Since we are to be treated to multiple staged crises by the GOP in order to dismantle entitlement programs so that there is more money to funnel to wealthy people, I thought it would be useful to collect some of the better pieces trying to assess where we (and the US Budget) really are. The coming months will be filled with more of the usual he say/she say fake objectivity from the media, who won’t do much to give you any context much less any real numbers. In other words, they’ll be participating in the fear factory that will be generated in order to create a better opportunity to cut back on entitlements. Several of these pieces will be longish and some will be fairly data-rich (we want that), so you might need a little time to read through them. But a good deal of the story is that we’ve gotten in a good deal of deficit cuts and we’re pretty close to the number needed for long term sustainability. This is good ammunition for talking to our Congressional delegation who seem hell bent on helping the GOP to cut Social Security and Medicare. Because what we should be focusing on is fixing these two — not in asking seniors to cut back.
I’m sure there will be other good work coming down the pike and I’ll add that to this list, but am not sure yet how to revive the thread. In the meantime, you can bookmark this as a place to find smarter journalism (or just plain wonkishness) on the budget issues.
The Senate Democrats’ internal budget memo: ‘Revenue Must Be Included’ This is from Ezra Klein and is probably the first of many from him — he is following the money, the policy and the politics. This is key, because he has included a link to the entire budget memo from Democrats, including a great recap of how we got here:
Take a good look at that chart — that chart says that Democrats have already agreed to implement $2.4 trillion in deficit reduction (over 10 years) and if you include the sequester, it becomes more than $3.6 trillion. So this means that there is alot of room to claim that Democrats have already been at the forefront of serious deficit reduction — certainly alot more than GWB and GOP run Congresses did. It also means that Democrats can stop cowering about deficit reduction, because (including the sequester) this amount of deficit reduction isn’t too far off what Simpson-Bowles asks for.
Go read the whole thing and know that the takeaway here is the the tax revenues Democrats will be going after are in cutting tax expenditures — loopholes and subsidies that are pointed at the wealthiest among us and at corporations.
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Assessment of Federal Expenditures Under Obama These charts originated with Kevin Drum, but it is pretty clear that the biggest increase in federal spending in recent history comes from George W. Bush.
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Exit Interview with Tim Geithner with TNR
This is an interesting interview, but I want to pull out two wonky points that you won’t get from the media:
LA: Now you’ve had a pretty full four years as Treasury Secretary. What’s been the hardest and most frustrating part of the job?
TG: I think absolutely the hardest thing was trying to design a response to the crisis that would be effective, that would work over time. That was the most important thing, because nothing was possible without that. I knew with a fair degree of confidence by the summer of ’09 that the cumulative actions we took, on top of what Paulson and Bernanke did, was going to work. I was very confident about that by that time. Even though we still had a long, rough road ahead of us.
The most frustrating part of this work, but in some ways it’s the most consequential, is how effective you can be in relaxing the political constraints that exist on policy. You can see that most compellingly now in the fiscal debate. Paulson before us and the President were very successful during the crisis in getting a very substantial amount of essential authority essential to resolving the crisis. But it has been very hard since then to get out of the American political system more room for maneuver both on near-term support for the economy, as well as reforms that would lock in a sustainable fiscal path. That is the most frustrating thing, to get the political system to embrace better policies for the country.
No matter what you think about Geithner, it is hard to argue with him that the political class has not done much to help support this slowly recovering economy.
LA: Over the last couple of years we’ve had pitched battles over the budget between the administration and the Republicans in Congress. There are really two interpretations of what’s driving the Republicans. One is, there is indeed in this county a fundamental philosophical divide about the role of government and that what we’re seeing is this divide being played out in the political arena. The other is that the Republicans have been willing to do almost anything to hand this President a defeat. Do you have a view?
TG: There’s something strange about the debate today. The magnitude of additional deficit reduction – revenue increases or spending cuts – that you need to lock in in order to achieve fiscal sustainability is pretty modest. By most accounting, because of what we’ve already done on the spending side and tax side, we have to find another ¾ of 1 percent of GDP of policy measures. And if we did that, that would achieve the economist test of sustainability, meaning it would get the deficit down to a modest primary surplus so the debt would start falling as a share of GDP.
Get that? We’re close to the needed deficit reduction that gets us to fiscal sustainability.
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Tim Geithner is Wrong This is Krugman weighing in on this interview — noting that Geithner is quite correct in the amount of deficit reduction needed, but that he is really wrong on the politics of bipartisanship to achieve that — noting that the GOP doesn’t really care about deficit reduction:
To say what should be obvious: Republicans don’t care about the deficit. They care about exploiting the deficit to pursue their goal of dismantling the social insurance system. They want a fiscal crisis; they need it; they’re enjoying it. I mean, how is “starve the beast” supposed to work? Precisely by creating a fiscal crisis, giving you an excuse to slash Social Security and Medicare.
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This is more of a think piece, but it also gets to the idea that the long term deficit reduction problem isn’t as big as it is being sold. How to Fix the Long Run Deficit in 6 Easy Steps.
I’d forgotten to include this one in the original list — a concise piece by James Kwak defining social insurance and its purpose. What Is Social Insurance?
In the inaugural address, I think the president got it basically right. They are risk-spreading programs. You don’t get back exactly what you put in: they have a certain degree of progressivity (although less for Social Security than is commonly imagined). Their main function is to protect people against extreme outcomes by pooling a limited share of our resources.