Showing posts with label deficit commission. Show all posts
Showing posts with label deficit commission. Show all posts

Friday, February 3, 2012

Those CBO Growth and Budget Projections: Just Forget About Them


The CBO 2012 and 2013 projections grabbed a lot of attention when they were released earlier in the week. The headlines were that growth will slow to two percent in 2012 and one percent in 2013, unemployment will rise to over nine percent by 2013, but the deficit will shrink dramatically. All of these calculations are based, as I pointed out in a recent blog, on discredited Keynesian models anyway.

None of these things will happen because the policy assumptions on which these projections are based will never materialize. The Bush tax cuts will not be dropped in their entirety (a slight possibility if Obama is reelected). Discretionary spending will not decline in absolute value over a five year period, and the various cuts in Medicare will not take place.

Actually the CBO points all this out, but commentators look only at the headlines and ignore the crucial details that tell us: “Never mind.”

Wednesday, November 23, 2011

In Many Cases, There Is No Compromise


The Arab League and everyone else tell Bashar Assad to compromise with the Syrian protesters. Republicans and Democrats are urged to be “moderate.” The European Union urges Germany to put up more bailout money to save the spendthrifts of the South.  Protesters tell the Egyptian military to be gone.

Compromise is not possible when there is no middle ground. It seems this truth escapes domestic and world politicians and pundits.

The majority of the citizens of Syria want Assad either dead or gone. He wants his opponents dead, in jail or thoroughly cowed. There is no middle ground. The outcome is  “either or.”  Either Assad is killed or flees or he kills or jails enough of his opponents to subdue them. He knows he must lose if he cedes ground.

The Democrats want a larger and more intrusive federal government.  The Republicans think the federal government is already too large and powerful. The “middle ground” is nonexistent. Republicans fear that any further increase in government will lead to more increases. Democrats fear that even small reductions in the size of government will be a repudiation of the New Deal. Neither will budge in such a situation. It was foolish to expect “compromise” from the congressional deficit commission.

The thrifty Germans do not want to bail out the spendthrift Greeks, Portuguese and Italians. Germany’s southern neighbors would like to continue as is with the help of German transfers. Germany’s taxpayers will not accept further bailouts of their southern neighbors, and the Greeks, Portuguese and Italians do not intend to enact real austerity measures.

Protesters on Tahir Square tell the Egyptian military to “leave” and to give up power. The military controls much of the Egyptian economy and is not about to give up this largess. Where is the compromise on such an issue?

In democracies, we hope that elections will resolve such impasses. In authoritarian states, impasses are resolved by violence, not by diplomacy.