Blue Dogs Bit Off Some Deficit Today
For over a year House Blue Dog Democrats took a back seat to President Obama's top priorities, a $787 billion stimulus bill and a health reform bill that CBO scored as paid for, but about which many have their doubts. This week the Blue Dogs bit off almost $80 billion from the extenders bill, H.R.4213, most of which passed the House this afternoon on two separate votes. The good news is that those fighting larger deficits in the House are gaining power. The bad news is that the Senate will undoubtedly add back some of that spending when it takes up the bill during the week of June 7. Taking away $8 billion of COBRA health benefits for the unemployed, $24 billion of Medicaid aid for the states, and $40 billion from the Medicare physician reimbursement hits the vulnerable, which I'm not comfortable with, but I've learned the hard way that there are no easy deficit cuts.
Uncomfortable cutting tens of
Uncomfortable cutting tens of billions from health care and education? Cuz god forbid those business tax breaks that no one thinks creates any jobs be cut...no, in the face of enormous structural deficits, the best way to conduct policy is by cutting social services. In fact, it's the only way.
Easy Deficit Cuts
Hitting the vulnerable are the easy deficit cuts. It will be impressive when they target areas where cuts could be substantial but are politically unpopular, like the military.
Well, they certainly made these cuts look easy somehow...
Indeed. Screwing the powerless is a great place to start it seems. Well, happily, no one at their cocktail parties will see their bonuses trimmed, so I guess that they have their priorities straight.
I disagree with your
I disagree with your assessment of the bad part. I think the bad part is that some people will live much popeer lives or even die from lack of health care. Remember we already let 45,000 people die every year for lack of health insurance. As noted by other commenters these are the politically easy budget cuts with serious repercussions. Nobody is talking about the politically difficult cuts that actually make sense. The poor don't have lobbyists.
We should cut military spending, like the many programs the Pentagon doesn't want but Congress votes for anyway. We could cut the tax loophole for hedge fund managers. We could remove health insurance companies as an unnecessary middleman in our health care system. We don't because they have lobbyists.
We could cut the tax loophole
We could cut the tax loophole for hedge fund managers.
Actually, this bill actually did do just that, tho they got a reprieve until 2012 and it's a 75-25 blend, not a 100% shift to wage income.
Health Care bill spending
I would like to hear more your statement that some people have doubts about the non-deficit nature of the health care bill. As you mention, the CBO said the bill would not add to the deficit. So who has doubts about it? Are any of them non-partisans? What is the basis of their analysis?
Accelerating deflation
Hmmm...let's cut nearly $80bn of spending that would have moved almost immediately into the (once again deflating) economy. That deleted COBRA money means more workers will lack insurance, making their working conditions much more unstable. $64bn deleted from Medicaid support to the states not only means tens of thousands of newly-unemployed home health aides, nurses, clinicians, janitors and clinics, etc., etc., but also means that states will be that much more broke because of unfunded Federal mandates, and will increase furloughs, layoffs, and cutbacks in purchasing, even further reducing the velocity of money and encouraging a deflationary depressionary death spiral.
Look, I understand that we are not only in a fiscal crash (as deLong and Krugman sometimes argue): real over-indebtedness at all levels is a genuine problem, and must be reined in. But frankly, reining it in through depression and deflation are among the least effective ways of doing so -- a little inflation would do a far better job, and without simultaneously grossly enriching the financial sphere, which is growing fatter and fatter not only on fundamental deflation, but on the wide spreads in debt instruments. Deflationary policies mean that banks take our money for %0.1 annual interest, then turn around and loan it to (admittedly risky) credit card holders at %17-%30, to pretty safe mortgages at %5.0, and all the rest.
Simply cutting support for the weak (as many commentors note) is both easy and shortsighted, and promises to have bad effects. Yes, hyperinflation is scary -- but aside from war-reparations hobbled Germany after 1919, there has scarcely been a sign of it in developed economies during the last century -- and there is scarcely a sign of it on the horizon now.
The beneficial--but difficult move is to get our benighted politicians to construct a believable trajectory of stimulus now and sovereign deleveraging over the next decade. The fact that the finance industry (aka the 'bondholders') is doing everything it possibly can to prevent such an outcome by itself suggests that it would be a good thing, if politically possible.
But if sane observers like Mr. Davis can be seduced into the blind orthodoxy of fiscal austerity, I suppose there's no hope.