars, has risen sharply. As have food costs.

    Continuing to spend well beyond its means WILL have repercussions for America and for Americans. As you have noted, making spending cuts is also likely to have repercussions in other places. So it’s important for us not to pretend that any of the hard choices America needs to make are no-brainers.

    Suppose we presume that it’s “necessary” or “very desirable” for the federal government to continue overspending to prop up a fragile economy and help state and local governments avoid draconian changes. Even if that IS true, it doesn’t do anything to make our creditors eager to loan us money regardless of our ability to repay.

    You’ve pointed out the possibility that budgets could reduce federal revenue by an even greater amount than the cuts made, thereby making the deficit worse. And I’ve acknowledged that’s possible. But how likely is it, really? Suppose, just for the sake of exploration, that we managed to make cuts to the next budget so that it was balanced. Let’s use the 2010 estimated numbers, where the gov’t collected 2.2 trillion and spent 3.7 million, for a deficit of 1.5 trillion. Suppose we spent only 2.2 trillion the next year, for an expected deficit reduction of 1.5 trillion. For the deficit to get worse under those circumstances, government revenue would need to fall from 2.2 trillion to less than 0.7 trillion. My point? Only that the more out of whack our deficit is, the less likely reducing spending could lead to a worse deficit.

    My concern is that our nation has overspent to the point where our creditors will demand ever-higher premiums to keep financing our choices. And as they do that, they’ll also look for better places to risk their money. Such as nations that spend within their means. There comes a point when any “necessity” of propping up the economy becomes irrelevant. If we have not reached that point yet, we’re getting close.

  36. Jim S Says:

    What about the fact that one side of the debate refuses to recognize increased revenues as part of the necessary solution, even going so far as claiming that tax cuts can’t contribute to the deficit? How can there be a realistic approach to significant deficit reduction in those circumstances?

  37. WHQ Says:

    My point?

    Nothing, really, because those numbers are absurd. If government spending dropped from 3.7 trillion to 2.2 trillion under current conditions, our entire economy would collapse with the attendant civil unrest. We’d be Egypt redux, only with more blood, and the government would very likely collect less than 0.7 trillion dollars. People would die in large numbers. Our productive capacity would be damaged such that it couldn’t be recovered for years, and our creditors would be screwed in the process. Not concerned or reluctant. Screwed. No one wants that. It would eff up the entire world.

  38. WHQ Says:

    So it’s important for us not to pretend that any of the hard choices America needs to make are no-brainers.

    Very true. This sounds like a message congress and the president need to hear more than the people reading this blog.

  39. kranky kritter Says:

    What about the fact that one side of the debate refuses to recognize increased revenues as part of the necessary solution, even going so far as claiming that tax cuts can’t contribute to the deficit? How can there be a realistic approach to significant deficit reduction in those circumstances?

    What’s your actual basis for claiming that one entire “side of the debate” refuses to explore ways to increase revenue?

    Remember, tax increases are not the only way to increase revenue. As I’ve mentioned here at least twice before, Obama is poised to suggest lowering the corporate tax rate while concurrently closing loopholes in such a way as to increase the amount of revenue collected. This is something Ronald Reagan did. I have not heard any Republicans coming out against this.

    Further, just a few weeks ago I heard a Republican (Thune IIRC, but it has been a while) say that making social security solvent may require means-testing.

    I think you’re WAY overstating your case when you claim one side of the debate insists that our fiscal problems must be solved exclusively via cuts.

  40. kranky kritter Says:

    My point?

    Nothing, really, because those numbers are absurd. If government spending dropped from 3.7 trillion to 2.2 trillion under current conditions, our entire economy would collapse with the attendant civil unrest.

    That’s not like you to not eventry, WHQ. If I thought that the example I described was a realistic approach, I would have said so. The example was meant only to be illustrative of a dynamic. My point was just I stated. The more grossly you overspend, the less likely serious spending reductions will make the deficit worse.

    If the amount of the deficit is greater than the receipts (in other words you spend more than twice what is collected) then balancing the budget cannot result in a larger deficit. Because receipts would have to fall below zero.

    Look. I’ve gone out of my way to explicitly acknowledge that it’s possible that serious spending cuts could make the deficit worse. As well as to acknowledge that they might exacerbate some troubling aspects of the economy. The least you could do is to admit that while serious spending cuts might make the economy worse, they are not that likely to reduce receipts so much that the deficit would be worse. It’s plausible to imagine that say 200 billion gets cut, but the deficit only decreases 110 million because receipts are reduced by the cuts. It’s less plausible IMo to imagine that 200 billion in cuts would lead to a 210 billion reduction in receipts.

    Counterintuitive things happen. All the time. I’m good with that, which is why I explicitly acknowledged your point. But it’s more likely that expected results happen…you cut spending, the deficit diminishes. Maybe not on a dollar for dollar basis, but still.

    It might also be nice if you offered some intelligent remarks on the issue of our creditors’ evolving assessments of the wisdom of loaning us so much more money than we collect. At the present time, China and other creditor nations might just be rattling sabers about things like establishing a new reserve currency or seriously decreasing investment in US treasury bonds or expecting much better returns in exchange for continuing to finance our debt. Perhaps they’d simply prefer for us to regain some sense of sobriety. That would sure be easing that disengaging from our economic problems.

    But the noises they are making show that they are watching more closely than ever, and that they get it about our wayward spending. China and the Asian Tigers don’t need us like they used to. They are solvent and thriving. If we stay sick economically, they can sell TVs and cell phones and knick-knacks to each other.

    IMO, our overspending is WAY too out of whack to keep spending “what we think we need to to invest in our future” and just hope it will be ok.

  41. kranky kritter Says:

    @whq
    I had a much longer reply get gobbled up.

    You’re not even trying. If I had intended for my example to be a proposal for what to do, I would have said so. Instead it was only intended to be illustrative of the point which I stated. The more out of whack your deficit spending is, the less likely you could cut spending seriously and end up with a larger deficit.

    For example, suppose your year x deficit is greater than your year x receipts. (you spend more than twice what you collect, IOW). Then in year x + 1 you balance your budget by spending an amount equal to year x receipts. It would not be possible to have a larger deficit, because receipts could not drop below zero.

    I’ve agreed both that it’s possible to exacerbate the deficit by cutting spending, and that it could harm the economy in some respects. The least you could do is to acknowledge that its more parsimonious to expect spending cuts to reduce the deficit, not enlarge it. A 200 billion cut might not save 200 billion, but it’s not all that likely to make the deficit larger.

    It would also be nice if you spoke to the issue of our creditors’ concerns
    about our spending. Do you agree that we can’t base our spending primarily on “what we think we need to invest in our future” without regard for the diminishing appetite of our creditors to finance it?

    I don’t want to sound like I am contending that folks who oppose budget cuts have no regard for our creditors. But I get the sense that the national mood of those you oppose budget cuts is dangerously similar to the wishful behavior of individuals who have caused so much debt to be run up, both personally and federally.

    We need to do better than to spend what we feel we really need to spend while hoping that it will someone be ok in the long run. We’ve done that for far too long, and the chickens are coming home to roost. Time for a more rigorous approach than hoping for the best.

  42. WHQ Says:

    If I weren’t concerned about our creditors, I wouldn’t be concerned about ill-considered, self-defeating attempts at austerity that won’t actually help reduce the deficit, kk. (Though the issuance of debt is a self-imposed constraint.)

    The point is that the cuts better be in right places, or they won’t actually be cuts. And what worries our creditors is our ability to produce. That’s what they’re investing in. If the private sector is saving in aggregate and the government doesn’t offset the net saving with net spending, the economy shrinks, productive capacity errodes and our creditors are screwed anyway. We’re in a crappy situation right now, and every dollar we spend needs to do the most good we can manage, and every dollar we tax needs to do the least harm we can manage.

    Yes, it’s very, very, very possible that we can spend our way into oblivion and become something like Zimbabwe or the Weimar Republic. I don’t advocate that. It would require spending that didn’t create jobs or promote sustained economic growth. But austerity cannot work right now, at least not without an omniscient being telling us some optimal way of doing it such that we end up with previously unheard of multipliers.

    Here’s a graph for you:

    http://bilbo.economicoutlook.net/blog/wp-content/uploads/2011/02/US_Employment_losses_by_Recession.jpg

    If that graph gets much worse, we have bigger problems than deficits and debt.

  43. WHQ Says:

    in moderation again

  44. kranky kritter Says:

    But austerity cannot work right now, at least not without an omniscient being telling us some optimal way of doing it such that we end up with previously unheard of multipliers.

    We’re so far from “austerity” right now that it’s very hard not to laugh derisively at that characterization. I’m not talking about austerity. I’m talking about the beginning of a move towards sobriety. Spending $170 for each $100 collected is not austerity. Neither is spending $160 or $150 or $140.

    The base presumption you seem to be implying (by showing that graph)is that cutting government spending is going to further balloon unemployment. Surely that stems from your belief (which we’ve discussed previously elsewhere) that high government spending creates real sustainable jobs.

    We’ll just have to agree to disagree. I think of a real job as work that stems from a self-sustaining enterprise that generates enough revenue to pay for people’s salaries while balancing inputs and outputs. The nature of a self-sustaining enterprise is that, at minimum, it balances receipts and outlays. Government-subsidized or funded or provided jobs could in some sense be viewed as real and sustainable if the government itself was balancing its receipts and outlays.

    But it’s not. The government is a leaky balloon pumping its dwindling supply of air into another leaky balloon. I am extremely skeptical of the notion that we’ve got no choice but to keep doing this, for the good of the country and its people. It lacks parsimony.

  45. WHQ Says:

    Regarding austerity, that’s cool. I’m not saying that what we’re doing now is austerity. I thought you were advocating something more austere than what we’re now doing. I don’t really have a great desire to spend more money just to spend it. We could probably do plenty of good at current spending levels if we spent more productively. Say fewer subsidies, less defense spending and more worthwhile public works and targeted help to local governments. I’d be willing raise taxes at the higher ends to increase revenue by adding brackets above the current ones.

    I also wouldn’t expect government to be a permanent source of jobs. Think of it as a virtuous cycle, where government spending produces jobs, not even necessarily government jobs, per se. People can work for the contractors who win bids to fix bridges and roads, repair our electrical grid and water infrastructure, install broadband networks and high-speed rail, etc. But that’s a shot in the arm that starts the virtuous cycle. Those workers become investors and consumers, restoring confidence to the private sector, whose spending eventually becomes self-sustaining and which benefits from the restored and expanded infrastructure now in place, replacing government and government-supported jobs with private sector employment.

    I don’t have great confidence that our federal government will be able to manage that, particularly the way our political climate is these days, but that’s what I think the best way out of this mess is.

  46. Jim S Says:

    What’s your actual basis for claiming that one entire “side of the debate” refuses to explore ways to increase revenue?

    Remember, tax increases are not the only way to increase revenue. As I’ve mentioned here at least twice before, Obama is poised to suggest lowering the corporate tax rate while concurrently closing loopholes in such a way as to increase the amount of revenue collected. This is something Ronald Reagan did. I have not heard any Republicans coming out against this.

    The corporate income tax proposal is not a revenue increase. It is designed to be revenue neutral and if it wasn’t the Republicans would be coming out against it. You know that. You need a far better argument. While Obama caved in on it, which side pushed hardest for maintaining the tax cuts? Which party’s most “serious” budget proposal calls for the elimination of capital gains taxes and other forms of decreasing revenue? All of these bright ideas come from the Republicans. Why do you insist on denying it?

  47. kranky kritter Says:

    I’m confident that when the corporate income tax is reformed and loopholes are closed, it will eventually lead to increased revenue. If Reagan could get away with it, so can Obama.

    Jim, it clearly serves your purposes to treat the entire body of conservative thought as a monolith. I think that’s dumb.

  48. kranky kritter Says:

    I don’t really have a great desire to spend more money just to spend it. We could probably do plenty of good at current spending levels if we spent more productively. Say fewer subsidies, less defense spending and more worthwhile public works and targeted help to local governments. I’d be willing raise taxes at the higher ends to increase revenue by adding brackets above the current ones.

    Well, I do think we need to go down from current levels. Not all the way back to balance in one year or anything like that. But I think we at least need to get back down maybe halfway towards the 2008 budget deficit, which was like $432 million. We need to go something like

    2010: collect 100, spend 150.
    2011: collect 100, spend 130
    2012: collect 100 spend 110
    2013: collect 100, spend 100.

    At a very rough outline. Maybe somewhat slower, but not over more than 6 to 8 years. Otherwise, too much of the budget progressively gets consumed by debt service.

    I am also not personally opposed to tax increases here and there. But I think they are off the table in this environment. If there were one “increase” I would support as soon as possible, it would be to implement a social security income cap removal and means testing of social security at the high end. The only way I’d support it would be if the implementation was geared towards year-by-year. pay-as-you-go solvency. In other words no changes could be enacted that actually led to any annual surplus in SS revenue. We’d only collect an additional amount that made SS solvent for that year.

    That would have two beneficial effects. It would take the “SS insolvency argument” off the table. It would also avoid providing the government with extra spending power that they could pretend they were “saving” for the next generation.

    I would like to see subsidies reduced or eliminated in many areas. Especially buyer subsidies which lead to higher prices. But with food prices going where they are going, we could probably reduce farm subsidies as well.

    I am sort of agnostic on big public works projects. I’d like to see some sort of overhaul where federal money is geared towards programs that have a real benefit to the nation as a whole, and away from picking winners and losers on projects that have regional benefit.

    For example, my state’s looking for fed financing for a wind energy project and a subway extension. The wind energy project is IMO defensible as a national benefit, because the project will be a useful lab experiment for everyone. OIl is a finite resource and its price is going up, so lets try to learn now to harvest alternative sources on a large scale and see what we find out.

    A subway extension? While it has merit and clear benefit for everyone, the benefit is clearly regional. I’d like to see projects like this planned and financed without expectation that they’d necessarily get earmarked federal funding. Maybe the feds distribute pieces of pie to the state to use as they see fit. If one state wants to spend it on a huge project, then their smaller needs would have to suffer or alternative financing found. Maybe states have the people vote on a length of project surtax that auto-expires.

    And maybe states decide in some cases to do without such stuff. I know NJ killed a really big project for just that reason, that they didn’t know how it would be paid for. Those are IMO exactly the sorts of choices we need to make over the next 5 or 10 years.

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