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 in reply to Patrick Cahalan 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. 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 in reply to North 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 in reply to James Hanley 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 in reply to 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;

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

          • 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 in reply to Tod Kelly 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 in reply to Stillwater 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 in reply to Tod Kelly 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 in reply to North 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 in reply to North 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 in reply to greginak says:

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

              • Avatar Jaybird in reply to Kimmi 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 in reply to Mike Schilling 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 in reply to North 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 in reply to Mike Schilling says:

                Or make a 2 billion dollar platinum coin.Report

              • Avatar North in reply to Mike Schilling says:

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

              • Avatar Stillwater in reply to North 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 in reply to Stillwater says:

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

              • Avatar Mike Schilling in reply to Stillwater 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 in reply to North 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

  5. 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 in reply to Tom Van Dyke 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