Bipartisan Agreement Reached: Continue Deficits

There is so much to talk about on the final report of the Deficit Commission, and so much posturing going on in Washington that it is almost impossible to get it all in one post. With the intersection of the potential deals on tax cuts, unemployment benefit extension, and the Deficit Commission, the double talk coming out of Washington is immense, even by Washington standards. It is quite apparent that the Commission plan will fail to attract 14 votes, which was the supposed goal to move it forward. It does look like a majority will support the plan. But it is intriguing that the opposition to the plan is quite bipartisan. On the left Andy Stern, a key Democratic player, and Democratic Rep.Jan Schakowsky have come out against the plan. On the right Rep. Paul Ryan, the incoming Chair of the House Budget Committee, and Rep. Dave Camp, the incoming Chair of the House Ways and Means Committee, both came out against the plan. On both sides of the Commission the nominal reasons for rejection are reflective of, in my opinion, a high dose of political pipedreaming. I cannot say, in criticism, that some alternatives have not been offered. They have been. But they are truly, on both sides, not grounded in achievable reality. And they reflect some inner belief, in my opinion, that the crisis at hand can be solved principally along the preferred lines of left or right.

The editorial in yesterday’s New York Times shows that whatever those guys are drinking it is likely pretty strong stuff. From some initial support of the concept the Times has come out blazing against the Commission report, with much of their argument probably reflective of the opposition of the left.

The final report, for example, fails to call for significant near-term stimulus spending to counter the effect of deficit reduction. It also aims for an arbitrary — and dangerously low — spending target of 21 percent of the economy, a level that would make it impossible to meet coming challenges. In tax reform, it does not consider a value-added tax and a financial transactions tax.

The Commission favored lowering rates while eliminating a host of “tax expenditures”, some of which are popular. But they take a huge step forward in tax simplification. The Times apparently wants a VAT, not as a substitute for, but in addition to the current tax load. Absolutely a non-starter politically. As for their criticism of the 21% number it is also nothing short of ridiculous. Republicans are saying it is too high, Democrats too low. It must have some merit on that basis alone.

But the left does not stand alone in budgetary hypocrisy. The right proudly stands for the same type of double talk and nonsense. Rep. Ryan and Rep. Camp are full of it as well, starting with their insistence on extension of the Bush tax cuts without budgetary offsets. They are deficit hawks? But they do insist that unemployment benefits be paid for, at $12 billion. Unbelievable hypocrisy.

The Deficit Commission plan is certainly not a panacea, nor is it without serious flaws. But it recognizes the imperative of action, and makes a whole host of good and doable suggestions. And the insistence of both left and right that the plan reflect 90% of their priorities just means that no plan will advance. The very best opinion piece I have read on this came from Steve Pearlstein, who ridiculed both sides pretty effectively in the Washington Post:

The same dynamic is at work in the overheated criticism of the deficit reduction plan put forward by Alan Simpson and Erskine Bowles, the chairmen of the soon-to-expire deficit commission. To hear it from liberal groups, you’d think the proposed spending limits would cut the federal government down to that of a small state, even as it “decimates” the middle class and forces seniors to eat dog food. From the right come similar hysterics about the “hollowing out” of the American military and the economic catastrophe that will befall us from a 15-cent-a-gallon hike in the gas tax.

Principle. As I mentioned yesterday it is easier to accept disagreement without the overt hypocrisy of constant doublespeak. And Republican Senator Tom Coburn, who came out in support of the plan, has principle. And that principle applies even when it requires him to swallow castor oil you know that he hates. Today’s clip should be contrasted with that, which will be posted later, of Rep. Camp, offering the same old nonsense on tax cuts and the budget.

As a final word the Deficit Commission plan which has created this firestorm, aims to cut the deficit by about $4 trillion in a decade. Simply letting ALL the tax cuts expire at some point saves $4 trillion over a decade. Hmmmm.

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