Deficit Falling at Fastest Rate Since WWII -- And Not Because of Spending Cuts

Republicans like to say that you can't spend your way to prosperity. Why that statement doesn't get them laughed out of whatever room they're in every time they say it remains one of life's great mysteries. Of course you can spend your way to prosperity; ask any prosperous person. The only wealthy people who haven't spent their way to prosperity are those who've inherited wealth. Even lottery winners spent something to gain all their riches, even if it wasn't much. Wealthy people became wealthy by spending money -- and even by borrowing money.

Conservatives are dead wrong on this point and, indeed, the opposite is actually true -- you can't save your way to prosperity, since you're never going to be able to save more than you make -- or at least, figuring in interest, not much more. It's a case of Republican talking points contradicting other talking points; you can't spend your way to prosperity, but successful people are "risk takers" who put money on the line to get things done. One the one hand, conservatives praise entrepreneurs, on the other, they argue that entrepreneurial efforts are obviously doomed and only a fool would believe that you can spend money to make money. No wonder people who listen to talk radio make no sense at all when they start talking about economics. It's all a muddled mess of contradictory propagandizing with no real connection to how things actually work.

All of this started bouncing around in my head when I read this:

The Hill: The federal budget deficit for fiscal 2013 was $680 billion, the Treasury Department reported Wednesday.

This is the first time that the deficit has fallen below $1 trillion during President Obama's time in the White House.

[...]

The deficit has dropped $409 billion from 2012, when it was $1.089 trillion.

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Sequestration, the March Hare, and the Mad Tea Party

It's Sequester Day, America. The worst holiday so far this year. Still, we should make the best of it. Other special days have mascots -- Santa Claus, pilgrims, Jack-O'-Lanterns, etc. -- so I propose that Sequester Day be celebrated under the lunatic grin of the March Hare. The mascot is pretty perfect; a participant in the Mad Tea Party, completely insane, and -- of course -- it's March.

You see, there's nothing sane about any of this. The last time we celebrated this holiday was not a year ago, but just back in January, when it was known by a different name: the fiscal cliff. We went over the cliff a little bit, Republicans lost their nerve, and the crisis was avoided... Well, not avoided so much as kicked down the road until today. The crisis was very much not avoided, as the mad March Hare reminds us. We merely banned the nickname "fiscal cliff" from our national vocabulary, cut some deals to reschedule the whole thing, and now we refer to it by it's more formal name, sequestration. It the same stupid self-laid trap, we've just all agreed to pretend it's a new one. It's mad, mad I say -- frantabulousy, craptastically, thingdubitably, deliciously mad!

And no one better embodies the true spirit of the March Hare better than the House Republican caucus. Left is right, up is down, right is wrong, and Washington has a spending problem, not a revenue problem.

CBS News:

...House Speaker John Boehner has said he's done negotiating. The House, Boehner says, has twice passed legislation that would undo the sequester, and should not have pass a third bill before the Democrat-controlled Senate "gets off their ass and passes it once." He has also stated that Republicans will not play ball on new tax revenue, telling the president, "You got your tax increase; it's time to cut spending here in Washington."

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The Economy as an Issue is Now 90% Republican-Owned

Last night, Robert Reich made a decent point. Writing about the debt limit deal and yesterday's market sell-off, Reich wonders if Republicans are ready to take ownership of the problem.

John Boehner said Tuesday the Republicans got "90 percent of what we wanted" from the budget deal. So presumably he and his colleagues are willing to take responsibility for some 450 points of today's mammoth 513-point drop in the Dow Jones Industrial Average.

I'm being a bit facetious -- but only a bit. It's always dangerous to read too much into one day's move in the stock market.

Of course, there are a lot of factors that figure into the ongoing dive -- economic uncertainty in Europe, for example -- that have nothing to do with the US. But jitters about jobs and the threat of a double-dip recession are driving a lot of it. If Republicans got 90% of what they wanted from the debt limit deal, then Republicans now own 90% of responsibility for the economy.

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There's a Reason Why "Compromise" and "Reasonable" are Two Different Words

It's an argument that I bring up often on this blog; that compromise for the sake of compromise is not a good thing, but a bad thing. Especially when that compromise is between two positions at opposites end of a spectrum. If your house has termites, you might call an exterminator. Or you could listen to your crazy Uncle Stan and burn it down. Only burning half your house down does not qualify as a reasonable compromise -- no matter how insistent Stan's arguments are that it's the only solution. A bad idea is a bad idea. Infusing it with a portion of good idea doesn't improve it, it only ruins the good idea. Some compromises should never be made.

In politics, compromises also suffer from a misperception of the center position. There's the Washington middle and the American middle. The Washington middle -- being a town inhabited by a larger than normal proportion of lunatics -- is almost never where the American middle stands. These days, it's far, far to the right. Where Uncle Stan's idea is to burn the house down, the Republican solution would be to burn the house to the ground, then salt the Earth so that nothing ever grows there again. The "compromise" in Washington would be to embrace Uncle Stan's lunacy wholeheartedly.

Of course, I'm just some guy with a blog. No one's going to listen to me, no matter how solid my arguments are. So maybe if someone like Robert Reich were to make the same damned argument...

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Reality-Based Budgeting

The budget deficit is a multi-generational problem. At least, that's the impression you get if you listen to some in Washington or pretty much any random talking head. If we don't get crazy with the budget scissors, our children and our grandchildren will pay the price. If we do nothing, the nation will be... I don't know, in flames or something.

But yesterday, Annie Lowrey at Slate crunched the numbers and found the real consequence of doing nothing -- eliminating the budget deficit in eight short years.

So how does doing nothing actually return the budget to health? The answer is that doing nothing allows all kinds of fiscal changes that politicians generally abhor to take effect automatically. First, doing nothing means the Bush tax cuts would expire, as scheduled, at the end of next year. That would cause a moderately progressive tax hike, and one that hits most families, including the middle class. The top marginal rate would rise from 35 percent to 39.6 percent, and some tax benefits for investment income would disappear. Additionally, a patch to keep the alternative minimum tax from hitting 20 million or so families would end. Second, the Patient Protection and Affordable Care Act, Obama's health care law, would proceed without getting repealed or defunded. The CBO believes that the plan would bend health care's cost curve downward, wrestling the rate of health care inflation back toward the general rate of inflation. Third, doing nothing would mean that Medicare starts paying doctors low, low rates. Congress would not pass anymore of the regular "doc fixes" that keep reimbursements high. Nothing else happens. Almost magically, everything evens out.

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A Drastic Solution for a Phony Crisis

Another short one today. Here's the Wisconsin Capitol rotunda, courtesy of Associated Press:



Thousands of protesters have been jamming the building daily, hoping to convince state lawmakers of the foolishness of Governor Scott Walker's plan to basically dismantle most public employee unions. It's a plan that moves the budget burden from those who can afford it, to middle class families. Not only is this incredibly unjust, but it's a recipe for economic disaster, driving down consumer demand as thousands of public employees are forced to cut back drastically.

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On the Front Lines of the GOP's War on Math

Before we get started here, I just want to say that the next person who says that Egypt and Mubarak are important for stability in the region gets to shut up. Is Egypt looking real stable to you right now? Yeah, I didn't think so.

Here at home, where things are a little more stable, the only major skirmish right now is the Republican War on Math. If there's one thing that Americans can count on, it's that the GOP will remain unswayed by fact for quite some time. With the rise of the Tea Party on the right, we see an anti-fact movement taking hold of the party. From the raising of the flag at Iowa Jamma to the Soviet Union being brought down by Sputnik, in the hands of Republicans, facts become irrelevant things. Want Thomas Jefferson -- who actually wrote the divinity of Christ out of the Bible -- to be the most Christian man ever? Done. Need the American Civil War to be about anything other than slavery? You got it. Give them a little while and the right will be blaming FDR for America's humiliating loss in WWII.

So it shouldn't surprise anyone to learn that the Republican relationship with arithmetic is a rocky one. Numbers are, after all, one of the highest forms of truth. So, since no fact is immune to revision and twisting, numbers have found themselves in the GOP's crosshairs surveyor's marks.

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Conservatives are Politically Correct Robots

Over the years, conservatism has undergone a sort of metamorphosis. And it's a strange metamorphosis because, in true conservative fashion, it involves changing back into something it once was. Where it was once about conformity and "right-thinking," it briefly became about independent thought and the potential of the individual. Ronald Reagan appealed to what was called the "self-actualized person"; a sort of existentialist self-help idea popular at the time that held that your responsibility is to define yourself and concentrate on your own potential, rather than that of the group. In Reagan's world, society was holding you back, you needed freedom to pursue your own ideas, and the state was both that society holding you back and a check on freedom. Take that or leave it for what it was, but the core of Reaganism was a focus on individualism.

Now, here's conservatism today:

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Let's not concentrate on what an obvious fool Michael Steele is. Let's concentrate on how many "individuals" we see here. I'm counting zero. Grover Norquist's questions have the flavor of a pop quiz. He's not interested in any ideas they may have, he's interested in a litmus test, which Republican Party voters can then use to check a candidate for the RNC chair against a scale of ideological purity. For example, they're asked to make a case for "the defense of marriage between one man and one woman." The idea that there would be a dissenter who believes in marriage equality is unthinkable and obviously disallowed. Conservatives are back to mindless conformity and "right-thinking."

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The GOP's $100 Billion Lie

Yesterday, I mentioned that Republicans began their first day of their new House Majority by breaking one of their oaths made in their Sacred Pledge. Where the party had sworn in their "Pledge to America" to make cuts that "will save $100 billion in first year alone," they now say the number -- which they'd apparently reached into their pants to retrieve -- was merely "hypothetical."

But words mean things. The only way that number could be hypothetical would be if the GOP had asked voters, "If we promised you an insanely large, made-up number -- say, $100 billion -- in spending cuts, would you elect us?" But they didn't. At least, not straight out like that. "Will save" means "will save," not "could save." It's a definite statement and, when written in the body of a signed document with the word "pledge" in the title, constitutes a concrete promise. Once again, Republicans -- with the help of a credulous and/or uncritical media -- lied to the American people. Clearly, there was no math behind the figure, no one sat down at a ledger book and added up all the savings. It was merely an impressively large number that could be used for a bait-and-switch.

If you doubt that $100 billion was an invented number, consider that the new House Republican Budget Czar, Paul Ryan, has no idea what they're planning on cutting. "That is what is gonna happen in the appropriations process down the road," he said when asked for specific cuts. "So I can't tell you the answer to that because, as a budget committee person, we simply lower the cap and then those things go down. We're gonna be reducing all domestic discretionary spending. I can't tell you by what amount and which program, but all of it is going to be going down, and the aggregate amount will be back to 2008 levels before the spending binge occurred."

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Repeal and Replace -- Maybe... We'll See...

On the 12th, Republicans will begin to fail to repeal healthcare reform. The GOP campaigned on the deficit, the deficit, the deficit, but the first order of business for the new House GOP Majority will be an attempt to kill a deficit reducing bill. It's not jobs, it's not the economy, it's increasing the deficit. Want proof that Republicans aren't serious about anything other than winning elections? There you go.

The GOP has been talking a lot about a "repeal and replace" strategy, but so far, they haven't come up with any "replace" -- there is no bill other than the repeal bill. This is a bit of a problem, since many of the provisions of healthcare reform have already kicked in. This means that these provisions die. You've paid for them, but they'd go away. It's just a grandstanding, time-wasting stunt with no hope of ever being signed into law. To give you an idea of just what empty PR theater this is, consider the talking point title of the bill: "Repealing the Job-Killing Health Care Law Act" [pdf]. I guess "Kill the Commie Obamacare Act" didn't occur to Eric Cantor.

Still think this is a serious effort? Think again.

Palm Beach Post:

Conservatives have acknowledged that with a Democrat-controlled Senate and Obama in office, their hopes of a successful repeal are limited. But the "repeal" bill is meant to energize their base, attract Tea Party conservatives who abhor the notion of mandatory health insurance, and launch the start of a slow campaign to kill health reform through 1,000 cuts -- primarily by obstructing the spending appropriations needed to implement it.

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GOP Deficit Dishonesty

The deficit, the deficit, the deficit! By all accounts, the Republican Party is about to get tough on deficits. They're going to force Washington to get real and live within its means. If Republicans have their way, wasteful deficit spending will become a thing of the past.

There's only one problem with this widely accepted narrative -- it's not even remotely true. A couple of stories yesterday paint a picture of a party making a big show of deficit hawkery, while returning to their traditional borrow-and-spend ways. The GOP talked a lot about deficits, because they realized deficit panic could get them elected, but they aren't serious about the issue. They love deficit spending the way an alcoholic loves happy hour and they have no interest in giving it up.

Exhibit A is a gimmicky new house rule called "cutgo." Where Democrats used a rule called "pay as you go" or "paygo," which required all but emergency spending to be paid for somehow, Republicans are requiring that all new spending be offset by cuts. Or at least, that's what they'd like you to believe. But it isn't true at all.

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American Aristocrats

Maybe it's geography, but I often find Madison-based John Nichols and myself thinking along the same lines. While conservatives call the estate tax a "death tax," Nichols comes up with a much more accurate term for it -- the aristocracy tax (the link is mine):

The estate tax agreement is a giveaway to millionaires. Indeed, as the group United for a Fair Economy notes, "The deal (Obama accepted) would make the estate tax even weaker than it was under President Bush, and the weakest it has been in seven decades."

"Originally," the group OMB Watch notes, "President Obama had been calling for extending 2009 estate tax levels as a compromise on the issue. An extension of the 2009 estate tax would exempt the first $3.5 million ($7 million for couples) of an estate's value and tax any amount above that at a rate of 45 percent. This proposal was more than generous to the wealthy of this nation, as it would affect less than 1 percent of estates each year."

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The Republican Plan to Increase the Deficit

The big story so far today is House Democrats' refusal yesterday to take up President Obama's tax deal with Republicans. While this is undoubtedly a big story, it's not the only one and may not even be the biggest story coming out of Washington. It may come as a shock to some in the media, but there are two parties in Washington. While Democrats are refusing to accept what they believe is a bad deal, the other party -- known as "Republicans" or "the GOP" -- are refusing to accept anything, holding fast to a promise to stop everything in Washington until congress agrees to borrow an insane amount of money to give the wealthiest 2% in America a tax break.

The GOP argument is that these tax breaks are good for the economy. Look around you; that argument is obviously untrue. Those tax breaks exist now and the economy sucks -- it's like swearing that grizzly bear repellent works, while you're being torn apart by grizzlies. But tax cuts are Republican's snake oil; good for what ails you, from inflation to deflation, from unemployment to labor shortages, perfect for bad economies and good economies. The reason is simple -- they don't like social programs like Social Security and Medicare, so they want starve government of revenue to make these programs unaffordable. If GOP opposition to having the very wealthy pay their fair share demonstrates one thing, it's that GOP hair-tearing over deficits is a false panic. They want deficits. If you doubt me, look at what they want to cut: not taxes, but -- at the moment -- vague and unspecified spending. When they're talking about "spending," they really mean social programs and aid to states, since they've made it clear that one of the biggest contributor to the debt -- our bloated military -- is off-limits for cuts.

No, Republicans aren't worried about deficits, they're worried about very specific spending. Other than that, they really don't give a crap about anything. Certainly not you or me -- unless you're in that top 2% who are the only people they represent. For example, let's say you were a worker at Ground Zero or a first responder to 9/11. You spent a lot of time breathing in toxic crap and now you're sick -- maybe even dying. The GOP doesn't give a crap about you.

And they proved it.

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A Democratic Filibuster?

We have a deal on extending Bush's big tax giveaway to the wealthy. We'll continue to borrow money to cover a tax break for those who don't need one for the next two years, because it's so damned much better reach an unwise compromise than it is to fight for the right thing. Now Republicans will be allowed to continue to expand the deficit -- while blaming Obama and Democrats for growing deficits. It's frustrating that no one in the White House seems to see that coming.

Let's be clear; compromise for the sake of compromise is pointless. On any economic issue, one group will be right and one group will be wrong -- or, at least, more right and more wrong. Compromise insures that bad ideas from the cult of the wrong find their way into the final product. As a result, the "solution" is no solution at all. It's just not completely wrong. When you meet someone who's crazy halfway, the result is halfway crazy.

What do Democrats get out of this? More than we expected, frankly. We get an extension of unemployment benefits and we get payroll tax cuts -- the latter seems to have come out of the blue and will help the lowest income workers. If you don't get paid enough to have taxable income, you'll still get a tax break. There's an obvious Keynesian effect from this.

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R Stands for "Rich" and "Republican"

I've got a minor, yet essential, project to finish up, so this is probably going to be a short one, heavy on quotes. Some things just can't be put off, I guess... And then, some things can:

Huffington Post:

The House of Representatives on Thursday voted down a measure that would have reauthorized extended unemployment insurance for another three months, leaving no clear path forward to prevent the benefits from lapsing as scheduled on Nov. 30.

Without a reauthorization, the Labor Department estimates that two million long-term unemployed will prematurely stop receiving benefits before the end of the year.

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Let the GOP Infighting Begin

The internal battle over earmarks in the GOP seems to be all but over. Republicans have decided to unilaterally disarm. There are still a few holdouts, but with Senate minority leader Mitch McConnell caving on the issue, things are swinging the anti-earmark way. As a purple state resident, I see (a selfish) reason to cheer here. See, the bluer the state, the more money it pays to the feds in tax money. And the redder the state, the more money it takes out. I've written about it before; "In terms of federal taxes spent in their states, Mississippi gets 202% of every dollar they pay, West Virginia get 176%, Arkansas gets 141%, South Carolina gets 135%, and Kentucky gets 151%. The only state in the five wealthiest that receives more than they pay out is Maryland, at 130%." If you ban earmarks, then red states are going to see a lot less money heading their way and they're going to have to start living in the real world, where their screwy economic flateartherism is no longer subsidized by states with wiser policies. Have fun with that, guys. Enjoy funding your own projects with happy thoughts and good intentions.

Meanwhile, earmarks don't mean crap to the deficit. Earmarks make up less that 2% of federal spending, so eliminating them solves almost nothing. I hate to say it, but Mitch McConnell was right; banning earmarks is dumb -- especially for Republicans. Sure, projects like the "bridge to nowhere" are wasteful, but don't blame the process, blame the corrupt congress members gaming the process. Like a balanced budget amendment, this is a "stop us before we spend again!" measure. It's like putting the blame for running a red light on the lack of one of those railroad crossing gates at the intersection.

But hey, it's a free country. If they want to exercise their Second Amendment rights by shooting themselves in the foot, I'm not very interested in stopping them. As I said, it works out great for me. I should be seeing more Wisconsin tax money coming back to Wisconsin, for a change. States like Mississippi or Kentucky, you're on your own. The free ride is apparently over. Make sure to thank your various elected officials for that.

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Specifics? Who Needs Specifics When You Don't Plan to Do Anything Anyway?

Earlier this month, Think Progress put together a video of Republicans weaseling out of answering what specific cuts they would make to reduce the deficit. They've decided that ending Bush's tax giveaway is off the table, despite the fact that it's a budget buster, so cuts to make up for it would have to be drastic and deep. With that in mind Senator/Congressperson/candidate, what would you cut?:

The popular explanation for why Republicans can't name any cuts they'd make is because they refuse to. That they want to make what would be unpopular cuts to Social Security, Medicare, and Medicaid to pay for their tax giveaway to the already wealthy. Robin-Hood-in-reverse -- robbing from the poor and middle class to give to the rich -- is not a popular position. So Republicans choose to hide their true position, waiting until they're safely installed in office to cut the social safety net they've all hated for decades. Maybe this is true and maybe not, but I think my explanation for this is probably a lot closer to the mark.

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Getting Serious About the Deficit

If there is a rogue missile aimed at our country, we have 33 minutes to figure out what we're going to do. We are sitting with the only technology in the world that works and it's laser technology. We need 1,000 laser systems put in the sky and we need it right now. That is [of] paramount importance.
-John Raese, West Virginia Republican candidate for the US Senate

So much for fiscal sanity from the Republican Party. Raese's -- oh, let's be generous and call it a "plan" -- would cost the taxpayers $20 billion. At least, that's what he says it would cost; it's clearly a figure from the Republican Ministry of Made-Up Numbers. Who knows what it would really cost?

Would it work? Well, no. See, if it worked we'd be doing it now. Our last president was a big fan of crazy stuff like this, after all. But, according to even missile defense advocates, it "could take two decades to develop." What Raese calls "the only technology that works" doesn't actually work -- not in the real world, anyway. So we're talking about spending a made-up amount of money on nonexistent technology, to counter a threat that doesn't actually exist -- Iran doesn't actually have nukes and North Korea struggles to even get a missile off the pad. And why 1,000 of these orbital deathrays? There's another made-up number for you.

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