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Friday, December 28, 2012

The cliff, the cliff, the goddamned cliff...

I just caught a bit of Obama's press conference about the last minute fiscal cliff negotiations. He says he's "modestly optimistic." I think he's bluffing.

There is little chance of a successful compromise. Even if Reid and McConnell come to an agreement -- and I suspect that they will -- Boehner will not be able to talk his GOP House members into signing off on it. So over the cliff we go.

Right now, everyone wants to be seen trying to make a deal without actually doing a deal. I believe that the Republicans secretly want to miss the deadline. The "Grover factor" still plays a huge role here. If taxes automatically go up to Clinton-era levels, then the Republicans will be more open to negotiations in the post-cliff period -- at which point, they can tell their constituents that they never voted to raise taxes, only to lower them.

But why would Dems would want to make post-cliff concessions?

This situation reminds me of Anna Russell's once-famous comedy routine in which she explains the entire plot of Wagner's Der Ring des Nibelungen. (Her monologue doesn't seem very funny these days, although it still gives you a painless way of learning the story.) She closes her discourse by noting that the last theme of the last opera is the same primal "Rhine" music that we heard at the very beginning of the first opera.

"And so after this whole operation, we're right back where we started!"

And that, my friends, is the big bad cliff.

Going over the cliff means partying like it's 1999. We're going back -- back to the tax structure we had the last time we got the government out of the red. Except this time, Defense will be cut. And nobody touches Social Security.

From a liberal perspective, is that outcome such a bad thing?

The Republicans brought this situation on themselves back in 2009-2011, when they whipped the country into a frenzy over the debt. Remember those commercials in which the little girl confronts a guy digging a huge hole and pleads with him to stop shoveling? They don't run those spots any more.

The only game left is the blame game -- hence all of the current posturing.

Ezra Klein, in a very good WP piece (which boasts some excellent graphics), addresses that point. Klein argues that the Republicans, not the Democrats, have been intransigent. He's right, of course -- Obama has shown willingness to cut into Social Security, fer chrissakes. The important thing now is to make the Republicans pay the price for being obstinate.
The check on that sort of behavior is blame. If Republicans are being intransigent and the American people want compromise, then, in theory, the Republicans will get blamed. And that does seem to be happening: The GOP polls terribly, and they lost the 2012 election.

But at the elite level — which encompasses everyone from CEOs to media professionals — there’s a desire to keep up good relations on both sides of the aisle. And so it’s safer, when things are going wrong, to offer an anodyne criticism that offends nobody — “both sides should come together!” — then to actually blame one side or the other. It’s a way to be angry about Washington’s failure without alienating anyone powerful. That goes doubly for commercial actors, like Starbucks, that need to sell coffee to both Republicans and Democrats.

That breaks the system. It hurts the basic mechanism of accountability, which is the public’s ability to apportion blame. If one side’s intransigence will lead to both sides getting blamed, then it makes perfect sense to be intransigent: You’ll get all the benefits and only half the blame.
Unfortunately, this is not an election year, so Boehner's unruly crew won't be in immediate danger even if they do get the blame. Obama and the Democrats, on the other hand, will feel plenty of heat if the economy heads downward again over the next two years.

So, like, there's that.
The Republicans brought this situation on themselves back in 2009-2011, when they whipped the country into a frenzy over the debt.

Especially that most prominent Republican, Barack Obama when he convened the Catfood Commission by executive order.

What is it about Kool-Aid that produces an irresistable urge to rewrite history?
My favorite Anna Russell was Hamletto or Prosciuttino
Fear not Obama, Pelosi, and Reid will make a sow's ear out of the silk purse the republicans are handing them.

Obama will give Wall Street everything they want while telling the true Believers (Kosholes)it was the bestest deal ever.
There certainly is an encouraging dearth of bloggerheads/News outlets on FISAsteins single-handed defense of warrantless you-know-what.

The Sorcerer's apprentice got a veto-proof vote (understatement) which Obama would certainly veto because of his commitment in 2008, to 'look' at the issue, and 'listen' to opposing views.

I get all warm and gooey inside, thinking about how well run, this particular exercise has been.

Happy New Year !!!!

There are many differences in our economic situation now compared to then.

We now spend nominally double to triple on the military as we did then. We have tens of millions more of retirement age. The economy has been stripped of still further millions of manufacturing jobs and union jobs. We lack the froth and throwing off of asset bubble 'profits' in capital gains income, and there are no replacements in sight (the last bubble standing is the long bond bubble, but that doesn't foster much economic wealth among the general public).

Raising up to the Clinton rates in his day saw ONLY the topmost two brackets increase, not all of them, as will be the case now. Even then, mainly out of caution but partially out of the ex post fact appearance of raising rates in the middle of a year and applying that raise back in time, what extra was owed under that rate increase was allowed to be paid over several years' time, to lessen the blow. (An often forgotten policy, as it truly only applied at the top of the income levels, i.e., not at all to most people.)

So I'm not as sanguine as you, Joe, even as I do agree it will not be the vast economic killer event some suggest. But it will sharply tap the brakes and further slow what is already a moribund economy.

I do not understand the distinction you draw between the immediate hurt this might bring Democrats, but spare the GOP as they don't face the music for another two years before the next election. That is exactly the case for the Democrats as well-- no 'accountability moment' until the next election in two years. They'd seem to be in a parallel situation. (?)

Well, XI, I guess the distinction lies in the fact that the Dems are now perceived to be in the driver's seat. So they'll get the blame if the vehicle goes off course.

Higher tax rates, if not coupled with increased government spending, will hurt the economy and that's the danger of the fiscal cliff.

Great, we go over, and tax rates go up. What then, we start paying down the deficit? That money would be better spent in unemployment and food stamp benefits, but we both know that won't happen with the deficit hysteria Obama helped to build.

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