NYT economics reporter Catherine Rampell says:
Economists want spending cuts and/or tax increases that come after 2012, when the economy is expected to be stronger. But to use Standard & Poor’s lingo, cuts that take effect in 2012 may not be fully “credible.” Committing to future cuts/tax increases is just another way of kicking the can down the road, as Washington has been doing for decades now. Almost every time Congress promises painful fiscal measures at some future date, later politicians jump in to dismantle them just before they take effect.This is just so massively wrong. Incredibly wrong. Totally, completely wrong.
"Decades"? The budget was balanced -- in surplus -- just over one decade ago. Because Congress did, in fact, implement various measures that were passed in the 1990 (bipartisan) and 1993 (partisan) deficit reduction packages. And: "later politicians"? Well, yes, and they even had names, and belonged to a political party: George W. Bush, Tom DeLay, and other Republicans. They didn't so much "dismantle...painful fiscal measures" (although, yeah, they did that too), as that they enacted huge tax cuts. Sort of like the ones that got the budget into a mess in 1981. Which were, you know, also from Republicans.
(Note: in both cases, quite a few Democrats went along with the tax cuts, and fair enough from a deficit point of view to bash them for that -- but they were obviously and clearly GOP policies).
I might be willing to say that the Gramm-Rudman scheme and other mid-1980s attempts to find gimmicks to reduce the deficit would fit in Rampell's world, but certainly not the 1990 and 1993 plans. And certainly not anything since then.
ugh i can't find the recent reference i remember as serious so i'm reduced to declaring it hearsay that the deficit reduction plans, good as they may have been, played second fiddle to the dotcom revenue surge in pushing federal budgets into the black.
ReplyDeleteif that were true, it wouldn't make the ensuing reckless abandon of combining tax cuts with 'long war' any less reckless or corrupt, but maybe it weirdifies the argument - maybe undermining it, or maybe clarifying for the denser observers that enthusiastically creating huge deficits in good times is incredibly stupid because it's hard to deal with them AND rescue measures during harder times.
The question is if there is anything that can be done about this type of reporting. It seems all to typical.
ReplyDeleteWould it be possible to strip Standard&Poor of their undemocratic power over the country? There is no legitimate basis for them to condition a AAA on a debt reducer now. It would be just as legitimate to say we'll downgrade and drive up interest rates and cripple the economy unless the Tea Party is thrashed in 2012 elections, thus averting the risk of default. Not that I would personally complain against such a statement. But how is their demanding $4 trillion in cuts not politicized and who the heck elected them?
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