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View Diary: What can we trade away? (128 comments)

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  •  My understanding (0+ / 0-)

    is that going over the fiscal cliff without taking ameliorating action will probably result in a loss in GDP of about 5%. That's Depression-level costs. You think that's preferable to reductions in entitlements?

    •  Yes (4+ / 0-)

      The fiscal cliff shock is temporary.   Much of it also doesn't happen immediately, which will also cushion the shock.

      Changes to entitlements are permanent AND tend to cause austerity-based-contractions.

      Eg, cut Social Security and less money is in the hands of people very likely to spend it.  So that kind of a cut is counter-productive, it'll ALSO contract the economy.  But the austerity effect is permanent.

      •  I'm a Keynesian (0+ / 0-)

        so I agree wholeheartedly that we DON'T want to reduce payments to the poor. But we have to offer the Republicans SOMETHING or there can't be a deal. What else can we offer?

        •  There really doesn't seem to be anything they want (3+ / 0-)

          They do NOT want to raise taxes in any way shape or form.

          They do NOT want to cut defense in any way shape or form

          They also don't seem moved by actual deficit reduction (the Sequester is the biggest deficit reduction plan of any that have been floated, by quite a bit)

          All they seem to want to do is make cuts to programs that help people, worse cuts than the sequester does in exchange for grudging tax increases on millionaires...maybe...but probably not (check the voting today on Plan B)

          I'm willing to go along with less deficit reduction in the form of lower taxes on folks earning less than 250k.  

          I'm willing to fix social security by raising the payroll cap until it's funded even if we stay in a recession for the next 30 years.

          I'm willing to reduce medicare costs by allowing negotiation on drug prices for part D.

          Hell, I'm willing to give temporary tax giveaways to the rich in exchange for temporary stimulus measures such as unemployment insurance extensions.  But they have to be just as temporary...sunset at the same time.    No permanent tax rate reductions for a stimulus that expires in a year.

          I'd also be willing to look at sequester replacement bills that didn't just shift all the pain away from Defense.   Keep it 1/1, but reduce the overall amount of cuts if you want less cut from defense.

          Bottom line, the baseline is the Sequester and all Bush tax cuts expiring.   All deals must be better than that, not just in short term, but in long term as well.

      •  .03% a year reduction from chained-CPI, tho maybe (0+ / 0-)

        a bad idea on merits, is not exactly significant enough to cause a recession, or probably more than a marginal GDP effect.

        IOW not all cuts are created Keynesian-ly equally.

        •  No, but it does hurt real people (4+ / 0-)

          with severely attenuated incomes.

          There was a time when Democrats cared about such things.

        •  It's a permanent change that gets worse over time. (1+ / 0-)
          Recommended by:

          I'd trade it only for something that is permanently better over time.  I don't see the Rs offering anything like that.

          It's also bad science, which bugs me.

          We should be using CPI-E for social security benefits.  Most things the elderly spend money on don't HAVE a cheaper alternative that chained CPI assumes.

          Part of how the sequester passed, is it did a pretty good job of protecting the most important programs.  None of the fiscal cliff proposals have that structure, not even Obama's original offer.

          •  The BLS paper says much of the extra cost in E (1+ / 0-)
            Recommended by:

            is medical costs (drugs and services/docs/hospitals, etc). And the study period does not include Maedicare PartD or ACA, especially closing donut hole.  Not too mention CPI-E is not inclusive of all SS beneficiaries but does include health insurance costs for 62-65 year olds (which rise rapidly in cost to 65).

            I asked in another thread if anyone has crunched net-net of those raises in benefits/reductions in costs for SSbs and recalculated CPI-E without 62-65 costs.  No answer yet.  It may not matter, or it may be that not having to pay for rising health costs more than offsets the cut from chained-CPI, or it may still really suck.

            Seems like pretty important data before we decide net effect of chianed-CPI, which is all that really matters.

            But, I hasten to pt out my original comment was C-CPI "may be a bad idea on the merits" and only addressed the keyensian effect point of comment I replied to.

            I also think SS should have nothing to do with this debate, since it doesn't add to the deficit. But, we shall see if BO offered it for political or substantive purposes, seeing how Bonehead and the Thu Clown Posse just cut their own heart out.

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