Thursday, December 20, 2012

fiscal cliff -- not at all what you hear

I am not sure of the details here, since I haven 't had time to study the Obama and Boehner "B" offers
in detail, but it does seem very clear that the press discussions are confused. And "going over the cliff" doesn't mean what many imagine.

First, the differences between Obama B and Boehner B seem to be much less that people imagine --
much less than the difference between either and "fiscal cliff." BOTH of them avoid an immediate drop in demand, BY POSTPONING DEFICIT REDUCTION TO FUTURE YEARS. They bite less now, and more later. Any true Tea Party person dedicated to the single goal of deficit reduction would simply prefer the cliff. Anyone else... well, maybe the parties should agree on the key numbers of WHEN the deficit reduction kicks in, to what degree, and on the overall tax versus spending ratios
(maybe just the same as in the fiscal cliff status quo), FIRST, in law, getting rid of debt ceiling issues
contingent on adhering to the agreement.

Next -- Obama has given a WHOLE lot. The bar charts I have seen show about half the deficit reduction coming form "taxes" (i.e., higher than the temporary Bush rates) and almost half
from social security and medicare, and only about 10-15% other government spending 9which Boehner's does not cut at all). It seems quite plausible to me that Democrats in the Senate
would simply not put up with what Obama has already offered. MAYBE they can find just enough
Democrats to vote for cutting social security and medicare, combined with non-Tea-Party
Republicans, but for a given level of deficit reduction, many Democrats would conclude that
this deal is no better for escaping recession than the fiscal cliff would be, and they simply may not accept the mantra that "cutting entitlements" (social security and medicare) is the right thing to do.
It's like offering the middle aged folks in the US a kind of vast credit card swindle, where they
get more money in the short term, but pay for it in spades later on. Maybe Obama could convince them that he can do a lot of that just by improving efficiencies in health care, but maybe not.
Boehner certainly couldn't.

So the chances of a cliff are looking greater by the day...

But again, that's just a quick impression today, between tasks I put more energy into....

No comments:

Post a Comment