StanCollender'sCapitalGainsandGames Washington, Wall Street and Everything in Between

Tim Duy Asks; CG&G Answers

12 Oct 2011
Posted by Stan Collender

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.

Austerity for thee, but not for me

Oh, it'll be austerity - for 99% of the country. The GOP knows they've gotta squeeze the last few drops out of the American public before even the diehard gawdgheyzgunz crowd wakes up and realizes they've been cheering for the wrong side...

It won't be just tax cuts.

It won't be just tax cuts. It'll be tax cuts for the wealthy. What's been the key catchphrase? Broadening the tax base. I.e., make the poor pay. Cain's 6-6-6 plan? Cut corporate and capital gains tax; VAT for everyone else. At least be honest about what it is the Republicans are really proposing to do. Purely regressive taxation.

So in other words, hypocrisy

So in other words, hypocrisy as usual. But on a grander scale.

How about a war with Iran for

How about a war with Iran for a fiscal stimulus?

Deja Vu

Or, in other words, the GOP will do what they did in the Reagan and Bush II administrations.

I suspect it'll be a bit of both

I think the common practice is to do a bit of everything, so your decision can't be either right or wrong.

A big chunk of that tax cut will go

to Republican Super PACs to create an avalanche of negative advertising to tighten their grip on power in 2014 and 2016, while their legislators continue to dismantle the unions, choking off their funding, to perpetuate the right wing's stranglehold on wealth and power.

Real Austerity or There Will Be a Tea-Party Revolt

Without real austerity, I think the Tea-Party will either revolt or simply just stay home completely demoralized as they begin to realize they have been duped. And then in 2014, we will have what is yet another super-shift in the political spectrum. All of this will happen until we embrace a long-term strategy of reductions in defense, entitlements, an overall increase in taxation with slightly more progressivity, because you just can't get water out of a rock.

The sad fact that most politicians (dare I say, almost all) fail to mention is that every American (except the super wealthy who can repatriate to whereever) are all in the same boat - Republicans, Independants, Democrats - and the vessel is taking on water while we are out in the middle of the ocean with the safety of shore and harbor still visible. We are currently arguing about whether to bail water out of the ship, pull up the anchors, patch the holes or paddle it back to shore. The reality is that we need to be doing all of the above or lest we shall all go down.

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