My head hurts

Over at Ace, Monty sums up beautifully what's confusing about an extraordinary piece of babble from the CNBC website:
See, here's the problem:  A spending limit isn't a limit unless it actually functions as a bar to further spending.
The CNBC piece struggles hard to reconcile a lot of contradictory ideas.  For example, Obama promised the sequester wouldn't happen, but the article's author notes with some surprise that it turns out absolutely nothing has been done so far to avert it.  That's because of "entrenched politics in Washington."   (We know who those entrenchers are.)   "Many" thought that the recent Republican agreement to delay the effective date of the debt ceiling signaled a willingness by Republicans to "co-operate" with the White House, but now it seems that Republicans think spending cuts are a good idea.   (Who knew?)

Republicans would rather see the spending cuts take a different form, but if the sequester is the only form on offer, they'll live with it.  Democrats would rather avoid the spending cuts altogether, but they kind of like them, because they spare Medicare and Social Security, so they're not motivated to negotiate, unless the Republicans offer to raise taxes on the wealthy.   (Wait.  Didn't Republicans just agree to do that?)  Republicans don't want to raise taxes on the wealthy again, a negotiation position that apparently has taken the Democrats completely by surprise.

So both sides are more or less content to let the sequester take effect, given the alternatives.  But the spending cuts may slow growth, especially since Congress just increased payroll taxes.   (The article can't figure out to which party to attribute that change, so it stays fuzzy.)  And now that Democrats think about it, they don't like the non-defense spending cuts in the sequester.

I've lost the thread of what Democratic negotiators in Congress are trying to achieve.  I know they want to avoid slowing the economy.  They see spending cuts as slowing the economy; they may even see tax hikes as slowing the economy.  They sometimes express an interest in reducing the deficit, which surely requires either cutting spending, raising taxes, or expanding the economy.  Is the idea that you can expand the economy by raising taxes as long as you tax only the rich?  In other words, the higher taxes on the rich will shrink the deficit as long as they don't slow the economy too much?   I understand the notion that it's fair to tax the rich more, without agreeing with it, but I don't understand the notion that it will not slow the economy.  It sure isn't working in Europe, or California.  We can concentrate on not slowing the economy by avoiding either tax hikes or spending cuts, but then we're ballooning the deficit.  Eventually, that will lead either to runaway inflation or to a drying up of the national credit.

No matter how many times we play this shell game, how is there ever any real alternative to living within our means?

I hope that the debt-ceiling deal will lead to a budget from Congress by the agreed deadline.  It's got to be less irrational to try to negotiate spending cuts within the context of a specific budget than to negotiate with people who say, "If I can't spend as much as I'd like on absolutely everything, I'm not going to pay any bills at all."


james said...

Their words are meant to have no denotation, only connotation. If the people were to pay attention to what was really meant, they might object. So there's a need to blur what's going on, and prophecy illusions.

Perhaps Babel is the inevitable consequence of trying to build a tower to reach omnipotence, and not a one-time punishment.

Grim said...

Even without sequestration, the USMC is planning to shed 20,000 Marines. The Army is looking at 60,000. The entire DOD civilian workforce -- 800,000 -- is going on mandatory furloughs. The Navy is planning to delay maintenance and training, which means drastically fewer warships on the sea making sure shipping gets where it belongs.

The legitimacy of a state or a world order ultimately depends on its ability to enforce that order. That's a big transfer of legitimacy to... who?

Dad29 said...

Well, if the Europeans would cover their own damn asses and we'd stop trying to "spread democracy" to hopeless cases, maybe we could maintain ships and planes.

Grim said...

The Europeans' covering of their own asses cost us a bit more than the current arrangement, as I'm sure you know. The whole point of the current arrangement was 'to keep the Russians out, the Germans down and the French in' (in NATO, that is). We've had nearly seventy years of peace in Europe as a result -- cheaper, by far, than the alternative WWIII.

Not that it matters. I think I know the answer to the rhetorical question I asked. Maybe the corporations will do a better job than the nation-states did.