Disaster, Again


Jason Kuznicki

Jason Kuznicki is a research fellow at the Cato Institute and contributor of Cato Unbound. He's on twitter as JasonKuznicki. His interests include political theory and history.

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38 Responses

  1. Avatar Patrick Cahalan says:

    > But second, when the war ended, we were the only game in
    > town economically. Neither of those conditions obtains today.

    Well, it’s certainly true that we’re no longer the only game in town.

    Everybody is still playing with big piles of our chips, no matter what table they’re playing at, though. I can’t claim anywhere near enough monetary policy chops to know what that means, but it means something.

    Also, Europe seems poised to push austerity to the down-low. Again, I don’t know enough macro to know what that means, but it means something. And “well, they’ll go broke” isn’t it; the global economy is too interconnected to have someone go broke without a cascade effect. My gut says, it’s going to keep the inflated value of first world labor propped up a little bit longer…Report

    • Avatar Simon K says:

      As long as everyone continue to play with large piles dollars, the US will continue to be able to borrow at unprecedentedly low rates. That can probably all continue in the short run, providing the Fed keeps the value of the dollar on a predictable track, which it is by and large doing. In itself, this strikes me as a bad tradeoff – from a purely domestic point of view, the Fed should devalue the dollar if it can.Report

  2. Nob Akimoto Nob Akimoto says:

    When it comes to reserve currencies, the US dollar is still damned well near the only game in town. The Euro is shaky, the yen and swiss mark aren’t nearly plentiful enough and the CNY isn’t traded at enough volume to be a good safe haven.

    But yeah, I’m not seeing how this is a horrible “budget bomb”…wasn’t this the point of the negotiations?Report

  3. Avatar North says:

    I am hopeful the “triggers” will actually go off and bite. It seems plausible that they will; absent the parties working together they will and smart money has definitly been on non-coopertation in this session.Report

    • Avatar James Hanley says:

      Half-assed prediction: The parties will come together to preserve Pentagon spending, and fail to agree on anything else. So all the triggers will hit except the one that actually matters.Report

      • Avatar North says:

        I certainly would think that the Dems aren’t going to just give away the defense spending bit without getting anything in return; the defense cuts were ~the~ big goad against the GOP. If the dems knuckle under on the defense spending and get nothing in return then they’ll never be able to negotiate with the right again since A: the right will know that they can roll the dems on defense and B: the dems base will probably abandon them in disgust.Report

        • Avatar Mike Schilling says:

          I certainly would think that the Dems aren’t going to just give away the defense spending bit without getting anything in return;

          I admire your idealism, but based on what past event where they showed any backbone at all?Report

          • Avatar Tod Kelly says:

            It occurs to me that part of the reason we are at such an impasse is because they have showed backbone.

            Also, HRC strikes me as the mirror image of SS reform the GOP never had the cajones to pull a trigger on.Report

            • Avatar Stillwater says:

              Well, the impasse is really grounded in Cleek’s Law, if you ask me: GOP and conservatives oppose whatever the Dems support, updated daily. Since the Dems want the GOP to honor the deal they made last year, the Law requires them to oppose doing so.

              Even tho they look like fools. To everyone. Except those that operate by Cleek’s law.Report

              • Avatar North says:

                Stillwater, yeah if this thing pops up again with Obama wearing his big boy shoes now (and having put the sparkly Hope&change slippers away) I suspect the GOP is going to have a whole different kind of tussle on their hands.Report

            • Avatar North says:

              Tod, I think the SS vs HCR thing is an interesting paralell. I wasn’t very interested in the SS reform so I don’t remember the politicis of it at the time. Was it very much like HCR; as in publicly divided opinion, dems uniformly opposed no matter what but the GOP holding the votes to pass it on a strictly partisan vote?Report

              • Avatar Morat20 says:

                Actually, SS reform was rather unpopular with the masses — and it wasn’t even on the radar during the campaign. (In 2008, however, you knew health care was an issue both parties were going to address — and when you went to the polls, you knew roughly where the Democrats stood. Although it was guesswork on the GOP).

                In 2004, there was no such SS debate during the election. As such, when Bush took it up and claimed it part of his mandate, it was rather surprising to the public — and apparently the seniors (an important GOP voting block) did not accept “Don’t worry, we’re only going to screw your kids, you guys are safe” as a selling argument.

                I was surprised to see the Demcorats show backbone on SS, but then again SS is one of the crowning Democratic achivements. If they weren’t going to stand up for that, what would they stand for?

                Although I do find it amusing that privatizing social security was, you know, an individual mandate sort of thing. If you opted out of SS, you had to save. By law. That was back when the GOP was okay with making you eat brocolli, I guess.Report

              • Avatar greginak says:

                SS refrom never got out of commitee in the house. Bush didn’t run on SS reform so it was new to just about everybodey as opposed to HCR which was a major topic of the 08 election and in D thought for years. SS reform had little support and fell apart once it got a little bit of attentino. The comparison isn’t all that good.Report

              • Avatar Kimmi says:

                SS reform is just dumb. don’t fix the leaky scoop, fix the sinking battleship called medicareReport

              • Avatar Jaybird says:

                People above a certain age should receive heavy subsidies for cigarettes and alcohol. This will also give them an opportunity for some extra income, if they are enterprising.Report

          • Avatar North says:

            As Tod notes Mike they may not have had a ton of spine but even the Dems weren’t going to permit the GOP to do their all-austerity-all-spending-cuts witchdoctoring on their watch. If the Dems had no backbone at all they’d have folded completely and we’d truely be up fish creek.Report

            • Avatar Mike Schilling says:

              The Tea Party is genuinely OK with government default; the Democrats are not. When push comes to shove, they’ll cave like a cheap suit.Report

              • Avatar Morat20 says:

                Or make a 2 billion dollar platinum coin.Report

              • Avatar North says:

                Gosh, I hope you’re wrong on this one.Report

              • Avatar Stillwater says:

                It’s an interesting question, tho, isn’t it? Is the GOP willing to default as the lesser of two evils in a policy debate? There’s some game theory going on there, to be sure, but there’s certainly a part of their constituency who appear to be stupid enough, ideological enough, self-interested enough, or just plain fed up enough, to do just that.

                And really, if you want smaller government with lower taxes, there’s only one way to get there: cut spending and reduce tax rates. So from their pov, it’s not like they’re crazy to think isn’t the worst option on the table. (They’re crazy for different reasons 🙂Report

              • Avatar Stillwater says:

                Oops. “constituency” should be “caucus”.Report

              • Avatar Mike Schilling says:

                Is the GOP willing to default as the lesser of two evils in a policy debate?

                For the Norquist crowd, I’m not even sure it counts as an evil.Report

    • Avatar Kimmi says:

      Guns and cigarettes!
      (seriously, I always thought it was the Paulites who wanted those)Report

  4. Avatar Scott says:

    Why is it that the Repubs who refuse to cut defense are bad but Dems that refuse to cut social programs are heroes? In the last fight over the debt limit, what if any significant cuts to social spending were made given the large percentage of the budget they make up?Report

    • Avatar North says:

      In the last fight over the debt limits, cuts to social spending were offered so long as there was some revenue increased, as I recall it started at 6 dollars of cutting to every dollar in revenue and went up to 14 for every dollar of revenue. The right refused all those deals (thank goodness).Report

      • Avatar Scott says:


        This country doesn’t have a taxing problem, it has a spending problem. Barry has added over 4 trillion to the US debt in his four years, he has added more to the debt at a faster rate than any president I can think of. Yet all Barry can think of is taxing more and pushing more stimulus. Why not keep taxes low and let business actually grow?


        • Avatar Stillwater says:

          It’s true that Barry signed off on a stimulus package – government spending to accelerate a recovery and all that other nonsense – but how has he added to the debt faster than any other president? Is there any data to support that claim?Report

        • Avatar Kimmi says:

          … as if businesses weren’t growing under Clinton.
          Businesses grow when people buy things. Taxes provide a redistribution back to the middle class from the rich people, who have too much money to spend it all.Report

    • Avatar Jesse Ewiak says:

      According to Karl Rove and Friends, Obama just cut eleventy trillion dollars from Medicare. Why isn’t he getting any credit for that on the right?!?Report

  5. Avatar Tom Van Dyke says:

    Because he immediately spent it somewhere else. He’s spent his proposed tax hike on the rich 5 different ways already. He’s incapable of addressing the deficit, and that’s what the election’s about.Report

    • Avatar North says:

      Last I heard the election was about jobs yes? The deficit and jobs are pretty much opposites. If you want jobs then you keep taxes low, spending up and interest rates low. If you’re concerned about the deficit then you bring taxes up, spending down and adjust the interest depending on what the currency does. They’re just about opposites.Report