August 2, 2011

How is that debt crisis thing working out?

I haven't really been paying attention, so let me guess what happened: everybody procrastinated to the last moment, then they rushed something through that does a bunch of things, but nobody is all that sure exactly what is in the fine print, and meanwhile it kicks a lot of other cans down the road.


the slatest said...

You mean you didn't watch any of it?

I thought it lagged a bit in the third act, but that subplot with the trillion-dollar coin was delightful.

Shouting Thomas said...

Yes, that's what happened.

The problem is that nobody knows what to do... about the economy, that is.

A pretense of absolute certainty and action is, however, required.

Sarah Palin did get in a pretty good whack at President Obama on Fox News. He "pals around" with a real terrorist... i.e., Bill Ayers.

She's lethal!

DCThrowback said...

The CW is that Dems lost in the deal and that the GOP won, which means, as usual, the exact opposite is true. Leviathan will continue to grow, no steps towards taking on the big 3 entitlements (Medicare, SS or Defense) has been addressed and the country will stumble further down the path of currency debasement. The Southern Avenger summed it up best at AMCON: The Tea Party actually needs to be more extreme.

See Markovits "contrary" take in the LA Times here:

Anonymous said...

she's a witless dweeb...

Anonymous said...

Well, the last day of the debate, I learned that I, a person concerned about the national debt and about ceaseless government spending that doesn't do any good, am a terrorist, at least in the eyes of the VP and several members of his party.

That confused me a bit since they don't seem to feel that Major Hasan is a terrorist.

Oh well. These same people think me to be a racist, I guess, because I don't think the President has been very good in the area of policy.

I guess I'd better look at myself more closely.

Anonymous said...

"she's a witless dweeb..."

Come now, Michelle's not a dweeb! She went to Princeton!

Anonymous said...

The Chinese rating agency Dagong (or some such) just downgraded the US.

The US is exhibiting many of the signs of terminal decline, the most assured of which are demographic and economic magical thinking.

This is not a country run any longer by or for the peoples who founded it.

This is the central and fundamental problem.


beowulf said...

I thought it lagged a bit in the third act, but that subplot with the trillion-dollar coin was delightful.

Heh, if I had to do it over, I would have called it the "plunge for distance" option. :o)

Anonymous said...

Buchanan had a column pointing out that Reagan agreed to a 3 dollar spending cut, 1 dollar tax raise to take care of the deficiet and it ended up being 3 dollar tax raise 5 dollar increase in spending...

From what i have read its just an agreement to reduce increasing spending - NOTHING has been cut. and the media as usually celebrates the 'law' that they HAVE to cut something by xx date or face autocuts-

I gurantee the auto cuts won't happen nor the big cuts.

We've raised the debt ceiling (0th time in 50 years according to Peter Schiff) and we will increasing spending.

Tank said...

Your guess is close enough.

Some of us were surprised to learn we were terrorists and kidnappers.

Anonymous said...

Guns and butter didn't work out so well when we were still the world's pre-eminent manufactory, and ethnically fairly monolithic. Guns and butter, in an age of diversity, balanced atop a service economy, will turn out a good bit worse. (By "a good bit" I fear that I mean "very bloody.")

As a youth, I believed in American exceptionalism, based more on the idea that America simply did things differently than other major powers, but travel and experience changed my mind.

Meanwhile, since comparisons with Rome seem to be de rigeur, the adherents of the Blues and the Greens sit in the electronic stadia, flinging poo at each other.

We could, perhaps, cut back on the guns side of the equation, but as Whiskey reminds us in his inimitable Scotch-Irish fashion, then the Pakis will overrun us, ban the color green and make us pray to Mecca five times a day.

We could, perhaps, cut back on the butter side of the equation, but then, well, what will those people do? How will they feed themselves? The coal mine is closed and Victory gardens have gone out of fashion. Everyone can't work at Goldman Sachs.

In the late 90s, I walked through the remains and residue of the Soviet Union. I'd missed the bad part, missed the hard part, the part when things actually fell apart. By the time I got there, people were putting things back together again, but they talked about two or three bad years, two or three hard years, years without utilities (power, heat, water).

I can only hope that we show the fortitude through those hard times that the people of the Ferghana Valley did. But---and forgive the crudity---as the old saying goes, "Hope in one hand and shit in the other, and see which one fills up faster."

Anonymous said...

Obama seems to me to be the technocrat asymptote, just about the only adult in a world of kids. Prof. Krugman, DeLong are whiners rather than builders, and all the non-liberal economists seem to me to basically be bullshitters of type America has been full of for so long that Obama's adultishness strikes me as one of his less American traits.

Hopefully Anonymous

Anonymous said...

How is that vibrancy thing working out?

Mannerheim said...

Steve's summary is pretty much correct. We kicked the can down the road until after the election, made a few superficial cuts that don't take effect for 2-3 years, and set up a committee to propose more cuts down the road. Taxes were neither raised nor reformed and nothing at all was done about Social Security or Medicare. The debt ceiling was raised but the underlying problems that keep forcing us to raise it went almost completely unaddressed. The stock market seems to have noticed this and handed in one of the worst declines of the year on Tuesday. Meanwhile the economic news of the past couple weeks has been unequivocally awful, suggesting we're on the verge of slipping back into recession. In other words, RECOVERY SUMMER!

Anonymous said...

The "solution" to the debt problem was to raise the debt limit - thus creating more debt. In other words no solution at all. Someday something terrible is going to happen.

Currahee said...

re. "vibrancy" link above:

A few years ago I sold a house to an LAPD commander involved w. the San Fernando Valley gang squad.

He told me he had to transfer his young cops out of the unit after about two years: at the point when they eagerly volunteer to inform mommy gangster that her kid was killed.

Jim Baird said...

I was hoping Beowulf would comment - as one of the the three people I know of who both hang out here and at MMT blogs, he was also the distinguished originator of the platinunm coin idea, which is so far the only MMT idea that seems to have made any headway in the mainstream.

For those who are worried about the debt, or about downgrades, or the Chinese coming over and reposessing our lunch, I'd advise you to relax, and go over to to learn how the monetary system really works.

Of course, then you'll probably end up just as dismayed at the idiocy of politicians, but over different things...

MIchelle said...

"Come now, Michelle's not a dweeb! She went to Princeton!"

Hi, Mom!

Thank-you for loving me and always making me feel good about myself.

P.S. I'm gonna grab a burger and fries after I finished this photo-op in the White House Garden. You want anything?

Anonymous said...

Someday something terrible is going to happen.

I've recently moved to a "the worse the better" position, so bring on the terribleness!

I'm guessing that the US goes the way of the USSR. That is, no violent revolution, just a gradual disintegration based on the reality that nobody believes in the state anymore.

Then we can split this mess up into different countries. The left can have their socialist/communist state where homosexuality and dark skin are celebrated, and the rest of us won't have to care.

Anonymous said...

Yes, kicking the can down the road seems to be the general consensus.

I'll go ahead and stick my neck waaay out and predict that the pols aren't going to solve this problem. Because they're constitutionally incapable. Junkies tend to put their last five bucks into a fix. Gambling junkies tend to put their last five bucks into a fix. Debt junkies tend to borrow until they can't borrow any more. People who are addicted to living beyond their means tend to do so until daddy takes their T-Bird away.

I think inevitable consequences will solve this problem. And that'll include a lot of pain.

Eric said...

Meh. The same thing happened that always happens. They made rounding-error-sized cuts to the expansion of government this year (not actual cuts, mind you), and then they raised the debt ceiling and agreed some future Congress will be making hard choices.

So yeah, kick the can. But damn it all if that can isn't getting heavier and heavier each time it gets kicked.

NOTA said...

Along with proposed cuts that can't really bind future congresses to anything, one other thing happened. One side won a perceived political victory by threatening to wreck the country. That is much worse than their utter inability to address the deficit, because I expect that success this time will lead groups of politicians to do similar stuff in the future. And the problem with getting your way by playing chicken is that sooner or later, you end up dead in a head on collision.

Mr. Anon said...

As a side benefit of the meaningless debt-reduction deal, we do succeed in taking a major step toward outright oligarchy - the "Super Congress", which is probably not even legal, but why should that concern our lawmakers.

And for the passage of this turd, the Republicans broke their 2010 campaign promise about putting legislation on their website 72 hours in advance of the floor vote.

What's the difference between Pelosi and Boehner? Pelosi doesn't cry all the time like a woman.

Anonymous said...

One side won a perceived political victory by threatening to wreck the country.

What "one side"? Both sides threatened to wreck the country.

And from what I can see, both sides are making good on their threats.

Anonymous said...

Perhaps what happened is that a lot of churning went on--churning tee vee viewer interest, churning ratings for advertisers,churning name recognition of main politicos
among the tee vee viewers (sometimes voters), etc etc. It makes quite a bit of sense, once we get straight that Wolf Blitzer has lots more to do with governing America than does Barry Obambi.

beowulf said...

Thanks Jim Baird. The tea party is quite correct that there is no need to ever raise the debt ceiling, even when it is necessary to deficit spend during a recession or to offset a trade deficit's demand leakage (9.1% unemployment with a $570 billion trade deficit qualifies on both counts).
Its no more or less inflationary for the US Mint to create money interest free than for the Fed to borrow money at interest from Wall Street and China (the $300 billion in debt service paid-- like any other wasteful spending-- should be zeroed out and recycled into tax cuts).

Its irritating that neither party recognizes that the budget can only (and has only) balanced when the economy is at full employment (less than 4%). And even then we should cut taxes if we aren't willing to to impose the tariffs necessary to eliminate the trade deficit (anytime budget deficit is smaller than trade deficit, like in 2000 and 2007, a recession is inevitable).
The single best fiscal reform to improve the econmy would be (as James Meade and JM Keynes suggested in the 1940s) automatically adjust payroll taxes inversely to monthly unemployment rate (e.g. 9.1% U3 rate, cut FICA rate by 91%).
The second best reform,and we should do both, zero out the trade deficit with something like Warren Buffett's import certificate plan.

Jack Aubrey said...

The Republican Prime Directive is to cut taxes on the rich. Protecting the military budget follows close behind.

The Democratic Prime Directive is to increase the money flowing to the parasite class, which is a large and growing share of the population.

To solve the deficit problem we need to do the precise opposite of what these two parties are most inclined to do: raise taxes, especially on the rich, but also on the ~50% who pay nothing at all; and slash spending, especially on programs which discourage work.

Given the nature of the two parties, a balanced budget will not happen until it aboslutely has to - which is not until the money stops flowing.

By the way, the new report on food stamp use is depressing as hell. The economy was at its worst two years ago, but use is up 34% since. 45.8 million people now on food stamps, with benefits averaging $1,600 per year. Illegal immigrant families qualify if they have a U.S. born child in the home.

NOTA said...


A lot of the people who pay no income taxes simply don't have much money. It's hard to raise much money from them--you can't get blood from a turnip. (I think everyone who makes any money pays into SS and Medicare, even when they don't make enough to pay regular income tax.)

An interesting feature of US political battles wrt income tax rates is that in many predominantly blue areas, the cost of living is high, and so someone in the top tax bracket isn't necessarily all that rich. Yet it's team blue that claims to want higher tax rates at the top. Red states tend to have lower costs of living, so the top brackets hit people who are in general richer. For example, making $100K/year in DC is way different from making the same sum in Springfield, IL.