“Still More BS”: The Bowles-Simpson Commission Is The Fiscal Zombie That Just Won’t Die
We all do things that we regret. President Obama must surely regret that he ever listened to the extreme deficit hawks back in early 2010, when he appointed the Bowles-Simpson Commission, the fiscal zombie that just won’t die.
The commission is long defunct. The recommendations of its majority report never became law (because that required a super-majority). But the dreams and schemes of B-S have become the gold standard of deflationists everywhere. The test of budgetary soundness is: does it meet the recommendations of Bowles and Simpson?
On Tuesday, the depressive duo were at it again, calling for additional deficit reductions of $2.4 trillion over a decade. This is almost a trillion dollars beyond what President Obama and Congress are considering.
This clarion call was issued under the aegis of the corporate group, “Fix the Debt,” a bunch of millionaires and billionaires urging regular people to tighten their belts for the greater good.
Quite apart from the impact of particular cuts (Social Security, Medicare, domestic discretionary spending), this is economic lunacy—because it sandbags an already depressed economy. The Congressional Budget Office has calculated that growth would be 3 percent this year, but will only be half that rate because of the effects of the sequester (or cuts of a similar magnitude)—and Bowles and Simpson are calling for annual cuts of twice the scale of the sequester, and over a whole decade.
President Obama has focused on heading off the sequester—$85 billion of mandatory cuts in the next ten months. But he has bought into the deeper mischief wrought by Bowles and Simpson, by embracing further cuts of $1.5 trillion over a decade.
As the latest pronouncement by the B-S boys shows, the cuts are never enough. If Obama accepts $1.5 trillion, they counter with $2.4 trillion.
They are more gentlemanly than Grover Norquist, but the ideological goal is the same—a government small enough to drown in a bathtub. Even worse, deflationary cuts slow growth, making the debt load larger in real terms, no matter how much we cut.
We’ve now had a real-time experiment, in countries as diverse as Greece, Spain, and Britain. Austerity only breeds more austerity.
By: Robert Kuttner, The American Prospect, February 21, 2013
“A Game Of Chicken”: Republicans Want To Burn The Coop
Well, here we go again. Another season, another manufactured, self-inflicted, completely preventable crisis of government. This time it’s the sequester.
We may as well put these things in the Farmers’ Almanac.
Now we’re engaged in a finger-wagging blame game of who proposed it, who supported it and who is opposed to preventing it.
Let’s lay out some of the facts of this disaster.
The sequester’s origin is quite muddy.
President Obama, responding to Mitt Romney in an October presidential debate, said: “First of all, the sequester is not something that I’ve proposed. It is something that Congress has proposed. It will not happen.”
John Boehner, on the other hand, now says that the sequester is Obama’s baby. In a speech on the House floor this month, Boehner said:
“The president first proposed this ‘sequester’ in 2011 and insisted it be part of the debt-limit agreement.”
In an opinion piece published Wednesday in The Wall Street Journal, Boehner wrote, “Having first proposed and demanded the sequester, it would make sense that the president lead the effort to replace it.”
PolitiFact rated Obama’s claim that the sequester was proposed by Congress as “mostly false” saying:
“It was Obama’s negotiating team that came up with the idea for defense cuts in 2011, though they were intended to prod Congress to come up with a better deal for reining in the deficit, not as an effort to make those cuts reality. Meanwhile, members of both parties in Congress voted for the legislation that set up the possibility of sequestration. Obama’s position is that Congress should now act to avoid those across-the-board cuts. Obama can’t rightly say the sequester isn’t his, but he did need cooperation from Congress to get to this point.”
PolitiFact bases its assessment largely on assertions in the new book “The Price of Politics,” by the renowned Washington Post reporter Bob Woodward.
The Web site does, however, point out that there are dissenting views, including that of Christopher Preble at the libertarian Cato Institute. PolitiFact quotes Preble as saying, “I do not believe it accurate to refer to the cuts that will occur in both defense and nondefense discretionary spending under sequestration as ‘Obama’s cuts.’ ”
And John Avlon, a senior columnist for The Daily Beast, wrote Wednesday that he “happened to come across an old e-mail that throws cold water on House Republicans’ attempts to call this ‘Obama’s Sequester.”
According to Avlon:
“It’s a PowerPoint presentation that Boehner’s office developed with the Republican Policy Committee and sent out to the Capitol Hill GOP on July 31, 2011. Intended to explain the outline of the proposed debt deal, the presentation is titled, ‘Two Step Approach to Hold President Obama Accountable.’ It’s essentially an internal sales document from the old dealmaker Boehner to his unruly and often unreasonable Tea Party cohort. But it’s clear as day in the presentation that ‘sequestration’ was considered a cudgel to guarantee a reduction in federal spending — the conservatives’ necessary condition for not having America default on its obligations.
The presentation lays out the deal in clear terms, describing the spending backstop as “automatic across-the-board cuts (‘sequestration’). Same mechanism used in 1997 Balanced Budget Agreement.”
So, there’s that.
But I’m not sure where all this you- are-the-father origination blame game gets us.
The bill got bipartisan support in the House and at the time Boehner bragged:
“When you look at this final agreement that we came to with the White House, I got 98 percent of what I wanted. I’m pretty happy.”
And President Obama signed it.
None of this changes the fact that the sequester is still bearing down on us, and it still holds horrible consequences that we didn’t think we’d be facing.
Now we are stuck in a vicious fight about what, if anything, can be done to prevent it and protect an economy that is just beginning to emerge from the muck.
According to the Bipartisan Policy Center, “Our estimate of approximately one million lost jobs due to sequester remains our base case if a full sequester occurs as scheduled on March 1.”
So once again the American people are caught in the middle of a game of chicken between Democrats, who rightly warn that the sky could fall, and Republicans, who want to burn the coop.
Thus far, the president and the Democrats are outmaneuvering the Republicans in the messaging war, but that will be of cold comfort if the Republican hotheads prevail.
Erskine Bowles, the former White House chief of staff for Bill Clinton, and the Bowles half of the Simpson-Bowles Commission, said of impending cuts: “They are dumb and they are stupid, stupid, stupid. They are inane.”
And yet dumb, stupid and inane have become the three pillars of government now that strong-willed, dimwitted hard-liners who see compromise as a dirty word have infiltrated the halls of Congress.
By: Charles M. Blow, Op-Ed Columnist, The New York Times, February 20, 2013
“Simpson-Bowles Rebaked”: Playing To The Peanut Gallery
Simpson and Bowles have returned to the stage with a far worse plan than the one they had before. Their old formula sought $2.9 trillion in cuts and $2.6 trillion in revenues, while this new one that they touted at a Politico breakfast this morning seeks just $1.3 trillion in revenues and jacks the cuts up to $3.9 trillion.
The change is driven not so much by any kind of ideological shift or decision that we need more pain as it is driven, or so says Ezra Klein, by their apparent decision this time not to create their own new thing wholly from scratch irrespective of what the pols are saying, but to use Obama’s and Boehner’s latest offers as sort of starting points and guides:
This isn’t meant to be an update to Simpson-Bowles 1.0. Rather, it’s meant to be an outline for a new grand bargain. To that end, Simpson and Bowles began with Obama and Boehner’s final offers from the fiscal cliff deal. That helps explain why their tax ask has fallen so far: Obama’s final tax ask was far lower than what was in the original Simpson-Bowles plan, while Boehner’s tilt towards spending cuts was far greater than what was in the original Simpson-Bowles.
That said, while this plan doesn’t include more tax increases than Obama asked for, it does include significantly more than the $1 trillion in spending cuts than Boehner asked for — about $500 to $700 billion more, if I’m reading it right. In increasing the total deficit reduction, Simpson and Bowles have put the weight on the spending side of the budget.
But why would they shift so dramatically in the Republicans’ direction? Derek Thompson of The Atlantic sees two reasons:
First, there aren’t enough people in Washington who want to raise taxes on anybody making less than $250,000 to make the original $2.6 billion figure work. Second, Congress has demonstrated a fairly strong appetite for scheduling budget cuts.
Well, alas, he’s undoubtedly right about that. But really, this is not to be taken seriously. I’m not usually part of the Entitlement Chicken Little Caucus, because I concede that something needs to be done, provided that “something” is first and foremost to change the way Medicare reimbursements are made, which would save many trillions over the years, and then see what else needs to be done. But to be “responsible” people inside the Beltway you must thirst for seniors and future seniors and poor people and future poor people to sacrifice more. Simpson and Bowles are just playing to that peanut gallery, for which a Politico breakfast is the perfect audience.
One might generously say that Simpson and Bowles are just bowing to the extant political reality. But I thought their job was to suggest the most responsible way forward. They of all people should be standing up to GOP intransigence, not accepting it.
By: Michael Tomasky, The Daily Beast, February 19, 2013
“Frontmen For American Austerity”: Sequestration Is Not Enough For Simpson And Bowles
Sequestration?
Cue the return of Alan Simpson and Erskine Bowles, frontmen for American austerity.
If sequestration is not averted by the end of the month, America will experience an arbitrary austerity agenda that shifts burdens from the wealthy onto working families. It makes across-the-board cuts to vital services. As President Obama noted Tuesday, sequestration would impose “automatic brutal spending cuts” to job creation, infrastructure and education initiatives. It would, as well, slash funding for air traffic control, federal prosecutions and Federal Emergency Management Agency grants that make it possible for states and local governments to hire needed firefighter and emergency personnel.
Even the parts of the sequester that are appealing—squeezing the bloated Department of Defense budget—will tend to harm low-wage federal employees rather than billionaire defense contractors.
Most troublingly, sequestration will slow, and perhaps stall, the economic recovery. “This is not an abstraction,” says President Obama. “People will lose their jobs.”
By any measure, the sequester is austerity.
But it’s not enough austerity for Simpson and Bowles.
The former Republican senator and defeated Democratic senate candidate who praises Paul Ryan’s budget don’t particularly like the death-by-slow-cuts of sequestration. They prefer a full frontal assault on the most vulnerable Americans and a redistribution of the wealth upward.
As President Obama has noted, Washington has already reduced the deficit by $2.5 trillion.
But the co-chairs of the failed National Commission on Fiscal Responsibility and Reform now want another $2.4 trillion.
To wit, in a “rehashed” plan to “Fix the Debt,” Simpson and Bowles are busy promoting schemes to “modernize…entitlement programs to account for” an aging population. That’s code for schemes to delay the point at which the hardest working Americans can get access to Social Security and Medicare.
Simpson and Bowles are arguing specifically for the adoption of “chained CPI.” That’s the assault on Social Security cost-of-living increases that Congressman Keith Ellison, D-Minnesota, correctly identifies as “a benefit cut.”
“It’s a bad idea and it’s a stealth way to give people less,” Ellison explained in a recent interview. “It is a benefit cut—and here’s the real problem with it being a benefit cut: It would be absolutely horrible if it were a benefit cut but the cut was designed to extend the life of Social Security and to make the program more solvent. But that’s not why they’re doing it. They’re doing it so that they can preserve somebody else to have a tax cut and to not raise taxes on the top 2 percent.”
Ellison is right. As is invariably the case with austerity schemes, Simpson and Bowles—and the billionaire-funded “Fix the Debt” group they head—are proposing cuts to the top marginal tax rate for wealthy individuals and corporations.
The United States can and should address debts and deficits. And there are sound plans to do so, including the “Balancing Act” advanced by Ellison and other members of the Congressional Progressive Caucus. That initiative rejects austerity and proposes a growth agenda based on tax fairness and investments in education and job creation.
That’s not Simpson-Bowles, which Nobel Prize–winning economist Paul Krugman dismisses as “terrible” economics. That’s responsible policy that avoids the “brutal cuts” of sequestration and the even more brutal cuts of full-fledged austerity.
“Almost $2 trillion has been cut over the past two years from teachers, firefighters, police officers, loans for college students, and infrastructure investments,” the congressman says of the warped federal budget priorities proposed by austerity advocates. “The American people shouldn’t continue to pay the price for massive tax breaks for millionaires and billions of dollars in subsidies to oil companies.”
By: John Nichols, The Nation, February 19, 2013
“More Republican Denial”: This Time, The People Are On To The GOP
Whose “idea” was the sequester, and why should it matter? My Twitter feed these last couple of weeks has been overflowing with people going beyond the usual “communist” and “idiot” name-calling that I get every day and throwing the occasional “liar” in there because I “withhold” the information that the sequester was the Obama administration’s idea. Very well, consider that nugget hereby unwithheld. Let’s grant that this is true. But it’s true only because the Republicans were holding a gun to the administration’s head—and besides, the Republicans immediately voted for it. In any case the important thing now is that outside of Fox News land, it’s an unimportant fact whose “idea” it was. The Republicans are partial owners of this idea, and as the party that now wants the cuts to kick in, they deserve to—and will—bear more responsibility for the negative impacts.
A trip back through the full context of this saga tells the story. The idea of having these deep budget cuts called “sequestration” goes back to the summer of 2011 and the debt-ceiling negotiations. You’ll recall readily enough that it was first time in history that an opposition party had attempted to attach any conditions to increasing the debt limit. You’ll also recall that the Republicans made this intention quite clear from the beginning of 2011; indeed, from campaign time the year before. Remember Obama’s quotes from late 2010 in which he said he felt sure the Republicans would behave more reasonably once the responsibility to govern was partly theirs?
Instead, they almost crashed the economy. And they were also clearly the side pushing for drastic spending cuts. Let’s go back quickly over a partial 2011 timeline. In April, Obama spokesman Jay Carney said it was the president’s position that raising the debt limit “shouldn’t be held hostage to any other action.” On May 11, Austan Goolsbee, then Obama’s chief economic adviser, said that tying a debt-limit increase to spending cuts was “quite insane.”
On May 16, the United States went into technical default, but the Treasury Department was able to string things along a few more weeks. Tim Geithner made it clear that the real problem would hit August 1. A key moment, as Scott Lilly of the Center for American Progress wrote in The Huffington Post, came on May 31. That’s when the GOP-run House voted on Obama’s request for a “clean” debt-limit increase. It failed, and all 236 Republicans voted no.
All this time, and right on up to August 1, Republicans were screaming for deep budget cuts, and the administration was saying no. But the Republicans had the leverage because it actually seemed plausible they were crazy enough to push the country into default. And so at that point, at least according to Bob Woodward in his new book, Jack Lew, then the budget director and now Obama’s nominee for Treasury secretary, originally came up with the notion of sequestered cuts. Or maybe it was Gene Sperling. The White House’s idea was based on language from the 1985 Gramm-Rudman-Hollings deficit-reduction act. It was also the White House’s notion that if the “trigger” was hit, what would kick in would be not only automatic budget cuts but also automatic revenue increases (an idea Republicans refused to go along with).
So fine, the White House proposed it. It did so only after months of Republicans publicly demanding huge spending cuts and refusing to consider any revenues and acting as if they were prepared to send the nation into default over spending. In other words, this was the administration’s idea in much the way that it’s a parent’s “idea” to pay ransom to a person who has taken his child hostage. There was a gun to the White House’s head, which was the possibility of the country going into default.
And then, when it was all put into legislation, it was the Republicans who passed the Budget Control Act of 2011 in the House, with 218 of them voting yes. So even if administration officials proposed it, it would have remained just a proposal if those 218 Republicans hadn’t supported it (no House Democrats backed it). Most Republicans agreed at the time that the sequestration trigger was a good thing—that it would force everyone to get together and agree to a path forward and a long-term budget deal.
Let’s say that I’m having a dispute with a neighbor I don’t really like or trust about some invasive weeds infesting both of our properties. We consider a range of options and then finally he proposes a solution that isn’t very appetizing to either of us—it’s expensive, might kill a lot of grass, say, or a couple trees. It’s not exactly desirable to either of us, but I endorse his suggestion and share the costs of implementation of his plan. If it ends up killing grass or trees, am I really then on firm moral ground in pointing my finger and saying, “Hey, it was your idea, bub”?
I guess maybe conservatives think that way, but of course I don’t. I assented to the plan. I share responsibility for the consequences. Where my little analogy collapses is that in my hypothetical, my neighbor and I are more or less equally affected by the negative outcome. The Republicans’ ace card is that they know, or they hope they know, they are not equally affected. Austere cuts will harm the economy, and the blame will fall on the president.
Normally yes. But the majority of the people are onto them. And it sure isn’t going to be looking very responsible to people, as the March 1 sequestration deadline approaches, for Republicans to be going before the cameras and saying that the cuts are unfortunate but necessary medicine, or whatever formulation they come up with. They’ve wanted these spending reductions for two years. It hardly matters much who invented the mechanism for the cuts. What matters, as the Republicans will find out, is that the people don’t want them.
By: Michael Tomasky, The Daily Beast, February 19, 2013
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