Why the Super-Committee Talks are Failing

[marmar]

from Washington Monthly:




.....(snip).....

You may have also noticed that Democrats turned down the proposal. Is it because Dems are unwilling to compromise? Obviously not — Dems have been so eager to strike some kind of deal that they “offered a plan that moved significantly toward the Republicans and a considerable way beyond the bipartisan Bowles-Simpson and Gang of Six plans, which conservative senators like Tom Coburn and Mike Crapo had embraced.” The GOP refused.

The problem, of course, is with the substance of the new Republican plan. The Center on Budget and Policy Priorities’ Paul N. Van de Water summarized the latest GOP proposal, put on the table late yesterday.

Republicans on the supercommittee have made a new offer that would reduce deficits by $640 billion over the next decade, according to news reports…. The Republican offer consists of roughly $542 billion in spending cuts and $3 billion in revenues, meaning the ratio of spending cuts to revenue increases in the plan is 181 to 1. These measures would also produce nearly $100 billion in debt-service savings. Democrats promptly rejected the new Republican offer as unbalanced.

When one includes the $900 billion in discretionary spending cuts already enacted in the Budget Control Act, the plan’s total deficit reduction rises to about $1.445 trillion, and its ratio of spending cuts to revenue increases rises to 481 to 1.

Hmm. So, Democrats would give up $542 billion in spending cuts and Republicans would give up $3 billion in revenue — not a penny of which would come from additional taxes on anyone, but rather, the end of a tax break currently enjoyed by corporate jet owners.

This, in the minds of GOP committee members, is a “compromise.” ............(more)

The complete piece is at: http://www.washingtonmonthly.com/political-animal/2011_11/why_the_supercommittee_talks_a033606.php?u

[xchrom]

1. recommend

[Fumesucker]

2. Eh, we haven't heard the fat lady yet..

It ain't over till it's over..

[Philosopher King]

3. Super-Committee is failing for the same reason that the entire Congress failed...

Having arrived at the Keynesian dead end, they lack the courage to make choices that are grounded in reality.

[marmar]

4. And what reality would that be?

nt

[Philosopher King]

5. Why of course, the economic facts of reality.

http://www.usdebtclock.org/

[marmar]

7. So what's your alternative to the, ahem, 'Keynesian dead end'?

nt

[Kingofalldems]

11. Excellent question.

[Philosopher King]

13. The Fed should have liquidated the bad investments so that a real recovery could begin.

The good news is that American are paying down their personal debts. The bad news is that they still have a large debt to pay off. This is needed for a true economic recovery.

[marmar]

6. delete, responded to wrong post

nt

[fasttense]

8. Having arrived at Milton Friedman's desired destruction of the wealthiest economy in world history.

Some people actually believe the propaganda they see on Fox, and endlessly repeat talking points about Keynesian economy theory they know nothing about, to the annoyance of all rational thinking people.

[Philosopher King]

12. It would appear that you haven't been paying attention; otherwise, you

know that the entire world has been employing Keynesian principles in an effort to revive their economies. However, they have discovered what rational, thinking people have always known--magic is for children. In other words, money has no value unless it is backed by legitimate unexpended assets.

Like many bad ideas, the Keynesian revival in the US began under George W. Bush. Now, the fiscal bills (as well as the political ones) are coming due. The Europeans have had enough and have decided to enter rehab in an effort to overcome their addiction to the euphoria of magic money. Whether or not the US follows suit remains to be seen.

John Maynard Keynes vs. Reality

[Kingofalldems]

15. From the Adam Smith Institute---interesting

Looks like a conservative think tank.

[Starry Messenger]

20. Ding!

http://www.adamsmith.org/ You win what is behind door number three.

[nadinbrzezinski]

21. I hate it when they do that.

I mean smith was a damn liberal.

[Philosopher King]

24. Not a damn liberal--but a real liberal.

[Philosopher King]

23. For one to know economics, one must know Adam.

[dawg]

25. With all due respect, I think you are wrong.

While it is true that we can't continue to spend more than we tax indefinitely, now is not the time for painful austerity measures, either from spending cuts or broad-based tax increases.

You said it yourself ... the American people are paying down their debt. In fact, there has been a net reduction in private debt that more than offsets the increase in the public debt. In short, there was no net stimulus to the economy. Without the increase in public debt, the GDP would have contracted even more, possibly launching a downward spiral that could have spun out of control.

With enough budget cuts, it could still happen. But probably not in the U.S.. Our economy is large and strong, and we have the advantage of our own currency, which can rise and fall relative to other currencies in order to equalize matters.

Europe is not so luck.

Austerity measures there have a real chance of launching a depression that could lead to a wave of sovereign defaults and a breakup of the Euro.

I understand your concerns about too much debt. I'm a bit of a deficit hawk myself. But now is not the time.

[Philosopher King]

26. Rational and well-reasoned...good post.

Your points regarding Europe are dead on; however, they have a problem child or two that limits their options. The EU has no choice but to literally squeeze the corruption out of Greece and Italy, as they can no longer bear to carry those millstones. The austerity measures imposed on Greece may in fact, cause them to bolt EU. And while Italy's manufacturing sector is still in decent shape, their bloated and overpaid bureaucratic class, has emptied their wallet too. And the worst is yet to come...

As for the US, I firmly believe we blundered by not forcing the banks to deal with their bad assets. As for the notion of "too big to fail," I ask why? Because Bernanke and Geithner told us so? Nonsense--they gambled and lost; and they should have suffered the consequences of their actions. The base of the economic pyramid is the foundation. Allowing a few fat cats to tumble from their perches would have hurt--but it would have them more than the rest of us.

If these banks were indeed to big to fail, why hasn't our Congress eliminated this "danger" by decentralizing the U.S. banking system? And why are they allowing the "too big to fail" to just keep getting larger and larger and larger?

[nadinbrzezinski]

14. If this was only Keynes.

:banghead:

Economic reality means revenue stream. It means taxes

But i see from that post you are a friend if the Chicago school, and I hope you realize how ironic that handle is at a place that in theory likes democracy. It is quite funny actually...oh the irony.

[Philosopher King]

16. I may not always catch the magician’s sleight of hand, but I am never fooled by his tricks.

AUSTRIAN SCHOOL

[nadinbrzezinski]

17. Worst

Thanks. Now I get the handle...it fits, and I will leave it at that. Quite the inside joke.

Wow.

As the the tricks. Even the Austrian School gets it TAXES...

[Philosopher King]

22. It's not the taxes, it's the tax code that is full of tricks.

That how this sort of "magic" occurs.

http://www.nytimes.com/2011/03/25/business/economy/25tax.html?pagewanted=all

[Laf.La.Dem.]

9. The GOP plan sounds "FAIR AND BALANCED"

WOW - $3 billion in revenues - what do you guys want - an arm and a leg!!!!!

:sarcasm: (just in case someone thought I was serious)

[no_hypocrisy]

10. Nobody's mentioned Grover Norquist and his lifetime pledge not to raise taxes at all.

Locking republicans into a position even if they disagree personally with it (unlikely) or if it's against the will of their constiuents.

Budgets will go nowhere until there are congressional hearings (unlikely) that will once and for all expose this anti-democratic posture and tactic.

[flamingdem]

18. Remember: All they want is to win the presidency so this is all a cover

If taxes go up when the Bush tax cuts expire for all they can blame Obama for the hurt on the middle class.

They way they play there is not enough incentive to make any reasonable deal.

[Tennessee Gal]

19. Fair and balanced. NOT!

This is a major factor in the OWS movement.