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While we wait for breaking news on the budget negotiations here are two interesting, if not gloomy, perspectives from pundits to provide some context. According to David Brooks: Fiscal Cliff Blame Should Largely Go To Republicans, writes Mollie Reilly & Ryan Grim.


"What's happening in Washington right now is pathetic. When you think about what the revolutionary generation did, what the civil war generation did, what the World War II generation did -- we're asking not to bankrupt our children and we've got a shambolic, dysfunctional process," Brooks said during an appearance on NBC's "Meet the Press."

"Most of the blame still has to go to the Republicans," he continued. "They've had a brain freeze since the election. They have no strategy. They don't know what they want. They haven't decided what they want." ...

"We have been talking to the Republicans ever since the election was over. They have had trouble saying yes to a number of repeated offers," Obama said. "[S]o far, at least, Congress has not been able to get this stuff done. Not because Democrats in Congress don't want to go ahead and cooperate, but because I think it's been very hard for Speaker Boehner and Republican Leader McConnell to accept the fact that taxes on the wealthiest Americans should go up a little bit, as part of an overall deficit reduction package."

Brooks also criticized President Obama who has "governed like a visitor from a morally superior civilization."

Jeffrey Sachs has a far gloomier view suggesting that the only thing worse than not reaching a deal, would be reaching a deal, as any deal we could reach with Republicans will mean Republicans have fundementally won by capping the size of government at a lower level than is possible for it to be viable as a progressive force. In Going Over the Cliff Is the Only Way to Save the Government argues if we reach a deal that extends Bush tax cuts for anyone "the federal government and the long-term purpose of the Democratic Party are both likely to be ruined for years to come," but only if if fails can we go back to "using government to promote the public wellbeing."

The main point is this. If no deal is reached, the Bush tax cuts end. We would return roughly to the tax schedule of the end of the 1990s, when the macro-economy performed reasonably well and the budget was near balance. Federal government revenues would rise by around 2.5 percent of GDP per year compared with the current tax schedule. According to the CBO, the federal tax system would collect 20-21 percent of GDP in the second half of this decade. This is a bare minimum of what's needed for effective government.

Sachs argues that the Bush tax cuts were never even remotely affordable if we want to sustain a modern government that provide any reasonable level of social spending.

If we make the Bush tax cuts permanent, at the $400,000 threshold, then we will only be able to collect 18.5 percent of GDP in the second half of this next decade -- 2.5 percent less than if we let the Bush tax cuts expire. (Early rumors this morning is that the Democrats have already conceded to make the threshold at least $450,000, and may go up to $550,000.)

Let's be clear. In an ideal world, there are better and more progressive ways to get to 21 percent of GDP in federal tax revenues than by personal income taxes alone. A partial list would include: a wealth tax on large fortunes (e.g. 1 percent on net worth above $5 million); an end to tolerating tax havens like the Cayman Islands; an end to the tax deferral of overseas corporate income; a crackdown on abusive transfer pricing; and a tax on carbon emissions). The problem is that neither the Administration nor the Congress is proposing these measures, and in the meantime, a deal now that extends the Bush tax cuts will be a severe loss of revenues for years to come without any offsetting gains.

If the deal is reached, therefore, the Republicans have won: they have locked in a federal tax system that collects so little total federal revenue that government can afford almost nothing aside from the military, interest payments, retirement programs and health care. Say goodbye to the rest: science, technology, education, job training, infrastructure, a functioning justice system, community development, renewable energy, environment, and more. ...In short, something terrible would have to give. Either we'd have to gut life-sustaining programs for the poor (Medicaid, Food Stamps, etc.), or gut civilian government (education, science, environment), or bust the budget with trillions of dollars more in public debt.

I guess the only good news from Jeffrey Sach's perspective would be to hope for that the talks complete collapse, and, as a nation, we withdraw from our addiction to excessively low taxes with two quarters of recession, but emerge a healthier nation. The CBO scoring on the failed talks scenario does predict that after two quarters of mild recession the economy roars back to 5% plus growth rats by around 2016 if I remember correctly. Global confidence will be restore by our returning to the Clinton model of balanced budgets and prosperity. Instead, we seem to be choosing to go into slash and burn austerity mode.

Alternatively, Democrats will need to keep in mind that if we agree to make the Bush tax cuts on those earning less than $400,000, we need to go into a full court press to find other ways to raise tax revenues, or face the music that the GOP as won, and start slashing spending everywhere, starting immediately with the debt-ceiling crisis.

The GOP may have outsmarted us on this one. Despite the funny jokes David Brooks makes about them not knowing what they want, they seem to be more committed to their vision of "starving the beast of government" than we progressives are to making sure we have enough revenues to sustain it. At this point they seem to be on the edge of a major victory locking in permanent tax cuts that were meant to be temporary when no other prospects for replacement revenues on the horizon until we regain control of the House.

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Comment Preferences

  •  Tip Jar (16+ / 0-)

    The means is the ends in the process of becoming. - Mahatma Gandhi

    by HoundDog on Mon Dec 31, 2012 at 07:18:43 AM PST

  •  We're hitting the curb... (5+ / 0-)
    Recommended by:
    HoundDog, MartyM, RUNDOWN, Gooserock, ms badger

    ...the rabid racoons in the House guarantee it.

    Oh, and Brooks who™?

    Float like a manhole cover, sting like a sash weight! Clean Coal Is A Clinker!

    by JeffW on Mon Dec 31, 2012 at 07:22:45 AM PST

  •  I hate brooks (7+ / 0-)

    and Ill leave it at that. How is he going to mock obama as morally superior?

  •  Brain freeze? (1+ / 0-)
    Recommended by:

    Maybe he meant to say "brain disease."

  •  The Fiscal Fiasco (3+ / 0-)
    Recommended by:
    ms badger, a2nite, RamblinDave

    actually is a cliff for the GOP, kind of like screaming "yippee" and sliding down the banister - after which they will have to fight for each and every "step" back up to restore things like defense spending.

    This will effectively neuter their perceived "leverage" on the debt ceiling.

    Their "plan" was to win the election with a rubber stamp Romney ready to sign the Ryan budget in time to avert "disaster" and proclaim themselves the heroes - they never thought more than 1 move ahead.

    If not us ... who? If not here ... where? If not now ... when?

    by RUNDOWN on Mon Dec 31, 2012 at 07:43:57 AM PST

    •  But, the problem is once we lock in insufficient (2+ / 0-)
      Recommended by:
      a2nite, Nespolo

      taxation to sustain progressive spending levels we force ourselves into the debt-ceiling trap.  Now and pretty much as long into the future as it tax to cut spending back to match a tax revenue stream that is around 18.5% of GDP rather than the Clinton level of around 21% to 22% (the numbers might be a little off,) but the point is that once we establish a 3% reduction of government spending as the maximum level, our choice is which to cut social spending or military and you already know how that one is going to play out.

      The means is the ends in the process of becoming. - Mahatma Gandhi

      by HoundDog on Mon Dec 31, 2012 at 07:51:07 AM PST

      [ Parent ]

  •  It's more like the GOP didn't have a plan B (2+ / 0-)
    Recommended by:
    a2nite, RamblinDave

    And no, that's not a pun on the DWOL's fiasco last week. I mean they had no plan beyond "Romney gets elected and we can do whatever we want." They really though they had this election and that once Obama was gone they'd be able to implement their plans at will. But Obama won, the Dems not only held the Senate but increased their majority, they only held the House because of redistricting...and they now have no idea what to do. A lot of them I think are still in denial and refusing to believe that the world has completely changed on them. And it shows.

  •  Bumper Sticker: Visitor from Morally Superior Civi (1+ / 0-)
    Recommended by:

    All of us.  Buttons too.

    This is us governing. Live so that 100 years from now, someone may be proud of us.

    by marthature on Mon Dec 31, 2012 at 08:19:00 AM PST

  •  Republicans win either way! Hasn't been mentioned (3+ / 0-)
    Recommended by:
    RamblinDave, HoundDog, RunawayRose

    by any leading Democrats that I've heard of.

    And it is THE point.

    The Bushco Republican Tax Cuts (for everyone!) and gigantic military spending, are the reason we are here today.


    There's been no talk by Obama about "undoing the Bush mistakes."  Or returning to even a Clinton era tax code (and downsized military) and if that never happens we will be in this "emergency economy" forever.  

    The "emergency economy" is what lets the Republicans and the people whose work they do (top 2% of the nation's wealth hoarders) pretend we "have no choice."  

    We do have a choice, and unfortunately, Obama is not making the case for it.  What he is doing instead is enshrining the bogus Republican theories of "limited" democracy, and starving the nation for the benefit of the existing oligarchy.  

    I guess we shouldn't be too surprised, but it's still depressing that there is nobody making this simple point.

    •  Exactly, this is the message that Sach's article (1+ / 0-)
      Recommended by:

      nails for me with numbers.

      What we are about to do is reject the Clinton success model for the budget and economy in favor of the Bush model and make it permanent.

      Those that will pay will be the poor, the sick, the elderly, future generations without high quality education, roads, bridges, etc.

      The Republicans not only win this round, but will have it locked into our status quo from here on out. A historic defeat for the New Deal and Great Society visions.

      But, many Democrats will perversely celebrate this as a victory for the middle class, when what we've done is shafted the poorest to pay to make Bush level middle class tax cut permanent instead of raising other revenues on the wealthiest.

      The means is the ends in the process of becoming. - Mahatma Gandhi

      by HoundDog on Mon Dec 31, 2012 at 09:25:03 AM PST

      [ Parent ]

  •  Morally superior to David Brooks, anyway n/t (1+ / 0-)
    Recommended by:

    This is us governing. Live so that 100 years from now, someone may be proud of us.

    by marthature on Mon Dec 31, 2012 at 11:52:22 AM PST

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