Our Common Good
Good sense from… wait, from the IMF?

shiracoffee:

IMF: Budget cuts hurt growth a lot. But tax increases barely matter.

But let’s focus on this claim, from Republicans, that Obama only wants to raise taxes and isn’t serious about spending cuts. Here’s an analysis from one senior Republican aide, as relayed to ABC News’ Jonathan Karl:

The White House keeps saying it wants a ‘balanced approach’ but this offer is completely unbalanced and unrealistic. It calls for $1.6 trillion in tax hikes – all of that upfront – in exchange for only $400 billion in spending cuts that come later. Plus, the only entitlement changes they proposed come from the exact proposals in the President’s budget.

The trouble with this analysis is that it ignores history: As part of the 2011 Budget Control Act, Obama agreed to spending reductions of about $1.5 trillion over the next ten years. If you count the interest, the savings is actually $1.7 trillion. Boehner should have no problem remembering the details of that deal: As Greg Sargent points out, Boehner at the time actually gloated about the fact that the deal was “all spending cuts.” 

And now, with this latest offer, Obama is proposing yet more spending reductions, to the tune of several hundred billion dollars. Add it up and it’s more than $2 trillion in spending cuts Obama has either signed into law or is endorsing now. That’s obviously greater than the $1.6 trillion in new tax revenue he’s seeking. (And that doesn’t even take into account automatic cuts from the 2011 budget sequester, which Obama has proposed to defer, or savings from ending the wars in Afghanistan and Iraq.) So, yes, Obama’s proposal is unbalanced—but not in the way Republicans seem to think. If Obama were proposing a truly balanced plan, he’d be calling for even more tax revenue or even less spending reduction.

In the survey of 236 economists, who work mostly for banks and businesses, only one-third said that fiscal policy should be “tightened,” as would occur with tax hikes, over the next year. But a majority said policy should become tighter starting in 2014.

When asked “How Should Congress Reduce the Federal Budget Deficit?,” participants were asked to pick from among five fiscal policy options. The most common response was “equally with spending cuts and tax increases” (selected by 45 percent), followed by “mostly with spending cuts” (31 percent), “mostly with tax increases” (14 percent), “only with spending cuts (9 percent), and “only with tax increases (1 percent).

On its face, the survey appears to show more support for Obama-style policies than for those advocated by the president’s Republican challenger, Mitt Romney. President Obama, after all, has consistently and loudly called for a “balanced” approach that includes both spending cuts and tax hikes.

The US government will slash spending targeted for the protection of embassies around the world as part of a $100bn program of automatic spending cuts set to be start this January if Congress can not find a compromise.

The news comes after ambassador to Libya, Christopher Stevens, and three other Americans died following attacks the US consulate and a safe house refuge in Benghazi on Tuesday night. US embassies across the Muslim world are now being targeted by protesters angered by a video that denigrated the prophet Muhammad.

According to a 400-page White House report released on Friday, automatic spending cuts to be made at the end of the year will include $129m a year earmarked for the next nine years to go to maintaining and protecting US embassies.

The cuts are a small part of massive cuts to the military, air traffic control, the federal bureau of investigation, housing and social welfare programs, government salaries and private contracts that “would have a devastating impact on important defense and nondefense programs”, according to the report from the White House budget office. Starting in January, some $54.7bn per year will be cut from defense spending and continuing for nine years.

The fiscal contraction expansion myth – the Ricardian Equivalence myth – which underpins the stated claim that fiscal austerity will be good for growth because the private sector will be revitalised by the boost in confidence that comes from knowing that the budget deficit is being cut – denies basic human psychology.

timetruthhumor:

Welcome to the Republican version of America.

timetruthhumor:

Welcome to the Republican version of America.

The boasts of Congressional Republicans about their cost-cutting victories are ringing hollow to some well-known economists, financial analysts and corporate leaders, including some Republicans, who are expressing increasing alarm over Washington’s new austerity and antitax orthodoxy.

Their critiques have grown sharper since last week, when President Obama signed his deficit reduction deal with Republicans and, a few days later, when Standard & Poor’s downgraded the credit rating of the United States.

But even before that, macroeconomists and private sector forecasters were warning that the direction in which the new House Republican majority had pushed the White House and Congress this year — for immediate spending cuts, no further stimulus measures and no tax increases, ever — was wrong for addressing the nation’s two main ills, a weak economy now and projections of unsustainably high federal debt in coming years. Instead, these critics say, Washington should be focusing on stimulating the economy in the near term to induce people to spend money and create jobs, while settling on a long-term plan for spending cuts and tax increases to take effect only after the economy recovers.

[…]

Among those calling for a mix of cuts and revenue are onetime standard-bearers of Republican economic philosophy like Martin Feldstein, an adviser to President Ronald Reagan, and Henry M. Paulson Jr., Treasury secretary to President George W. Bush, underscoring the deepening divide between party establishment figures and the Tea Party-inspired Republicans in Congress and running for the White House.

Soto is paralyzed from the shoulders down but does not let that keep her from doing advocacy work for people with disabilities at a Los Angeles independent living center. Using her mouth, she can operate a computer trackball and type numbers into a phone with a Popsicle stick. Several times a week, an aide helps her into an electric wheelchair so she can take the train to work.

Most of the $800 she earns a month goes toward work expenses, including paying someone to feed her lunch. She has relied on $723 a month in SSI to cover rent and utilities. In July, the state reduced its portion of the grant for single beneficiaries like Soto to the federal minimum, shaving $15 from her income.

The same month, the state began charging Medi-Cal beneficiaries copayments of $5 for prescriptions, $50 for emergency room visits and up to $200 for hospital stays. Soto has five prescriptions and went to the hospital four times last year. “That can really add up,” she said.

But the cuts that worry her most are those to the In-Home Supportive Services program, which is paying for about nine hours of care a day. The two women who have been assisting Soto for more than a decade have told her they will have to look for other jobs if their hours are cut again. Without them, she fears she would have to go into a nursing home.

"Oh, my gosh. That’s no way to live," she said. "I wouldn’t be able to continue working. I would lose my quality of life…. I think I would rather just die."

The GOP Teabaggers screamed about ‘death panel’ but here is further evidence that their policies are the real death panels.  And frankly, I often think that is their goal.  Despite their ‘pro-life’ anti-abortion rhetoric, once you are born, if you can’t make it on your own, don’t save up enough to take care of yourself when you retire or need any healthcare you can’t pay for out of pocket, then you should just die.  Maybe they hope that poor unwanted baby they force you to have will be the last straw and you will just kill yourself, saving them the trouble and expense of killing you slowly. 

digby concludes:

The idea seems to be that the suffering of the old, poor, sick and unemployed will magically lead to a good harvest. Who says the human species hasn’t progressed?

Maybe they are getting into organic farming and plan on composting our remains.

Last week brought the disconcerting news that the economy grew no faster than the population during the first six months of the year, in part because of spending cuts by state and local governments. Now the federal government is cutting, too.

“Unemployment will be higher than it would have been otherwise,” Mohamed El-Erian, chief executive of the bond investment firm Pimco, said Sunday on ABC. “Growth will be lower than it would be otherwise. And inequality will be worse than it would be otherwise.”

He added, “We have a very weak economy, so withdrawing more spending at this stage will make it even weaker.”

Federal Reserve Chairman Ben Bernanke warned Congress on Thursday that overzealous cuts to government spending could derail an already fragile recovery and said a U.S. debt default could wreak financial havoc.

“I only ask … as Congress looks at the timing and composition of its changes to the budget, that it does take into account that in the very near term the recovery is still rather fragile, and that sharp and excessive cuts in the very short term would be potentially damaging to that recovery,” Bernanke told members of the Senate Banking Committee.

jonathan-cunningham:

  • Voters will blame Republicans over Obama 48 - 34 percent if the debt limit is not raised;
  • Voters say 67 - 25 percent that an agreement to raise the debt ceiling should include tax hikes for the wealthy and corporations, not just spending cuts;
  • Voters say 45 - 37 percent that Obama’s proposals to raise revenues are “closing loopholes,” rather than “tax hikes”;
  • But voters say 57 - 30 percent that Obama’s proposals will impact the middle class, not just the wealthy.

If the Republican strategy is “run out the clock until the debt limit is reached, then try to blame Obama”, the pivotal factor will be public perception of the debt ceiling negotiations. That’s why you’re seeing so much political theater (Obama walking out, McConnell making a stand, etc)- the public’s perception is the key. As things stand, it appears the majority of the public (albeit a slim majority) does not agree with the GOP party line.

Other interesting points from the poll…

  • People hate Congress. High disapproval ratings for both Republicans and Democrats

  • People blame Bush for the economy, not Obama. They don’t particularly like Obama’s policies, but with independents and overall, the public has not bought the line that Obama caused all the problems.

  • Jobs. Jobs, jobs, jobs. People want ‘em.

jonathan-cunningham:


We can also use the Gallup poll to tease out what mix of tax increases and spending cuts the public would like to see in a deal. Assume that the people who told Gallup that they wanted “mostly” cuts would prefer a 3-to-1 ratio of spending reductions to tax increases, and that those who said they wanted mostly tax increases would prefer a 3-to-1 ratio in the opposite direction. (The other choices that Gallup provided in the poll — an equal mix of tax increases and spending cuts or a deal that consisted entirely of one or the other — are straightforward to interpret.)
The average Republican voter, based on this data, wants a mix of 26 percent tax increases to 74 percent spending cuts. The average independent voter prefers a 34-to-66 mix, while the average Democratic voter wants a 46-to-54 mix.
Now consider the positions of the respective parties to the negotiation. One framework that President Obama has offered, which would reduce the debt by a reported $2 trillion, contains a mix of about 17 percent tax increases to 83 percent spending cuts. Another framework, which would aim for twice the debt reduction, has been variously reported as offering a 20-to-80 or 25-to-75 mix.
With the important caveat that the accounting on both the spending and tax sides can get tricky, this seems like an awfully good deal for Republicans. Much to the chagrin of many Democrats, the mix of spending cuts and tax increases that Mr. Obama is offering is quite close to, or perhaps even a little to the right of, what the average Republican voter wants, let alone the average American.

Obama is offering less tax increases and more spending cuts than what Gallup reports as desirable by Republicans, and is still getting rejected. It’s clear at this point that the Republicans are running out the clock and hoping that Obama will receive the blame for the disastrous effects of the US debt ceiling remaining where it is. I can only hope the media and the US population are keen enough on what’s happening to understand who is really at fault.

Link to Nate Silver’s entire analysis

jonathan-cunningham:

We can also use the Gallup poll to tease out what mix of tax increases and spending cuts the public would like to see in a deal. Assume that the people who told Gallup that they wanted “mostly” cuts would prefer a 3-to-1 ratio of spending reductions to tax increases, and that those who said they wanted mostly tax increases would prefer a 3-to-1 ratio in the opposite direction. (The other choices that Gallup provided in the poll — an equal mix of tax increases and spending cuts or a deal that consisted entirely of one or the other — are straightforward to interpret.)

The average Republican voter, based on this data, wants a mix of 26 percent tax increases to 74 percent spending cuts. The average independent voter prefers a 34-to-66 mix, while the average Democratic voter wants a 46-to-54 mix.

Now consider the positions of the respective parties to the negotiation. One framework that President Obama has offered, which would reduce the debt by a reported $2 trillion, contains a mix of about 17 percent tax increases to 83 percent spending cuts. Another framework, which would aim for twice the debt reduction, has been variously reported as offering a 20-to-80 or 25-to-75 mix.

With the important caveat that the accounting on both the spending and tax sides can get tricky, this seems like an awfully good deal for Republicans. Much to the chagrin of many Democrats, the mix of spending cuts and tax increases that Mr. Obama is offering is quite close to, or perhaps even a little to the right of, what the average Republican voter wants, let alone the average American.

Obama is offering less tax increases and more spending cuts than what Gallup reports as desirable by Republicans, and is still getting rejected. It’s clear at this point that the Republicans are running out the clock and hoping that Obama will receive the blame for the disastrous effects of the US debt ceiling remaining where it is. I can only hope the media and the US population are keen enough on what’s happening to understand who is really at fault.

Link to Nate Silver’s entire analysis