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Bruce Bartlett speaks of economic common sense in the midst of the current political circus. The Daily Show with Jon Stewart Mon – Thurs 11p / 10c Bruce Bartlett www.thedailyshow.com Daily Show Full Episodes Political Humor & Satire Blog The…
Bruce Bartlett speaks of economic common sense in the midst of the current political circus. The Daily Show with Jon Stewart Mon – Thurs 11p / 10c Bruce Bartlett www.thedailyshow.com Daily Show Full Episodes Political Humor & Satire Blog The … Continue reading
The GOP has nothing to offer even in rebuttal.
Obama channeling Teddy Roosevelt:
UPDATE 3-Obama hits Republicans, Wall St in populist speech | Reuters: “Their philosophy is simple: we are better off when everyone is left to fend for themselves and play by their own rules. Well, I’m here to say they are wrong,” he said.
But Republicans said it was another attempt to distract from what they see as Obama’s failed economic record. Senate Republican Leader Mitch McConnell accused the president and his fellow Democrats of resorting to “cheap political theater.”
Of course being the Party of No, well, that’s expensive political theater. If he resonates with the Occupy movement, the GOP goose is cooked. You heard it here first. Break a leg, Mr. President!
Cain shows off his mental bonafides.
“The more relevant question is whether the Ryan Plan will promote the more efficient allocation of health care. You can dredge up a theoretical argument that it would. In free market fantasy land, remember, employers and individuals will shop around for the most efficient health care plans, so insurers have an incentive to make their plans more efficient. The crux of the argument is that since insurers face a competitive market, they will work hard to make their plans as efficient as possible, which means they should do a better job than Medicare, which doesn’t face competition. I’m sure this argument has been advanced a hundred times by Heritage, AEI, and so on.
The problem with that argument is that it’s completely false in practice. If that market worked, then we would have a functioning health insurance market for people under 65 (where there is no Medicare);*** but if we had that, then we would not be talking about health care today.”
(Via The Baseline Scenario.)
“Thus we see that Republicans want their cake and eat it too. They want to use higher [CBO] revenue projections resulting almost entirely from expiration of the Bush tax cuts to prevent any discussion of tax increases to reduce the deficit, while implying that this revenue rise comes solely from faster economic growth. As Sen. Kyl put it, “So revenues are down, but it is due to the recession that we have. We have not cut tax rates in the last few years – since 2006 – for example.”
According to the CBO, ending all of the tax cuts and allowing scheduled tax increases now in law to take effect would raise revenues by $5.6 trillion between 2012 and 2021, including debt service. That would go a long way toward solving our debt problem. In fact, the Center on Budget and Policy Priorities says that this action, by itself, would be sufficient to stabilize the national debt and prevent it from rising as a share of GDP.”
Half-truths are whole lies.
[UPDATE: Forgot to add the previous paragraph that follows.] In other words, and completely contrary to what GOP leaders are saying, two major financial market participants are warning that there will be a Wall Street-related price to pay if the debt ceiling is not raised as needed.
The best indication of all that the market has already started reacting negatively is the current trading of credit default swaps on U.S. debt. As of late May, the number of CDS contracts — essentially insurance policies on the possibility of a default — had risen by 82 percent. Equally as important, the cost of a CDS — the best indication of how much riskier U.S. debt has become — rose by more than 35 percent from April to May. Last week I spoke to a number of people who calculate such things for a living, and they said this change means that the interest rate the U.S. government has to pay has already increased by as much as 40 basis points compared with what it otherwise would be. This means higher federal borrowing costs and deficits, and overall higher interest rates on everything from car loans to mortgages to credit cards.
Grade school social studies class: Congress has the Power of the Purse.
“The Republican strategy seems to be to ram their Medicare abolition plan into law within the next two months – Treasury says the ‘drop-dead’ date for raising the debt limit is August 2 – before people learn what they are really doing to Medicare.”
Isn’t this exactly what the Republicans accused Palosi and Reid of doing with “Obamacare?”
“There is some evidence that House Republicans are starting to get the message that their tax position is crumbling. On May 11, a senior Republican staffer told Atlantic reporter Derek Thompson that his party’s position on taxes is intellectually dishonest. ‘There are two worlds,’ the aide said. ‘One world is political and the sole objective is to maintain party message. The other world is real and in the real world fixing the deficit is a matter of national survival. When you get down to the real world decisions, it’s not about whether to raise taxes; it’s about the ratio of spending to revenue increases.’“
At some point you have to actually govern.
Kash Mansori notes that it takes more than a $100 cut in government spending to cut the deficit by $100. The reason is fairly simple. A cut in government spending causes output and income to fall, and the resulting fall in tax revenue increases the deficit offsetting some of the gain from the cut in spending…
When the policies they want to pursue have large negative effect on the deficit, the economy, employment etc. Republicans invent a story where the pain goes away. Somehow, the deficit actually falls, output goes up, and employment is stimulated even if it runs counter to obvious intuition. When tax cuts are the goal, we are told that tax cuts lead to so much additional effort that revenues actually go up and this reduces the deficit. We can cut taxes, and reduce the deficit! This magical answer is, of course, nonsense, but Republicans were able to hoodwink quite a few people into believing this.
Read Mansori’s entire article. It’s worth it. A few nuggets:
Somehow, this simple exercise in macroeconomic math seems beyond the reach of policymakers around the world.
- Many Republicans (and some Democrats) in Washington continue to believe that they can close a $1 trillion deficit by simply cutting $1 trillion in spending, and are apparently hoping to use the debt ceiling vote to do exactly that.
- The Cameron government in the UK embarked on an austerity program last year to try to reduce its budget deficit, and now mysteriously keeps missing its deficit reduction targets as the UK economy shrinks.
- The Greek government was forced into enacting a number of austerity measures last year, and… surprise, surprise… is now missing its deficit targets.