“It’s Worth Taking Seriously”: Washington Is Ignoring Obama’s Budget. You Shouldn’t
Mere hours after the White House released President Obama’s budget, Washington had reached a consensus about it: It’s “irrelevant.”
As this argument goes, the House and Senate have already agreed on a fiscal policy plan—the agreement from House Budget Chairman Paul Ryan and Senate Budget Chairman Patty Murray that Congress passed in the fall. Ryan-Murray lays out the basic parameters of what the government will take in and spend, not just for 2014 but also for 2015. Neither party wants to revisit that pact. And to the extent Obama is proposing new ideas for the long term, like pouring money into early childhood education, the Republicans simply aren’t interested in passing them. That would seem to render Obama’s new budget an exercise in pure political symbolism, and maybe empty symbolism at that.
I take a different view—and not simply because I’m nerdy enough to think of reading 200-plus pages of figures and charts as an opportunity, rather than a burden. For one thing, some of Obama’s budget proposals could still become legislation—not as sweeping initiatives, for sure, but as scaled-down pilots or add-ons to other pieces of legislation. It’s already happened once, in the Ryan-Murray spending agreement. Mostly that pact was about restoring some of the funding that various federal agencies had lost, because of budget sequestration. But the Administration and its Capitol Hill allies managed to squeeze out a little extra funding for early childhood programs. One reason: Obama’s call for a massive, $75 billion investment in the previous year’s budget put the issue onto the agenda.
The Administration may have another chance to scrounge up new funding for early childhood this year, now that leaders in both parties have expressed interest in reauthorizing and improving the Child Care and Development Block Grant, which is the federal government’s biggest program for financing day care. And that’s not the only pending legislation that could give the Administration and its allies a chance to fight for funds. Congress could take up a major highway bill, since the existing federal law expires in September. That’s an opportunity to drum up support for infrastructure projects, which include ports that need dredging as well as roads that need building.
“We can’t simply throw up our hands and not pass a highway bill,” one senior administration official said on Tuesday. And while this particular Congress has shown an unusual proclivity for doing nothing, thanks mostly to Republican intransigence, the two parties seem to have some of the same topics on their minds. Both Ryan and Senator Marco Rubio has expressed interest in expanding the Earned Income Tax Credit, so that childless adults can get benefits closer to the ones that families already receive. Obama’s budget calls for the same thing. House Ways and Means Chairman Dave Camp has talked about closing corporate tax loopholes, bolstering tax breaks for the working poor, and even throwing a little funding at infrastructure. Obama’s budget includes versions of all of these.
The parties are still far apart—very, very far apart—on the specifics. Republicans and Democrats have fundamental disagreements about how to fund highway creation and maintenance, with one side supporting new taxes and the other favoring tax cuts. (You can guess who wants what.) The Republican EITC proposals would give more money to childless adults by giving less money to families; Obama’s proposal would increase funding across the board. But particularly when it comes to some of the provisions of Camp’s tax plan, a senior administration official said on Tuesday, “there’s basis for a serious conversation.”
Of course, Camp isn’t the problem. It’s the House Republican leaders, who are in no rush to put his plan—or anybody else’s plan—on the agenda if they can avoid it. That’s partly because an election is coming up. Republicans figure they will pick up seats in the midterms, giving them more leverage over any fiscal negotiations taking place. But a budget unlikely to generate legislation can still have meaning, as a statement of priorities. In this case, the Obama budget is a preview of the agenda Democrats will adopt whenever full-scale fiscal negotiations start up again—which, as Bob Greenstein of the Center on Budget and Policy Priorities points out, is likely to happen sometime in 2015:
2014 likely won’t be a year of significant budgetary action beyond the appropriations bills. But 2015 may well be. Policymakers likely will seek to negotiate another budget deal to ease the scheduled sequestration budget cuts for 2016 and beyond and also may consider tax reform and other measures. Both the new Obama budget and the budget proposal that House Budget Committee Chair Paul Ryan will unveil in a few weeks will offer dueling frameworks for a year-long debate on where fiscal and program policy should go, in advance of larger decisions next year.
That’s precisely the sort of information voters should have in November, when they decide which parties control the two houses of Congress.
The stakes in the fall may not be nearly as big as they were in 2008, when Obama was promising to reform health care and stop climate change—or in 2010, when Republicans were vowing to roll back Obama’s accomplishments and, then, roll back parts of the Great Society and New Deal. But those were unusually grandiose times. The difference between Democratic and Republican visions of government are still large—and in 2015, when the current spending agreement runs out, lawmakers will have to reconcile them. Obama’s budget is one vision for how to do that, which makes it worth taking seriously.
By: Jonathan Cohn, The New Republic, March 4, 2014
“Addicted To The Apocalypse”: Scaremongers Can’t Bring Themselves To Let Go
Once upon a time, walking around shouting “The end is nigh” got you labeled a kook, someone not to be taken seriously. These days, however, all the best people go around warning of looming disaster. In fact, you more or less have to subscribe to fantasies of fiscal apocalypse to be considered respectable.
And I do mean fantasies. Washington has spent the past three-plus years in terror of a debt crisis that keeps not happening, and, in fact, can’t happen to a country like the United States, which has its own currency and borrows in that currency. Yet the scaremongers can’t bring themselves to let go.
Consider, for example, Stanley Druckenmiller, the billionaire investor, who has lately made a splash with warnings about the burden of our entitlement programs. (Gee, why hasn’t anyone else thought of making that point?) He could talk about the problems we may face a decade or two down the road. But, no. He seems to feel that he must warn about the looming threat of a financial crisis worse than 2008.
Or consider the deficit-scold organization Fix the Debt, led by the omnipresent Alan Simpson and Erskine Bowles. It was, I suppose, predictable that Fix the Debt would respond to the latest budget deal with a press release trying to shift the focus to its favorite subject. But the organization wasn’t content with declaring that America’s long-run budget issues remain unresolved, which is true. It had to warn that “continuing to delay confronting our debt is letting a fire burn that could get out of control at any moment.”
As I’ve already suggested, there are two remarkable things about this kind of doomsaying. One is that the doomsayers haven’t rethought their premises despite being wrong again and again — perhaps because the news media continue to treat them with immense respect. The other is that as far as I can tell nobody, and I mean nobody, in the looming-apocalypse camp has tried to explain exactly how the predicted disaster would actually work.
On the Chicken Little aspect: It’s actually awesome, in a way, to realize how long cries of looming disaster have filled our airwaves and op-ed pages. For example, I just reread an op-ed article by Alan Greenspan in The Wall Street Journal, warning that our budget deficit will lead to soaring inflation and interest rates. What about the reality of low inflation and low rates? That, he declares in the article, is “regrettable, because it is fostering a sense of complacency.”
It’s curious how readily people who normally revere the wisdom of markets declare the markets all wrong when they fail to panic the way they’re supposed to. But the really striking thing at this point is the date: Mr. Greenspan’s article was published in June 2010, almost three and a half years ago — and both inflation and interest rates remain low.
So has the ex-Maestro reconsidered his views after having been so wrong for so long? Not a bit. His new (and pretty bad) book declares that “the bias toward unconstrained deficit spending is our top domestic economic problem.”
Meanwhile, about that oft-prophesied, never-arriving debt crisis: In Senate testimony more than two and half years ago, Mr. Bowles warned that we were likely to face a fiscal crisis within around two years, and he urged his listeners to “just stop for a minute and think about what happens” if “our bankers in Asia” stop buying our debt. But has he, or anyone in his camp, actually tried to think through what would happen? No, not really. They just assume that it would cause soaring interest rates and economic collapse, when both theory and evidence suggest otherwise.
Don’t believe me? Look at Japan, a country that, like America, has its own currency and borrows in that currency, and has much higher debt relative to G.D.P. than we do. Since taking office, Prime Minister Shinzo Abe has, in effect, engineered exactly the kind of loss of confidence the debt worriers fear — that is, he has persuaded investors that deflation is over and inflation lies ahead, which reduces the attractiveness of Japanese bonds. And the effects on the Japanese economy have been entirely positive! Interest rates are still low, because people expect the Bank of Japan (the equivalent of our Federal Reserve) to keep them low; the yen has fallen, which is a good thing, because it make Japanese exports more competitive. And Japanese economic growth has actually accelerated.
Why, then, should we fear a debt apocalypse here? Surely, you may think, someone in the debt-apocalypse community has offered a clear explanation. But nobody has.
So the next time you see some serious-looking man in a suit declaring that we’re teetering on the precipice of fiscal doom, don’t be afraid. He and his friends have been wrong about everything so far, and they literally have no idea what they’re talking about.
By: Paul Krugman, Op-Ed Columnist, The New York Times, October 24, 2013
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