Tim Duy Asks; CG&G Answers
Over at his own blog, Tim Duy provided an interesting post about what we should expect fiscal policy-wise in 2013.
Tim said he saw two possibilities -- fiscal austerity or abandon fiscal austerity -- and he that he'd "like to hear the views of the gang at Capital Games and Gains." Since he quoted one of my posts from several weeks ago and mentioned me by name earlier in the piece, I will take up the challenge for my co-bloggers-in-crime at CG&G while still encouraging them to respond on their own if they're so inclined.
Tim is using "fiscal austerity" as a surrogate for spending cuts, and I strongly suspect that, if the GOP wins the White House as he asks us to assume, that at least a symbolic spending cut will be on the agenda. If the Senate goes and the House stays Republican, the cut may be more than symbolic.
But...I also expect that a tax cut will be a priority for the GOP at the same time. In fact, it's likely to be a higher, and perhaps a much higher, priority than anything they will propose on the spending side. I also expect that the GOP-proposed tax cut will increase the deficit by more than the GOP-proposed spending cut will reduce it, especially in the first two years.
Short-term pain and an increase in federal borrowing to get a long-term gain will be the battle cry. The fact that the GOP wouldn't let Obama say or so that won't matter a bit.
Is that "austerity"? I doubt it, but it will be sold as if it is.
The higher short-term deficits will also be sold as something that was required because of the budget mess Obama left us. That will be nonsense, of course, but that won't matter in the afterglow of a GOP president taking the oath of office.