November 22, 2011
Why I Don’t Care About the Silly Supercommittee

Much hay has been made over the last couple of days about the failure of the so-called Supercommittee to hash out a budget deal that would reduce the long-term US deficit by $1.2 trillion —that’s $1,200,000,000,000, just for reference’s sake—over a ten year period. And there surely should have been: faced with long-term problems, Congress did what it is best at—it fiddled as Rome, if not exactly burned, at least lit the kindling.

And I don’t care in the least, for several reasons.

  • It turns out that if Congress does nothing—and I mean NOTHING—and just lets the Bush tax cuts expire, and fails to adjust the earned income tax credit (which is a bad idea), and fails to adjust Medicare payments to make doctors and insurers happy—TRILLIONS of dollars will come out of the long-term deficit all on its own. Indeed, it will go down MORE than if the Supercommittee had worked.
  • It isn’t at all clear to me how, with interest rates on US Treasury bonds at 2% or lower, and unemployment at 9+ percent, cutting federal spending is a good idea. Indeed, at the rate the US is refinancing its old debt at new rates, interest payments on the US debt are actually going DOWN right now. It makes a hell of a lot more sense to borrow money when interest rates are low than it would be to wait until rates were higher.
  • THERE IS NO DEBT CRISIS. Seriously. While we certainly have long-term debt problems, the “crisis” that led to the formation of the Supercommittee was entirely artificial in nature: the tea party Republicans decided that they would not vote to authorize an increase in the debt ceiling unless the budget was cut for every dollar that the debt ceiling increased. They claimed that the markets would go crazy if they didn’t make this stand, and that interest rates would skyrocket as investors abandoned the US, thus necessitating their budget cuts. And what actually happened? Well, interest rates when down when the Euro threatened to collapse. We borrowed more money and the world did not fall apart. The “crisis” was political in nature, and opportunistic in impulse: no economic force drove the politics that led to the creation of the Supercommittee. It was the tea party’s ambition to gut social spending that made the Supercommittee both necessary and doomed.

Don’t get me wrong: we need to fix our budget problems. But we don’t need to fix them tomorrow. We need to be serious, thoughtful and responsible. We need to be willing to give up things we care about deeply.

The Supercommittee was none of these. It was a gimmick. Good riddance.

May 19, 2011
Agenda Setting, the Media, Deficits and Unemployment

John Sides at The Monkey Cage has a nice piece summarizing how agenda setting works in American politics. Using articles focusing on public opinion about the biggest issue facing America today—the deficit, or unemployment—Sides traces the ways public and media attention on the deficit have come to supplant public and media interest in unemployment. It’s worth a read.

Perhaps the simplest depiction of this interaction can be seen in the following sumary graph:

Articles on unemployment and the deficit, May 2009-May 2011

October 1, 2010
It’s time to play counter-history!

Americans are angry. Really angry.¬†They hate the bailout of the fat cat bankers while homeowners and ordinary investors see their retirement savings collapse and their home values destroyed or their homes foreclosed. They hate the stimulus package that seems to have spent hundreds of billions of dollars without restarting job growth. They hate the health care plan, both because they see it as a forced federal mandate, and thus the destruction of human liberty, and because they see it as a financial bombshell waiting to go off. They hate that their taxes are spent for things they don’t like and for people whose lives they think they are wrongly being forced to subsidize. And at least some of them hate Barack Obama as an apparent cultural outsider who is at the heart of all these betrayals.

Rather than addressing the internal inconsistencies of these positions—the image of tea party Medicare and SS recipients complaining about government spending; attacking Obama for a bank bailout started under Bush—I am going to make up an alternative history and imagine what would have happened “if.”

Let’s imagine that on January 20, 2009, it was President John McCain who walked into the Oval Office, his election having been ensured with the brilliant selection of Vice President Sarah Palin, symbol of the tea party, as his running mate. What, exactly, would have been different?

Let’s start with the banks. What are the odds McCain would have ended the bailout and potentially allowed the US and world banking systems to collapse? Well, given his record and history: zero. Thus, at the least, one of the major complaints of angry America would have been no different at all.

Next comes the stimulus. Here there is a likely difference: McCain would have tried to do it all through tax cuts, with minimal federal spending. Three things jump out at this. First, when taxes are already fairly low (as they are in the US, whatever the tea partiers say), the marginal effect of further tax cuts is limited at best. Second, federal tax cuts can only help people who pay taxes, whether income or capital gains taxes. (McCain also advocated eliminating the fuel tax, which would have benefited lower income classes as well as the better off.) Thus the large number of people who had lost their jobs would have received no benefit at all. Third, this approach would have further exploded the deficit, a source to tea party anger.

Healthcare is an area where there surely would have been a difference. Either no reform would have happened, or any reform would again have been centered on tax cuts/vouchers. Medicare and Social Security would, of course, not have been touched in the least. Deficits would again continue to explode.

As for the wars, if anything McCain could have been expected to expand the wars in Afghanistan and Iraq. Enjoy those deployments, folks!

Finally, however, there would surely not have been the “outsider,” “socialist,” “birther” backlash. Which, given how tightly much of the tea party movement seems wedded to these ideas—they’ve even got Newt Gingrich now—means that the modern tea party movement may well never have formed.

Two conclusions. First, elections are fought in the real world, by real people with real plans and programs and skills and limitations. The plain fact is that much of what the tea party movement complains about under Obama would have happened under McCain. Maybe it shouldn’t have, but it would have.¬†

Second, it is also true that the tea party movement would likely have no where near the energy and influence it does if it did not have a target as easy to caricature as an “outsider” as President Obama is. Thus I don’t think this is as much about race as it is about culture: for a certain set of people, Obama represents values and ideals that they consider unAmerican.

The culture war component of the tea party movement is deeply disturbing, and may well have the most lasting impact of any component of the movement. Which will give me endless material for my classes and this blog, but I am not at all sure is good for the United States.