Not that the political footrace is the most important aspect of this story, but it's hard not to be happy about evading cuts in food inspection programs and Pell grants (previous post aside). I think the thing that his base often forgets is that the default position at this point is a standstill, much as we saw with the health care reform debate. That, as we saw, is the most perilous possibility for reelection. The president, we are finding, must swim forward, or he suffocates. We have seen him take a lot more proactive position in terms of moving policy forward, with the realization that it's going to come at the cost of the "purity" of policy decisions. My opinion of what all this is about is that the executive branch is attempting to drive solid economic growth leading up to the election, since the rate of economic growthin the year before election often determines who wins. At the same time, a lot of what he is giving up is Republican candy--sweet and attractive, something they'll surely go for, but insubstantial in the long run, and not even effective in drawing them votes in the short term. The mistake of the president's base, it would seem, is that their "upset-o-meter" is cued to report the opposite of "how happy Republicans are at a given deal," instead of a more appropriate metric like "the effect on long-term prospects of getting stuff passed they actually want."
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President Obama has been accused of kicking his base and losing negotiations in the recent budget showdown with Republicans, having given them "historic" budget cuts without really asking for much in return. Now details are emerging that show he actually got the last laugh:
WASHINGTON (AP) — Details of last week's hard-won agreement to avoid a government shutdown and cut federal spending by $38 billion were released Tuesday morning. They reveal that the budget cuts, while historic, were significantly eased by pruning money left over from previous years, using accounting sleight of hand and going after programs President Barack Obama had targeted anyway.
Such moves permitted Obama to save favorite programs — Pell grants for poor college students, health research and "Race to the Top" aid for public schools, among others — from Republican knives.
And big holes in foreign aid and Environmental Protection Agency accounts were patched in large part. Republicans also gave up politically treacherous cuts to the Agriculture Department's food inspection program.
Not that the political footrace is the most important aspect of this story, but it's hard not to be happy about evading cuts in food inspection programs and Pell grants (previous post aside). I think the thing that his base often forgets is that the default position at this point is a standstill, much as we saw with the health care reform debate. That, as we saw, is the most perilous possibility for reelection. The president, we are finding, must swim forward, or he suffocates. We have seen him take a lot more proactive position in terms of moving policy forward, with the realization that it's going to come at the cost of the "purity" of policy decisions. My opinion of what all this is about is that the executive branch is attempting to drive solid economic growth leading up to the election, since the rate of economic growth in the year before election often determines who wins. At the same time, a lot of what he is giving up is Republican candy--sweet and attractive, something they'll surely go for, but insubstantial in the long run, and not even effective in drawing them votes in the short term. The mistake of the president's base, it would seem, is that their "upset-o-meter" is cued to report the opposite of "how happy Republicans are at a given deal," instead of a more appropriate metric like "the effect on long-term prospects of getting stuff passed they actually want."
Now, I'm not made of stone, I realize that it's possible to be upset at what was given up in a particular deal while still appreciating the forward movement of legislation. And I'm just as likely to get frustrated as the next guy. But this is probably a better framework for understanding the executive branch's mindset right now, it would seem.
We are still far from fixing the actual deficit, given that we did have those $800bn in "Bush" tax cuts extended. But we have to remember that an improving Real economy is capable of fixing that, as long as we don't keep lowering taxes to compensate. There are a lot of austerity hawks out there (hello, Austrian school), but austerity is not the only way--nor is it the most productive way--to accomplish deficit reduction. We do not need to do much more than look at how poorly it's working for a lot of the EU to see that. (This will have to be the topic of another post.) We can also do curve-bending. Now, just to be clear... I'm not talking about inflating our way out of debt, and I'm not talking about a general prescription whenever our economy has a downturn. I'm specifically talking about economic recoveries following downturns as substantial as the Great Depression or the Great Recession, where the economy gets trapped in a deflationary or small inflationary feedback loop. In a liquidity trap, inflation's not the concern--and in the event that we start to see it, we have a full range of movement in our fiscal and monetary policy to put a stop to it.
I'd better stop here before this segues into food and energy costs. Best to save that for another post.