Tag: Simpson-Bowles

The President Punks Us … Again

Here’s the thing: the President’s budget proposal is effectively DOA. Even if the Republicans didn’t control the House, his Senate has refused to propose a budget in three years. So there is no chance today’s proposal will come anywhere close to passing.

Given that, why doesn’t he propose something bold? Why does’t he put out Simpson-Bowles? Why doesn’t he say, “Hey, you want the budget balanced? Here’s what it’s going to take.” and put out a proposal with big tax hikes and even bigger spending cuts. He’s had two plans — Simpson-Bowles and the Ryan Plan — but out in front of him. And he responds with this?

President Obama on Monday unveiled a $3.8 trillion spending plan that seeks to pump billions of dollars into the economy while raising taxes on the rich to tame a soaring national debt now projected to grow significantly faster than previously forecast.

The president’s outlook for debt reduction has slid markedly since September, when Obama told Congress that his proposals would hold annual deficits well under $600 billion after next year and permit the debt held by outside investors to rise to $17.7 trillion by 2021, or 73 percent of the overall economy.

The new 10-year blueprint shows annual deficits exceeding $600 billion every year except 2018. And the portion of the debt held by outside investors would grow to $18.7 trillion by 2021, or 76.5 percent of the economy — a full $1 trillion higher.

Administration officials said about half the increase is due to policy changes, with the other half driven by gloomier economic projections that tend to depress tax collections, increase government spending and drive deficits up. Job growth has proved stronger than expected since the budget was prepared, they said, adding that the picture would look brighter today.

To see how accurate their past budget projections have been, Veronique de Rugy looked at the 2010 budget proposal. It projected a $500 billion deficit in FY 2013, about half of what we will actually have.

Now to be fair, the budget proposal keeps overall spending nearly frozen at $3.8 trillion. However, this is part of the problem. The Stimulus bumped up the baseline and we are still well ahead of it. I said at the time that the true cost of the stimulus would be more like $4.5 trillion over the next decade (a $300 billion one-year increase times ten years with the usual spending growth). And rather than cut stimulus bullshit, Obama’s spending cuts, such as they are, are coming from things like NASA, which did not get stimulus spending but is losing any Mars exploration to pay for things like Solyndra.

The President proposes to tax dividends as ordinary income. While I think this should be paired with an overall rate cut, I’m not opposed to this in principle. Since we lowered the capital gains and dividend rates in the 1990’s, we’ve had two investment bubble and little economic growth. I recently talked to an engineering professor who confided that his best students were going into finance instead of … engineering. I think it’s a fair argument that the low tax rates on investments had the side effect of keeping tax rates low for high-stakes financial gambling (that we subsequently bailed out) while leaving them high on people actually working and making. When Wall Street bankers pay a third of the tax rate of business owners, something is wrong.

BUT. But … you don’t start tax reform with the objective of taxing Mitt Romney or Warren Buffet more. The appropriate thing to do here is scrap the entire system and rebuild it from scratch in a way that minimizes the deadweight loss of the revenue our government needs to operate. It is possible, as Reagan showed, to increase overall tax revenues while decreasing the impact on the economy.

But that would require courage. And Obama’s budget basically punts on all the big issues. Stimulus spending? Maintained. Green energy? Increased. Medicare? Untouched. Social Security? Ha!

This is a joke. We should treat it as such. The first serious budget proposal will come out of the House. That’s when we should pay attention.

Fuck the Both of Yous

This really captures how I feel:

Over the course of history, Congress and the White House have seen highs and lows. Times that can be remembered with pride and other times when politicians failed to meet the American people’s expectations. Right now, we are at a very, very low point—the worst I’ve seen since I moved to Washington in September 1972. Never in my memory have both parties and both ends of Pennsylvania Avenue appeared as dysfunctional as they do today. The stakes are so high and the performance is so utterly disappointing. The goals of most of the debt-ceiling proposals being debated are so modest that victory would really be a defeat in terms of what needs to be done.

My wife told me recently about a Facebook post by an acquaintance that held Congress up to ridicule. Apparently, the sentiment was enthusiastically endorsed by people who spanned her entire network of friends—from the most liberal to the most conservative. My wife couldn’t recall anything else that had been so universally embraced by such a politically diverse group of people.

I’m sympathetic to the points made by Krauthammer and Carney that we are dealing with fundamental philosophical disagreements. “Acting like adults” is not going to erase these serious differences of opinion. However, fundamental political difference is not new. Reagan’s vision for America was quite radical in its day; we still got budgets passed.

No, this is political. Republicans don’t want to give Obama any kind of “victory”. And Democrats want to kneecap the only competent Speaker the GOP has had since Early Gingrich. Why else would they not give Boehner any votes on the current bill, even though it’s similar to the Reid bill that they will vote for? (As McArdle said on Twitter: If Harry Reid is the only thing standing between us and disaster, it’s time to break out the asbestos underwear.)

The problem is especially glaring when the long-term solution is obvious and has been for a long time. As this thing drags on, the wisdom of the Simpson-Bowles proposal — with tax reform, retirement age hikes and defense cuts — becomes clearer. It’s at least the basis of what a reasonable compromise between the competing political philosophies. But right now we have two parties who seem to be more interested in placating their own internal sects than working out a deal. Their big worry is being primaried by the Tea Party (if they’re Republicans) or everyone else (if they’re Democrats). But by trying not to piss off anyone, they’re only succeeding in pissing off everyone. If we have a financial crisis, they’re going to get primaried anyway. The choice is no longer between winning re-election and not winning. It’s between going down while accomplishing something or going down while accomplishing nothing. The Democrats got hammered in the last election; but that didn’t unpass Obamacare. Who cares if the GOP loses in 2012 if they’ve made huge inroads on our debt problem? I would gladly take four more years of Obama if it got us something like Simpson-Bowles.

The thing is that … hang on … I’m preaching to the choir. Let me address Congress directly for a moment. Later, I’ll put up a post on normal-people stuff.

Dear Gasbags:

We don’t like politics. I know it obsesses your every waking moment. You go to bed dreaming of political victory and wake up thinking of humiliating your enemies. But most of us don’t care that much. I’m a political junkie and even I don’t care that much. Here is a short list of the thing that have occupied more of my brain space than your petty games just this morning: my daughter, Disney princesses, astrophysics, booking plane flights, the Braves-Pirates series, the NFL lockout, how good Harry Potter 7B was, how awful the Battleship trailer looks, what I’m going to do on vacation, what I thought about The Girl with the Dragon Tattoo, what I thought about the Comedy of Errors, where I should have lunch, whether we can make Sal 11000 Beta’s gymnastics class, how I’m going to get tickets to a minor league baseball game and how much moss I can scrape off a picnic table with an empty Coke can.

See? We do a lot out here. We work, we play, we spend time with our friends and families. Washington, to most of us, is an occasional annoyance. We tolerate your stupid childish games because it serves a purpose. Government helps create the space in which we can enjoy the things we do care about. And politics keeps people like yourselves out of important jobs where you might be able to cause real problems. But we don’t care about your little internal snits and quarrels and re-election prospects any more than we care about inter-office gossip at the cable company. You’re a utility, not family.

You’ve been trying very hard to get our attention lately. From regulating our jobs to death (20% of jobs now need government permission) to making our taxes ever more complicated to sending the stock market and then the housing market on a roller coaster. We’re paying attention, sort of. But really, we mostly want it to just go away.

However, you’re getting close to end of our patience. If you don’t figure out a solution to this; if you run headlong into the most preventable financial crisis in history, you’ve had it. Personally, I will wash my hands of both of yous. I will vote for fucking Ralph Nader before I vote for either of you. Hell, I might vote Mahmoud Ahmadinejad before I give the keys back to your competing fleets of clown cars.

The deficit was not invented when Barack Obama became President. Nor was it something that was sprung by surprise on him by the Republicans. Of all the people in Washington, there may be a handful that have no blame in what’s happened. You don’t really need to waste all this time and effort blaming each other. We’ll happily blame both of you.

The framework for a solution was laid out before you a year ago. Yes, if you support something along the lines of Simpson-Bowles, your base will erupt and you might get unelected. But that’s going to happen anyway. We didn’t elect you to get re-elected. We elected you to make hard and possibly unpopular choices that may piss us off, may turn us against you but are necessary for the country to function. We elected you to fall on your swords, not to position yourselves for 2012. This is bigger than whether or not Barack Obama gets re-elected next year.

If we have to pay more taxes, we will. We’ll do it rather than let our children pay those taxes with interest. If we have to wait a couple more years to retire, we will. We’ll do it rather than bankrupt our nation. If we have a few less tanks to keep those Canadian hordes at bay … well, we’ve all got guns. We’ll be fine. My home state of Pennyslvania fielded one of the world’s largest makeshift armies last year and won a decisive victory over several hundred thousand deer.

Just fucking do it. If you have to temporarily extend the debt ceiling to work out the details, fine. We’ll manage. But quit playing these bullshit political games because we don’t fucking care about your petty little rivalries and ambitions and Fox News/MSNBC talking points. Quit kicking the can down the road. Turn off the cameras, log off of Twitter and do it. You don’t need another commission — you had a great commission last year and have so far ignored it. Start with that framework and build from there.

Because we would really like to go back to ignoring you.