StanCollender'sCapitalGainsandGames Washington, Wall Street and Everything in Between


Posted by Stan Collender

As I posted yesterday, House and Senate budget conferees will meet for the first time this week as they begin a process that has a built-in December 13 deadline. It's either budget agreement by that Friday the 13th or bust.

Bust is far more likely. Here's why.

1. There is no agreement about the problem. Almost all previous successfully concluded budget deals have been based on at least a tacit up front agreement about what the two sides are trying to accomplish. Without that this time, Republicans and Democrats will spend a great deal -- maybe even most -- of their time arguing about what they should be debating rather than the possible answers.

2. There's no need for a deal #1. This is not a situation where the political or economic world will collapse if a deal doesn't get done. The debt ceiling has already been raised, taxes won't be raised automatically, the government won't shut down, Wall Street isn't threatening higher interest rates if there's no deal to reduce the deficit, etc.

Posted by Stan Collender
posted back in April about how some businesses in Colorado were doing the equivalent of voluntarily paying additional taxes when the sequester spending cuts forced Yellowstone National Park not to do its customary spring snow removal on park roads. Waiting for the snow to melt rather than plowing it off the roads threatened to reduce the number of visitors to the areas surrounding the park and, therefore, the amount of business the very tourist-heavy stores, restaurants, hotels, etc. would do.
To deal with this, many in the business community decided to pay for the snow removal themselves. As I said in my post, this was the equivalent of an increase in taxes.
Posted by Stan Collender

Last August and September, I did a series of eight posts about how, contrary to Tea Party and John Boehner assertions, federal spending was actually very popular. As I said at the time, Americans don't want less government; they just want government that costs less.

The latest installment -- episode 9 -- happened last week when the air traffic control problems caused by the sequester were fixed in what by congressional standards was warp speed.

Faced with an immediate backlash from flyers, Congress and the White House enacted legislation that fixed the problems less than a week after the furloughs caused long delays in the skies and long security lines at the airports.

Yes...Flyers are a relatively elite group relative to the population at large. Yes...this is a group that has more influence and a larger megaphone than the average voter. And yes...the delays were easier for the media to cover and so were more visible than sequester-related reductions in other programs.

Posted by Stan Collender

I've been meaning to ask this question for a while: Isn't this the equivalent of a tax increase?

Here's the story.

The sequester spending cuts forced the superintendent of Yellowstone to decide not to clear the winter snow from the park's road as early as it typically had been plowed in the past will eventually melt as the weather gets warmer anyway. That seems like a perfect solution to the sequester-caused spending cut except for the businesses in and around the park. No plowing meant no tourists, and that meant much less business.

According to this story by Mark Barabak in the Los Angeles Times, the prospect of lower sales convinced many of the tourist-related businesses around Yellowstone to pay for the plowing. The Cody and Jackson Wyoming Chambers of Commerce raised $170,000 to get the snowed plowed.

Wasn't this the equivalent of a tax increase for those people who paid to have the snow cleared two weeks early?

Posted by Stan Collender

How did the sequester happen? How is it possible that what supposedly was the worst possible way to cut the deficit somehow became what actually happened?

Over the weekend Ezra Klein, in a much retweeted blog post that was the talk of large parts of the political blogosphere, said that the GOP was never going to make a deal to avoid the sequester if it included a tax increase. Nothing...not the prospect of reductions in military spending, not the projected reduction in GDP, not the estimated increase in unemployment, not the lost possibility of a bigger deal to reduce the deficit and not the overwhelming likelihood that Republicans would get blamed for all of this...made any difference.

The GOP's position seems to defy all economic and political commonsense until you realize how much GOP politics have changed in recent years.

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