Let Freedom Reign!


 
HomeHome  PublicationsPublications  SearchSearch  RegisterRegister  Log in  

Share | 
 

 Debt Ceiling and the Fiscal Cliff

View previous topic View next topic Go down 
AuthorMessage
Heretic

avatar

Posts : 3092

PostSubject: Debt Ceiling and the Fiscal Cliff   12/14/2012, 9:35 am

Jeff Weintraub did a series of articles last week on the fiscal cliff/debt ceiling that I thought were particularly noteworthy. Definitely worth reading:

Comparing the US & Britain once again confirms that Keynes was right and the Republicans are wrong

Quote :
To put it bluntly, when the economy is threatened by or recovering from a major recession, the government should be running a deficit (except in exceptional situations that make this difficult or dangerous) to pump more demand into the system, offset contractionary dynamics, and help promote economic recovery. In the US case, for various reasons, the major responsibility for doing this rests with the federal government, not state and local governments. (And, by the way, if you've been hoodwinked by right-wing propaganda into believing that the Obama administration's 2009 economic "stimulus" didn't work, thus disproving Keynes on this point, think again.) More generally, fiscal policy should be counter-cyclical. Everything else being equal, governments should bring down their deficits in good times, not bad times. The time for governments to balance the budget, run surpluses, or pay down the debt is when the economy is booming. During downswings in the business cycle, let alone major economic crises, trying to do those things is a bad idea.

. . .

As a number of analysts have pointed out over the past several years, we have a first-rate natural experiment available to help confirm that diagnosis. In American economic debates and demagoguery, there has been a lot of talk about the dangers of the US turning into Greece. But in many ways that's wildly misleading, since Greece is a very different sort of country from the US, with very different economic circumstances. The more logical and informative comparisons would be with the larger & stronger western European economies ...

... and especially with Britain, where the Conservative-led government elected in May 2010 decided to pursue Republican-style austerity policies in a serious and consistent way. (If you check out the graph above, May 2010 is the point when the red line, for the British economy, stops rising and goes flat. That's not a coincidence.) In the US, on the other hand, the Obama administration has responded to the Great Recession with broadly Keynesian policies of economic stimulus and counter-cyclical deficit spending—despite unrelenting Republican sabotage and obstructionism, combined with excessive timidity and unwise concessions to deficit hysteria on the Democratic side. They could have done it better, and they should have done it more aggressively, but basically they've done it.

With what results? As John Cassidy explains in a very nice recent piece, the lesson to be learned from this concrete comparison is very clear: "It’s Official: Austerity Economics Doesn’t Work".



John Boehner threatens to repeat the debt ceiling fiasco, and to keep repeating it indefinitely

Quote :
Again, it's important to emphasize that Congressional votes to raise the debt ceiling do not authorize new or increased expenditures by the federal government. They simply authorize the federal government to keep selling bonds to help pay for expenditures that have already been mandated by law. In the past, therefore, periodically raising the debt ceiling in order to allow the US government to keep paying its bills was a routine matter, sometimes accompanied by purely symbolic posturing.

. . .

In retrospect, though, we can now see that this somewhat odd procedure was a potential bomb that could blow up the US economy, if one of the major parties was sufficiently reckless and irresponsible to weaponize it. In 2011 the Congressional Republicans decided to take that plunge in a historically unprecedented way, refusing to raise the debt ceiling when US government debt hit the upper limit unless they got sweeping concessions in return. In effect, they used the threat of a US government default (which would also be historically unprecedented) as a way of taking the US economy hostage for purposes of crude political extortion.

. . .

The bulk of the Congressional Republicans, including the leadership, are acting on the basis of more cynical hard-headed calculation. They decided some time ago that a strategy of monolithic intransigence and rule-or-ruin obstructionism would yield them maximum political advantage--and the 2010 midterm elections confirmed those calculations for them, though right now they're still figuring out how to respond to the shock of Obama's re-election. Over time, unfortunately, the result is that the national Republicans have become a party dominated by routine extremism and intransigence, along with an increasing willingness to tear up the normal rules and restraints of the political game. And that makes them, frankly, a danger to the republic.

Even sober, centrist, temperamentally moderate, and judiciously balanced analysts of US politics like Thomas Mann and Norman Ornstein have gradually been forced to recognize this unpleasant reality.

Quote :
We have been studying Washington politics and Congress for more than 40 years, and never have we seen them this dysfunctional. In our past writings, we have criticized both parties when we believed it was warranted. Today, however, we have no choice but to acknowledge that the core of the problem lies with the Republican Party.

The GOP has become an insurgent outlier in American politics. It is ideologically extreme; scornful of compromise; unmoved by conventional understanding of facts, evidence and science; and dismissive of the legitimacy of its political opposition.

When one party moves this far from the mainstream, it makes it nearly impossible for the political system to deal constructively with the country’s challenges.

“Both sides do it” or “There is plenty of blame to go around” are the traditional refuges for an American news media intent on proving its lack of bias, while political scientists prefer generality and neutrality when discussing partisan polarization. Many self-styled bipartisan groups, in their search for common ground, propose solutions that move both sides to the center, a strategy that is simply untenable when one side is so far out of reach. [....]

And one of the most striking pieces of evidence helping to confirm this assessment is the astonishing (but no longer surprising) fact that the Congressional Republicans are willing to use repeated threats of a US government default as a routine tool of political extortion, despite the fact that by doing so they systematically undermine the "full faith and credit" of the United States and run the risk of financial apocalypse.



And the third part of the series is here.

Back to top Go down
Heretic

avatar

Posts : 3092

PostSubject: Re: Debt Ceiling and the Fiscal Cliff   12/14/2012, 9:41 am

On debt ceiling, GOP is defining extortion down

Quote :
Pay close attention to how this is covered. In a very general sense, the shrugs that greet the prospect of another debt ceiling fight suggest Republicans are successfully redefining the withholding of support for a debt limit hike as not agreeing to concessions requested by Democrats. In other words, Republicans won’t give Democrats the debt ceiling hike they want unless they get spending cuts in return.

But raising the debt ceiling is not merely giving Democrats something they want. It is averting a threat to the economy and to the whole country. Top Republicans have admitted this. As Steve Benen recently documented, during the last debt ceiling battle John Boehner readily admitted that default would mean “financial disaster” for the global economy.

Indeed, the mere threat of brinksmanship itself, let alone default, is potentially damaging. During the last debt ceiling fight Standard and Poors downgraded U.S. government debt before default occurred — partly because of the mere fact that Congress was fighting over whether to raise it.

I suppose technically it is giving something Democrats want... a still economically viable USA.

Quote :
This is not business as usual, in which each side is demanding concessions from the other. In this case, one side is asking for concessions in exchange for not hurting the whole country, and spinning any eventual agreement not to do that as a concession on their part. It’s a remarkable maneuver, when you think about it.

Clearly this is a dangerous game, as I doubt Republicans would be so cheering if the parties were reversed.
Back to top Go down
Artie60438

avatar

Posts : 9360

PostSubject: Re: Debt Ceiling and the Fiscal Cliff   12/18/2012, 4:12 pm

Poll: 69% disapprove of GOP on fiscal cliff
Quote :
Nearly seven in 10 Americans disapprove of how congressional Republicans are handling the fiscal cliff, according to a poll released Tuesday, with a bare majority expecting a deal to be reached by the end of 2012.

Only 17 percent of Americans approve of how the GOP is handling negotiations, while 69 percent disapprove, according to a new CBS News poll. Fifty percent disapprove of how Obama and congressional Democrats are negotiating, while 38 percent approve.
Back to top Go down
Artie60438

avatar

Posts : 9360

PostSubject: Re: Debt Ceiling and the Fiscal Cliff   12/20/2012, 10:53 pm

Boehner Calls Off Plan B Vote
In a stunning defeat, Speaker John Boehner (R-OH) called off a vote Thursday night on his Plan B to avert the fiscal cliff, citing a lack of support from his own party. Boehner issued the following statement as an emergency meeting of the House Republican Conference was ending:

The House did not take up the tax measure today because it did not have sufficient support from our members to pass. Now it is up to the president to work with Senator Reid on legislation to avert the fiscal cliff. The House has already passed legislation to stop all of the January 1 tax rate increases and replace the sequester with responsible spending cuts that will begin to address our nation's crippling debt. The Senate must now act.
Woo hoo! Fiscal Cliff here we come!!! cheers Coming soon: John Boehner to introduce Plan C,D&F from Planet Wingnuttia bounce
Back to top Go down
Artie60438

avatar

Posts : 9360

PostSubject: Re: Debt Ceiling and the Fiscal Cliff   2/25/2013, 7:13 pm

Back to top Go down
chuckmo48

avatar

Posts : 284

PostSubject: Re: Debt Ceiling and the Fiscal Cliff   2/26/2013, 1:38 pm

Look how the rethuglicons are trying to help in all this. These are quotes from Lindsey Graham on CNN:
Quote :
Have we put together a plan to cut $20 billion between March and October?" Graham said. "No, the House passed a plan to substitute sequestration.The Senate Republicans have yet to offer a plan."

"We'll criticize everything he does," Graham acknowledged. "We'll say, 'Mr. President, it is now up to you to find this $85 billion in savings and we'll say it’s to make it easier for you.' But every decision he’ll make, we'll criticize.
Back to top Go down
Sponsored content




PostSubject: Re: Debt Ceiling and the Fiscal Cliff   

Back to top Go down
 
Debt Ceiling and the Fiscal Cliff
View previous topic View next topic Back to top 
Page 1 of 1

Permissions in this forum:You cannot reply to topics in this forum
Let Freedom Reign! :: Nation/Other :: Nation/World-
Jump to: