If Mr. Obama wants to avert a fiscal crisis and win re-election in 2012, he needs House Speaker Nancy Pelosi to be removed from her powerful post. A GOP takeover may be the only way. Given the deficit-and-debt mess that Mr. Obama has on his hands, a Republican House would be a godsend. A Republican Senate would help, too. A Republican majority, should it materialize, could be counted on to pass significant cuts in domestic spending next year—cuts that Mrs. Pelosi and her allies in the House Democratic hierarchy would never countenance.
Well – we know that a Republican majority would never agree to tax increases. Steve Benen, however, reminds us that having both a Republican White House and Republican majorities in both houses of Congress wasn’t exactly the recipe for fiscal responsibility just a few years ago. But let’s suppose we did get massive reductions in domestic Federal spending. Maybe we should just turn the microphone over to Brad DeLong to explain why “we need bigger deficits” now.
Barnes: "A Republican majority, should it materialize, could be counted on to pass significant cuts in domestic spending next year"
ReplyDeleteThus giving us a double dip recession or a no-kidding depression. Which they would successfully blame on Obama, leading to a Republican administration in 2012. Then the Reps would start spending, the economy would recover, and people would go back to work at $5/hr. Sounds like a plan.
Why is it that it is only domestic programs that are up for discussion? The Bush/Obama Middle-east Follies are killing our economywith expenditures that do not recirculate here at home. Yet every sacrifice has to be made by the working class and the poor rather than reducing the tax holiday that the rich have been enjoying for so long now. Legislate a War Spending Tax and see how quickly the troops would be pulled out of Iraq and Afghanistan.
ReplyDeleteLooking at Delong's stuff I am really aggravated. So much is so wrong with what is being said that it is hard to know where to start. The presumption that government must borrow so as to spend is in the ditch immediately. Government spends and the Fed and Treasury react to the inflation caused by the spending. If there is no inflation then why sell T-Bills and why tax?
ReplyDeleteI have seen this same thing for 10 years now and it makes no real sense. Delong is playing the interest rate rollover game where we borrow when rates are in the toilet and take advantage of the reduction on the value of the fixed rate bonds as interest rates rise in the future due to the recovery. The question is: If spending does not actually cause inflation then why borrow at all? And if you can raise taxes on incomes that would have been stored in interest bearing mattresses called T-Bills then the real economy will not be harmed by tax increases. I never see any of this real life stuff from any of the economists.
Fred forgot it was the republicans who created the fiscal insanity in the first place.
ReplyDeleteThe Trucker: "The question is: If spending does not actually cause inflation then why borrow at all?"
ReplyDeleteI think that the reason is historical inertia as much as anything else. Governments used to have to borrow when their money was backed by metal. Now we have a fiat currency, but the custom continues. Besides, creditors like it.
The sheeple mesmerized by the pitch: 'Just a little game of skill.' You're keen eye on the pea while the pirate's clumsy hands fumble with the shells. And Bob continues to be your curiouser relative as the power rises.
ReplyDeleteRemember: Starvation makes the artist.
--ml