Big news about a small deal

Hooray! The budget deal was done with a few days to spare.

This isn't really a surprise. The hard work came in convincing the GOP to start negotiating and stop trying to defund Obamacare. So the real accomplishment was achieved get in October and consisted of getting the GOP to stop being crazy and act like adults. Since that deal, the adults have been in charge, and the adults were able to make a deal by splitting the difference. Of course, any fifth grader can probably average $967 and $1058 and get an answer close to $1012; it takes adults to do the math when it's billions.

The harder work was walking back some of the sequester spending cuts and putting other cuts or revenues in their place. The new revenues (called fees) are getting the press notice. The most notable one is the increase in the federal fee for airport security that's added onto the cost of airline tickets. This fee is increasing a non-painful $2.50 per ticket. It means that less general revenue (such as income taxes) will be needed to subsidize airport security, freeing the money for other spending, of course. This fee hike seems fair to me--it's not huge, it's not soaking one group, it's making the service pay for itself more. That's all good.

But what about those other cuts, which were supposed to be more targeted? I looked it up and it's the same cutting "waste and abuse." I hope they have actually done their homework and identified waste they can cut and therefore save actual money, not vapor money. But it's not really belt-tightening...

...except for federal employees, some of whom will now have to contribute more to their pension funds. This sounds fair too. It broadens the pain among the federal workers, who've suffered somewhat less than private sector workers.

The money that's been freed up is being split equally between defense and non-defense spending, so both sides are getting a small extra helping from the pot. That means there's not much budget discipline in this deal. It's sliding back from what the sequester tried to achieve--actual reduction in spending. I don't know how much of the sequester will actually go into effect. One article said 50% of what was planned for 2014 and 2015. So much for our collective attempts to rein in federal spending. We didn't even maintain half of round 1 of the cuts. We are sad wimps indeed.

I'd really like to see spending reduced in a gradual way, with the least effective spending targeted first. But Dems are set on protecting all their favored projects and so are the GOP. No one wants to give up anything on their side for the greater good. Sigh.

Image: opb.org

Extras. Analysis from the Heritage Foundation. The analysis of the airline fee increases is obviously muddled, which I discovered by following the link they helpfully provided. Some numbers from WaPo, an overview from the Atlantic Wire.

Continuing resolutions and continuing stonewalls

I like to write about significant issues, not the outrage du jour (currently whether or not the White House threatened Bob Woodward and all the petty partisan point-scoring around that non-issue).

So I won't be writing much for a while. It's strange to have written almost 400 posts, and now have nothing to say. But I don't want to endlessly repeat my complaint that neither party will seize the wide-open middle ground and actually propose a centrist spending plan.

Here's what will happen with the biggest issue in Washington, the federal  government budget:

• The GOP will continue their typical non-specific (Ryan) budget proposals, with lots of dollars removed from social programs, but no details on how that will translate to benefit reductions.
• The Dems will continue their proposals for larger budgets fueled by tax increases on the wealthy and budgetary sleight-of-hand to hide the growing deficits in the proposal.
• There will be NO POSSIBILITY OF RECONCILING these proposals.
• Just before a government shutdown on March 27, Congress will reluctantly pass a Continuing Resolution that follows the same budget we have now, with no replacement for the sequester and no reforms on the huge Medicare expenditures.
• The only bit of uncertainty is how long the Continuing Resolution will cover--six months or one year.

THIS IS PITIFUL. Our elected officials have reduced themselves to one decision: how long to keep the status quo going. We aren't getting much for the salaries we pay them.

The only silver lining is that neither the GOP nor the Dems can implement their respective destructive programs. So these doldrums are the price for avoiding the catastrophe we'd have from following one or the other partisan fantasy. I can live with that, but I'll need a new hobby since blogging on politics will be mighty sparse. Suggestions?

Better than blogging

Image: maxshertz.com

Extra. There is still one blogger who's doing well. Kudos to Jonathan Bernstein at Plain Blog (a good example here).

Update 3/17/13. The length of the Continuing Resolution isn't even in doubt. It will be 6 months, which takes us to the start of the 2014 fiscal year.

Countdown to sequester

Despite the [hollow] protests on each political side, the sequester is very likely to occur. That's because the sequester isn't going to be that painful, and there's no better deal on the horizon that can pass the House and Senate.

The GOP may complain about the deep cuts to defense, but they're on the record for wanting even deeper spending cuts. If all those cuts came out of entitlement programs, the GOP would actually be in more trouble. A lot of seniors would be furious over cuts in Social Security and Medicare that became noticeable, maybe even painful. Having a balanced sequester, for all the GOP bluster, is a boon to the GOP.

The Dems also complain, but about the broader effect of the cuts. It's bad for defense, they say (but most liberals are happy to give defense a good trim), but look at what it will do to food inspectors and air traffic controllers and first responders! Excuse me, but I think almost all first responders are paid for at the state and local level, so a 2.3%, 4%, 7% or whatever reduction at the federal level is minimal. But we do like all those spiffy uniforms at our press events.

Dems are pressing for more tax increases, but the GOP isn't going to give them that. So the Dem proposal is dead on arrival. The GOP wants to cut everything but defense, but that's dead on arrival for non-blue-dog Dems.

One thing to remember is that this sequester was the best deal available, in that each side got what it really wanted back when it was negotiated in August 2011. The GOP got no tax increases. That is still the top priority for them, so that leaves little room for them to strike a new deal. The Dems caved on no new revenue (and just had to be patient for the Bush tax cuts to expire), but they got to direct where the cuts occurred. To Dems, it's still the best mix of cuts. They have no incentive to let the GOP change that mix.

By the way, the sequester doesn't even cut spending. It just slows the increase in spending. Per the CBO, the spending for 2012 was $3.538 trillion. For 2013, it's projected to be $3.553 trillion with the effect of the sequester. So if we're cutting the budget in some places, it must be growing like weeds somewhere else. Maybe that indicates we have a big job to do on that "somewhere else." That's sure to be fun with this Congress.

Image: themoderatevoice.com

Extras.

A nascent thought - the one-day-a-week furlough for civilian defense workers will keep those workers off the unemployment rolls. That's a good move now, but will it establish a 4-day work week for federal workers?

A funny twist on the serenity prayer: "...politicians are finding the strength to accept the things they cannot change, and change the things they cannot accept. That means accepting the sequester but changing who gets blamed for it." --Atlantic Wire writer Elspeth Reeve

GOP disarray over the sequester:

• Boehner - It's all Obama's faaaauuullltttt!
• Reaction to Boehner - what a whiner and idiot.
• Plain blog - those incoherent GOP arguments.
• RedState - yes, the cuts are unbalanced, but let's cut anyway. Plus, Obama's on the run!

Up Next: Look for a post soon on the next crisis point - the next Continuing Resolution, which we need by April 1 March 27.

 Image: cagle.com

The only fan of the sequester

It's hard to be for the sequester if you're an elected official. After all, the sequester will send pink slips to somewhere around 600,000 employees in defense-related jobs, both in the Defense Department and Defense contractors. If you have a military base or a military contractor in your district, you can hardly support the sequester. So politicians don't express enthusiasm for it.

So who is this lonely fan of the sequester? Howard Dean, expressing his support from the safety of private citizenship with no official post in government or the Democratic Party. I loved some of the Dean quotes:

About defense cuts: "This is a chance to cut Pentagon spending. We haven’t done it for 30 years... This would not be my favorite timing. I don’t think this is a great solution. I just think it’s the better of any of the ones that are on the table... There are going to be some jobs lost. The fact of the matter is that we will not get this chance again."

About Medicare cuts: "I’m not in the least worried about Medicare provider cuts... Whether this comes from drug companies or provider cuts, we’re going to do those anyway as soon as they get around to doing what really has to be done, which is paying by the patient, not by the procedure." [Wow--how clear and how true]

About the risk of recession: "It will be a short term, light, small recession. Look, we’re in deep trouble financially in this country... You can pay me later or you can pay me now, but paying later is going to be much worse and it’s going to hit much more vulnerable people than this does."

The GOP is generally pro-sequester at this point because it's better than the other alternatives currently being floated. Those alternatives are objectionable because they contain tax increases and fewer spending cuts. However, the GOP can't be whole-hog supporters due to the military jobs in each district, as I said above. Some are trying to connect the sequester, and subsequent job losses, to Obama. The usual phrase is the sequester is "the president's idea."

I'm confident that the sequester will happen. I'm also a fan for reasons similar to those of Howard Dean, though I support broadly cutting jobs in the federal workforce, not just in defense. I also think we shouldn't miss this chance, and I'm willing to weather the consequences. Think of the sequester as the cuts we should have had in the 90's and the 00's, but didn't. We shouldn't put them off any longer, or it's "going to be much worse" as Dean says.

Image: newrepublic.com

Short: Why I'm writing more about the GOP

I struggle to write about the Democratic side of the political equation lately. Their positions and proposals are so stale that I just roll my eyes and shut down: sure, more spending on education! Too bad we haven't figured out how to reduce our $800 billion deficit a little bit more before we add on a few wishlist items.

The latest disappointment: Senator Tom Harkin, an unreformed tax-and-spend liberal, is repeating that the government doesn't have "a spending problem." Almost all Dems wisely stopped saying that in August 2011, but some are trotting it back out. With nearly $3T in spending each year, $17T in debt, and a bumper crop of retirees on the way, we absolutely have a spending problem that we better do something about. (By the way, this news item came to my attention via the conservative blogosphere. MSM FAIL, again.) I don't know when I'll hear something realistic from a Democrat again. Maybe when they finally propose a budget that can get 51 votes in the Senate, then they'll return to fiscal reality. Obviously I'm not holding my breath.

The GOP, at least some of them, are grappling with budgets and electoral fallout. They're the ones who acknowledge that the sequester will happen.

It's glaringly obvious that either of the political parties can lose sight of reality and start believing that their spin is truth. The Dems went from triple crown winner in 2008 to half-lame handicapped donkey in 2010. The GOP got punished in 2012. Won't someone learn from these last three years? If you go too far from  sensible, centrist policies, the American electorate is ready to slap you down. Please, dammit, learn this!

Image: epicureanddealmaker.blogspot.com

No-budget Obama

I hope you noticed this: Obama doesn't want the sequester to go ahead as is, but he isn't offering a replacement plan. That's the job for Congress. I guess Obama's job is to give lofty speeches and run our foreign policy. But his job evidently doesn't include providing meaningful leadership on difficult domestic issues.

His budget is AWOL too. So far, he seems to favor more revenue--from closing tax loopholes this time-- and unspecified cuts. It's disappointing that Obama can't state any cuts, even for the good of the country. He doesn't name cuts because they would automatically become incorporated in any future deal, and Obama doesn't want to give up any ground that isn't part of a package. There's a certain sense to this in an adversarial negotiation, but it's sad that other factors aren't a larger consideration, such as good budgeting and leadership on issues.

I don't think the sequester is horrible, largely because I'm for restraining government spending, but in gentle ways that are less likely to send us into another recession. However, Dems apparently have a different opinion. It is so damn hard to get Dems to agree to cuts that we ought to take the sequester as a once-in-a-lifetime opportunity, and also as an experiment to find out how painful cutting actually is. This is something we have never tried at the federal level, while it's common at state, town, family, and personal level. I'm unconvinced that it's too dangerous to run this $85 billion experiment (the savings in the first year, or appoximately 0.5% of GDP).

Obama claims that the sequester should be replaced by a balanced approach of spending cuts and revenue increases, but this ignores something very important. The sequester was the cut-only piece of deficit reduction passed in August 2011. The end of the some of the Bush tax cuts, passed Jan. 2013, was a tax-increase piece of deficit reduction. Between the two, that is balanced deficit reduction. If the sequester is to be replaced, it should be replaced with cuts. It's also pretty obvious that the GOP agrees with that, so only a new menu of cuts has any chance of passing. 

With no viable alternative on offer, I think that finally the cuts will happen, starting shortly after March 1. That's a long time coming.

Cuts are coming

Image: sxmdailyphoto.com

Extra: Spinning the sequester for future electoral gain

Negotiations at the edge of the fiscal cliff

This will be an unsourced piece, and unfortunately, that means I'll be doing that reviled job called punditry. But I've actually been pretty pleased with some bits of my own punditry, so here goes.

Congress and President Obama have 7-9 weeks to work out a deal prior to the expiration of the Bush tax cuts. When these tax cuts end, almost all the paycheck earners in America will have some nasty news, hence there is HUGE incentive for both parties to strike a deal. (For those who need a review: The GOP wants to keep all the tax cuts. The Dems want to end the tax cuts for the highest earners.)

Obama has issued a veto threat, but he won't have to veto anything. The Senate won't be passing anything the prez can't sign. Boehner is pretending he won't budge, but he surely will due to the huge incentive I mentioned above. There is also the recent history, which includes Dems and GOP negotiating the August 2011 debt deal and the GOP caving on the Social Security tax cut extension.

So there will be a deal, either before the end of the year or early in January. It might be a deal to extend the tax cuts a few months as serious negotiations take place, but there will be something. The exact form of the deal I can't predict. However, I definitely predict that Dems will include sunset provisions or other provisions that don't take effect yet, but require additional votes. This will provide Dems with leverage that is so valuable. The Dems will also try to reduce GOP leverage by including automatic debt ceiling increases without a vote.

I predict some very disappointed Republicans/conservatives. This is an easy prediction because the Dems have a lot of leverage, and the GOP is in a very weak position.

Elections have consequences

Image: dailykos.com

By the way, the sequester issue is not nearly as major because Obama has a fair amount of control over the timetable for parceling out the sequester cuts. He can make them tougher or gentler as he needs for his negotiating position. He's already announced that they will start off gentle, especially on defense contractors. Again, this is a leverage advantage for the Dems.

Update 11/17/12. There are so many angles on this, that I forgot a few that I wanted to mention. The deal will come out of the Senate, and the House will reluctantly pass amid much gnashing of teeth and perhaps some vomiting. In this way, the House will continue its tradition of NO COMPROMISE, that  is, passing dozens of grandstanding bills before caving to the deals worked by some senators. Sigh. I'm tired of these children--maybe we should abolish the House.

No specifics again! Obama's turn

You might think that this will be another screed about Romney's vagueness. Well, not this time for a refreshing change. The culprit for this post is President Obama. Specifically, this line during the Oct. 22 debate:

"First of all, the sequester is not something I proposed, it's something that Congress proposed. It will not happen."

Whoa. If the sequester will not happen, what will?

That's a huge statement with no clarification of what he means by it. And Obama seems to have gotten away with it... as he should considering the precedent set by Romney and his definitive statements about the deficit and cutting government by attrition during the first debate. Romney was been getting away with not explaining these claims and for the lack of detail his tax plan and his economic growth plan. So it's only fair that Obama gets a pass on his sequester claim.

How will Obama keep the sequester from happening? Well, duh, they'll start negotiating right after the election, of course! The talks are obviously not going to start before the election. Obama could add that they'll also start negotiating the changes to the Bush tax cuts after the election too.

Do I need Obama to be anymore specific than that? Not really. By now I generally know his bargaining position. Getting too detailed could cost him some votes that he'll need, and Lord knows neither candidate is going to blow those votes at this point. Not Romney, not Obama. This doesn't make them equivalent in their vagueness, but it levels the playing field a bit.

 Image: washingtonpost.com

Short: The sequester quantified

I'm not a complete nerd, but I long ago decided not to be scared of numbers, so I looked at the 394-page sequester report. The report is actually pretty simple-- it lists federal agencies and how much their budgets are going to be cut, like this:

The cut levels are 2% for some special favored programs (like Medicare), 7.6%, 8.2%, and 9.4% (mostly for defense programs). Some lucky programs have no cuts, like Social Security and Medicaid. The overall savings from these cuts are just $1.2 trillion over 10 years, that is only $120 billion a year or one-tenth of our current deficit.

The cuts and the which functions would be affected were determined by the debt ceiling deal that passed over a year ago. The Congress people who passed this legislation probably know what they voted for, and could probably put together this report, but they hoped to embarrass Obama and pin the cuts on him. That's a pretty weak ploy. Personally, I'm glad the debt ceiling deal had teeth. Finally a bit of fiscal sanity.

Anyone complaining about this had better make a damned good argument against these cuts and offer a better alternative.

One additional reflection: It takes 220 pages to list all the federal agencies and bureaus, though I fear that maybe even this listing isn't all the federal bureaus. This makes me wonder if the federal government is trying to do too much. However, I didn't see obviously ludicrous agencies. Maybe ending non-ludicrous agencies is part of budget sanity too.

Hail to the sequester

I'm a fan of the sequester for a simple reason: it cuts spending. Spending has to be cut. We are running a huge deficit that isn't going to shrink any time soon with our projected economic growth being so low. So if we are to avoid mounting up even huger piles of debt, we need to cut spending, raise taxes, and probably both.

I prefer that most of the deficit reduction come from spending cuts. We spend so much on government functions mostly because we aren't taxed for the full expense. If we had to pay the full amount, we would quickly decide to do without some of those government functions.

That is what the sequester does--it trims government. We should applaud the sequester, not bash it. Specifically, Republicans should support it. They're the ones who most favor cutting spending. Well, this is what spending cuts LOOK LIKE. Did the GOP, or the rest of us, think it was something else?

Of course, the GOP might have had the delusion that we would only cut programs they don't like, but even then, the GOP wasn't being too specific. How deep would they make cuts to food stamps, children's health, EPA, veterans' health, college aid? I haven't seen a specific proposals from a mainstream Republican--Paul Ryan's proposal was mostly smoke and mirrors. Romney's proposal: a vague leave-it-to-the-next-Congress.

So this sequester panic, I don't understand it except as a political fearmongering. The sequester is a cut. Embrace it because it's what we need to do. This one is just the beginning.

Did they think this is what it would be?

Image: dbaldinger.com

Fighting the Sequester/Defending it

The GOP has regretted the defense cuts they agreed to last August almost as soon as the ink was dry. Now  few Democrats are getting into it. Tom Harkin is cherry-picking cuts to vaccine programs to show how bad the sequester is. This commenter expressed some of my sentiment:

"The louder the politicians squeal about sequestration the better I like it." - WSJ comment

The comments were generally quite pro-sequester. That means the portion of the public that's paying attention is more realistic and pragmatic than the elected officials.

I've come to think that the sequester was the best Congressional action of 2011. They finally began to face the huge task of cutting the deficit. They also accepted, if only for a microsecond, that the pain was going to be spread broadly instead of being shoved onto the "other side."

I'm going to make a prediction. After Obama details the cuts, as the House and Senate are requiring him to do, there will be:

1. A brief period of trumped-up outrage.
2. Then a period of mellowing.
3. Then general acceptance of the cuts as positive change in government, with a few remnants of dissent by the habitually outraged.

Not a workable solution

Image: jlnavarro.blogspot.com

Boxed into a corner

That's what the GOP, and particular Romney, have done to themselves. Here is a list of campaign issues they can't talk about:

1. The impending end of Bush tax cuts
2. The impending sequester
3. Long-term plans to reduce the deficit
4. Short-term plans to reduce the deficit
5. Details of the GOP jobs plan
6. Tax reform
7. The replacement for Obamacare
8. Entitlement reform
9. American workers
10. Abortion
11. Supreme Court nominees

These leaves some topics, but not many neutral ones where the GOP takes a turn presenting its proposals, and the Dems take their turn. To be fair, the Dems can't talk about their jobs plan very much, tax reform, or much about entitlement reform either.

Here are a bunch of neutral topics where the Dems have a good chance to win the round:

1. The Bush tax cuts
2. Short-term plans to reduce the deficit
3. Social Security
4. Health insurance in a jumpy economy
5. The fiscal cliff

Here are some neutral topics that the GOP might win:

1. Energy policies
2. Government regulation
3. Government workers

 Better cards

It looks to me like the Dems are holding the better cards. They may not be face-cards, but the GOP's cards look like deuces for the most part. If one party talks mostly about:

• energy policy and drilling,

and the other party talks about:

•  deficit reduction, who keeps their tax cuts, and healthcare security,

the audience is going to gravitate to the more important, sexier, or scarier topics, and it ain't gonna be oil rigs and smokestack scrubbers.

Of course the GOP would love to avoid neutral topics altogether, and focus on blaming Obama for all the ills of the country. But that doesn't seem to be working, even after the dismal jobs reports this summer. Today, Gallup has Obama topping Romney 48% to 43%.

 Can't make it stick

It's not as though Obama is suddenly the teflon president (guffaw). Actually, there never was such a thing. It's just the frustration of opponents that more people aren't buying their arguments. Probably most people have decided how much Obama owns the bad economy, and it's going to be hard to convince many people that he deserves a heap more blame.

I think I've run the speculation steeple chase as far as I can. Does this theorizing stand up at all? You tell me.

 Image: whotalking.com

By the way, here are the negatives that will keep the GOP from talking about those 11 topics:

1. If the rich lose their tax cuts, you'll lose yours. Fair is fair.
2. We can't cut defense--anything or everything, but not defense!
3. We'll grow out of the deficit by the great year 2050.
4. Yes, we'll cut the deficit, we just can't tell you how yet.
5. Oil jobs, gas jobs, more oil jobs, and a huge spurt from deregulation.
6. Yes, we'll make the tax code fairer, we just can't tell you how yet.
7. Replace? Who said replace?
8. Yes, we'll reform entitlements, we just can't tell you how yet.
9. Workers, pay no attention to the man who did the auto bailout. He's not your friend.
10. Don't worry, we won't touch abortion for the middle class. Promise.
11. We need more justices like Roberts (the cute one), Scalia (the angry gnome), and Thomas (the mummified black conservative).
12. What did I skip? Real issues, no propaganda allowed.