Well, the debt deal is out. And, as you might expect, so is the hysteria. Here’s Krugman:
For the deal itself, given the available information, is a disaster, and not just for President Obama and his party. It will damage an already depressed economy; it will probably make America’s long-run deficit problem worse, not better; and most important, by demonstrating that raw extortion works and carries no political cost, it will take America a long way down the road to banana-republic status.
Let’s take these apart one by one. It won’t take long, I promise. I can do it in three short paragraphs, the idiocy is so transparent.
First, this is not “austerity”. This is a cap on spending growth. There are no cuts, although some programs may be cut so others can grow (imagine that). We will still spend 95% of what we’d planned to spend over the next decade. My salary has been frozen two of the last three years; some grants cut by 50% or more. I would mud-wrestle a dolphin to get these kind of “cuts”. In other countries like the UK, they have actually cut spending — real cuts not phony-baloney caps in spending. And, somehow, the world has not ended.
Second, Krugman advocates more borrowing because interest rates are near zero. Now I’m not a Nobel Prize winner, but even I know that interest rates are not going to stay low forever. And when they rise, the stimulus spending of just the last three years (some $4 trillion) will eat up $100-200 billion a year in interest. That could potentially be an amount greater than the “draconian budget cuts”. And the more debt we run up, the sooner and harder those interest rate hikes are going to hit.
Third, we will see if the GOP pays a political price. I was not terribly happy with the tactics and am annoyed with the GOP for walking away from a potential “grand bargain”. However, raw extortion is nothing new to anyone who remembers budget battles past. The President and the Democrats dragged this out with their devotion to tax hikes. And if the Republicans are guilty of extortion, the Democrats are guilty of negligence. They had many opportunities to fix this; they chose to kick the can to the Republicans, hoping the GOP would pay the price for the tough choices.
But I feel I’ve wasted the three minutes it took me to write the above, because even Paul Krugman doesn’t believe that shit. No, what really pisses him off is that we had a debt showdown and we didn’t get the tax hikes he so desperately wanted. He even calls for them (because the economy apparently can’t survive 5% less spending growth, but can survive 10% more taxes). Back in December, I wrote the following about the unemployment-tax deal Obama cut:
There is something very revealing about the Left’s extremely angry reaction to this deal. Most of the center-left are OK with the deal, understand the need for compromise. But the far Left is beside themselves this morning.
This shows just how many Democrats really are into the wealth envy game. They’re not happy that they’re getting an unemployment benefits extension from a GOP Congress. They’re outraged that taxes aren’t going up on the rich for two more years. What kind of person thinks like that?
We’re seeing this again. The Left was convinced that this budget fight would end up with their long-wished and eagerly-awaited tax hikes (which may still happen in 2013). Last week, they spent the week yelling, “Cut a deal, any deal! Just stay away from the debt ceiling!” Now, suddenly, it’s “Oh, wait, not THAT deal!” In fact, some of them are now openly calling for either a default or a 14th Amendment solution.
Who is it that was taking hostages, again?
Threatening the debt ceiling has always been the tactic of those opposing the status quo. Now that the status quo is to … let’s repeat this for those of you joining us late … capping spending growth, it’s the liberals in opposition and, not surprisingly, the liberals who want to take hostages on the debt ceiling.
Paul Krugman and his travelers don’t care about the debt, default or the economy nearly as much as they care about big government. More spending and more taxes are not a means to an end; they are the end themselves. Fortunately, the President isn’t as in love with the State as they are.
Update: It bears pointing out that the crazy no-compromise Republican extremists did conceded something important here: defense spending is on the table. In fact, it’s got more limbs on the table than anti-poverty spending. That is a big win for the Democrats, the President and the country as a whole.