Regardless of what you think of Obama, he's pretty clearly our funniest president

I was charged by a moose once

Most people who know me already knew this. Here's a video reenactment

A discussion on future fiscal debates

I still don't have time to post, but this was kind of substantive so just read it or whatever.

Canadian

gart, u there?

me

i am

Canadian

can i ask u a question re US politics?

me

yes you can

you ALWAYS can

Canadian

basically, what is the budget situation right now?

me

budget or deficit

Canadian

i know there was a couple of short-term measures to maintain current govt speding at 2010 (2011?) levels.

has obama put forward a new budget?

has it been debated, passed?

budget

me

ah yes

yes

Canadian

i know defiicit is huge. have they voted to increase teh ceiling?

me

2011 they had a last minute deal that passed about 2 weeks ago

literally, govt was going to shut down in an hour and they worked out a compromise with republicans

obama put forward a budget but republicans said no

so they had a compromise

that funded the govt through fiscal year 2011

they have not voted to raise the debt ceiling - that is what the next big fight is about

Canadian

ok, what is fiscal year 2011? that's oct 2010-oct 2011?

me

it'll have to be raised by june/july or the shit will be horrible

i'm not 100% but i think it goes through early spring 2012

Canadian

ok so the last development was two weeks ago with another continuing resolution?

me

there were a few short-term extensions, so that's why it didnt' get passed until april

right

Canadian

ok and when did obama put forward his budget?

btw you are being so helpful

me

haha good!

he announced his budget in the state of the union address in january and publicly released it around the same time

Canadian

basically current sitaution is: gov't is working via a continuing resolution prob through early 2012; at some point this summer there will be a debate over the debt ceiling; and there is a huge ideological divide in congress

me

that is 100% correct

oh and one more incidental thing

republicans say they will only vote to raise the debt ceiling if there are massive spending cuts attached to it

Canadian

but that is pointless then haha

me

yes

Canadian

why have a high ceiling if you aren't giong to go near the ceiling

me

to make it double-pointless is -- even if the republicans got every last thing they have asked for, they'd still have to raise the debt ceiling

Canadian

why will this issue be raised soon, if the gov't has a short term resolution to continue at current spending levels to 2012?

me

so they're just engaged in hostage-taking, essentially

ah

excellent q

Canadian

oh i see. got it re the ceiling

me

the continuing resolution for spending is just for the government to continue to pay people to do their jobs (postal workers, IRS, military)

the debt ceiling is different, and strangely unique to the US

the U.S. is the only country that says how much the treasury can borrow

this doesn't really make sense

Canadian

ahh ok very helpful

me

bc they pass laws saying "do this which will cost like $1billion"

but then they ALSO have to pass  a law saying "you can now borrow $1billion to do that"

most countries just say "if congress passes a law saying we are going to spend money, that automatically means they can borrow it if need be"

Canadian

hahahah god

and...if you were looking at this US situation from the perspective of a canadian business, what questions would you have? hahahha

me

and the TRIPLE ironic thing is that this only happened (the debt ceiling vote) in the mid 90s when republicans wanted to get more leverage over clinton to do exactly the same thing they're doing now

so fiscally, it makes no sense -- it's purely a political issue

well

i think the debt ceiling will be raised

i think it will go pretty much down to the wire

but structurally, the incentives are (mostly) there to raise it

the last 2 big times that a deal had to come down were tax cuts in december 2010 and the budget deal just 2 weeks ago

both times they worked things out

everyone knows the debt ceiling has to be raised

the republican speaker of the house (who is the #1 negotiator with the white house on the debt ceiling) has said he knows it would be catastrophic if the debt ceiling weren't raised

everyone knows that if it's not raised it'll make america look unsafe and could literally make people stop investing in the dollar

but at the same time, this is leverage and the republicans are going to see how much in concessions they can get from the white house before passing it

that's the rational end - the irrational argument is that the republicans are crazy and don't mind ruining the US economy unless incredibly massive spending cuts are implemented

Sent at 12:32 PM on Wednesday

Canadian

ok well put.

the republicans do seem irrational

how anyone votes for them is beyond me

this has been really helpful. a good summary

me

they're irrational-ish

some of them definitely are, yet they keep actually making deals

it's kind of in their interest for people to doubt their sanity

bc they can extract more concessions that way

Sent at 12:35 PM on Wednesday

Canadian

ya and their supporters get all worked up and rally behind the issues

brb

me

right

that's the other end to it

the grassroots of the republican party IS actually fairly crazy and also has MORE power than they've ever had before

politicians are self-interested, so it's making people who used to be semi-sane say some fairly nutso things

Sent at 12:37 PM on Wednesday

Canadian

sorry, one more question -- when will the next debate be regarding the budget?

me

next year

the most optimistic situation is that there is a comprehensive & bipartisan deficit-reduction act that passes before then

then the spending bill wouldn't be controversial, bc the issues would already be worked out

Canadian

until then its up to depts and agencies to work with what they have and decide how to spend it?

me

the more likely result is this all happens again next year -- under clinton there were 2 shutdowns, one in 95 and one in 96

well the depts and agencies are fully funded until next year

then if there's not another continuing resolution, they get more money

Canadian

I'm wondering where the bulk of the money is going and how this is being decided -- e.g. to defense, core programs like medicare...?

me

ah yes

http://www.nytimes.com/interactive/2010/02/01/us/budget.html

that's not what passed

Canadian

like, how is it being decided that e.g. spending for science and tech research projects should be cut but defense spending stays high?

me

but the numbers will prob be roughly the same

Canadian

ok great. and who decides these numbers?

compromise?

me

a lot of them are just predetermined

Canadian

so these numbers stay approx same until early 2012 when they try to pass a real budget?

me

as you can see, a huge proportion of it goes to, essentially, insurance programs

right

Canadian

and what about thsi reduction act?

you mentioned. how will that impact where money is spent?

me

so you can kind of predict like, how many people will be getting social security or filing for medicare

you know how much the wars are gonna cost

the thing people fight about is all in the bottom right corner - transportation, education, agriculture, energy - but those are all tiny parts of the budget

to get the deficit under control, you need to address the big chunks - social security, medicare/medicaid, defense

that's like 75% of spending

that's what the deficit reduction plan will address

Liberals and Conservatives Both Won Too Much

A while back, Yglesias wrote a semi-inflammatory post essentially arguing that liberals have won.  FDR started the process of social insurance for white elderly folks, and since then that safety net has expanded to provided a baseline of social insurance (retirement and medicine) to everyone.  This culminated with ObamaCare, which officially granted (near) universal health insurance to all Americans, regardless of income. Any future changes to this will either be tinkering about how to pay for these programs, or conservatives roaring back and eliminating them.

I think that's 100% right, and something liberals should really keep in mind. But the flip side to that is that conservatives have won too.  Ask an ideological conservative the #1 thing they want, and the answer will be "lower taxes." [Smaller government might be an argument, but that's really not what conservatives have fought for -- including Reagan. Government has grown hugely under Reagan and Bush, the two most electorally successful Republican presidents].  Anyway, taxes are historically low now -- so Republicans won that battle too.

Incidentally, yes, the tax rates for the top 20% account for pretty much the entirety of the tax cuts. But still - that is what Republicans fight for the hardest.

That is really the cause of the deficit. Both sides won! In the next few years though, one side is going to lose - we're either going to eviscerate some of the social welfare programs we've put in place or raise taxes (particularly on the top 20%). It'll be interesting.

Bipartisanship and Deficit Plans

Lots of interesting but boring-to-99%-of-the-population stuff about the deficit today.  I don't want to recap everything...oh FINE I will.

Paul Ryan/Republican Plan: "cuts" $4.3 trillion in 10 years. scare quotes used bc a) his numbers don't add up b) no one can actually predict what our deficit will be in 10 years with any kind of certainty. that's like me asking you what your credit card debt will be in 10 years, so fundamentally this whole debate is about hypotheticals and the numbers are pretty screwy.  Anyway - Ryan gets the cuts by turning Medicare into a block grant program (which means instead of covering your insurance when you're an oldtimer, you'll get a certain amount of money to buy your own insurance), raising the retirement age, cutting taxes on rich and raising them for the middle class/poor, fully repealing ObamaCare and Financial Reform Act. i think that's basically it.

Obama Plan: "cuts" $4 trillion in 12 years.  Raise taxes on people making over $250,000, fully implement ObamaCare to cut health care costs, continue to invest in research & development, slash defense spending. This would be about $2-3 dollars in spending cut for every $1 dollar in new taxes. Oh and reform the tax code, which would save a lot of money.

Surprise! Republicans like Ryan's plan, Democrats like Obama's plan, and Moderates want to split the difference. You've got moderate folks like David Brooks and Max Shifrin endorsing what they call a hybrid approach comprising of the following:

1. Aging populations, expensive new health care technologies and the extravagant political promises have made the current welfare state model unsustainable. Fundamental reform is necessary or the whole thing will collapse, here and in Europe.
2. Seniors and the middle class cannot be excused from the benefit cuts that will have to be imposed to rebalance these systems.
3. Health care costs will not be brought under control until consumers take responsibility for their decisions and providers have market-based incentives to reduce prices.
4. Tax increases on the rich have to be part of a fiscal package.
5. Government investments in research and infrastructure nurture broad-based prosperity.

That's the hybrid. There's kind of a big problem in that though, in the sense that it's...um...like...actually not a hybrid at all.  Let's work in reverse order:

5. Obama's plan has investment in research/infrastructure, and (I think) Ryan's does not.
4. Obama calls for new taxes on the rich. Ryan has 100% said that is completely unacceptable.
3. This just isn't true. Medicare - government-run health care - does a better job of controlling costs than the private insurance market. Health care costs in countries with government-run health care see their health care costs increase at a slower rate than those with more private markets. Why? Because health care is different - unlike most things, where people make a rational, market-based choice, people rarely do that when their loved ones lives are at stake. The free market is not the best way to deal with health care costs.
2. None of Ryan's cuts come from people younger than 55 years old. Obama's cuts do.
1. Ryan's plan doesn't really have fundamental reform...it just shifts the rising cost of health care from the government to individuals. It repeals ObamaCare, which is actually forecasted to slow the rate of health care cost growth.

So long story short, the moderate, consensus view is basically Obama's plan. Oops.

I am so delinquent at blogging but still this is insane

I haven't had time to blog recently.

This is how that makes me feel: