dajafi wrote:It's really interesting to me that "austerity" got such a fuller trial in Europe than here, even though the median voter there and state is probably well to the left of the avg American and their organized left is much stronger. I guess it's simply that in a parliamentary system, you can implement your agenda until you're voted out. Here, with a center-left government and a radical right opposition, we've tried a kind of mumblecore Keynesianism, which has worked better if not "well."

Werthless wrote:From the last thread, it was suggested that Euro's problems are being caused by the fiscal decisions their governments are making. I would say that it is the status of the US dollar, and the decisions of the Federal Reserve, that have made the difference in short-term performance. I'll see if I can find an article/blog post describing the differences in monetary strategy.

Related note: I'm enjoying reading TheMoneyIllusion.com, a thought provoking blog about nominal GDP targeting.

jerseyhoya wrote:

dajafi wrote:It's really interesting to me that "austerity" got such a fuller trial in Europe than here, even though the median voter there and state is probably well to the left of the avg American and their organized left is much stronger. I guess it's simply that in a parliamentary system, you can implement your agenda until you're voted out. Here, with a center-left government and a radical right opposition, we've tried a kind of mumblecore Keynesianism, which has worked better if not "well."

But it's a lot more than just ease of policy implementation by ruling governments. As JFLNYC notes, a lot of the austerity has been driven by demands from Germany (and other European institutions) in exchange for necessary loans. The Germans couldn't justify politically handing out tons of money to countries on the periphery of the Eurozone to bail them out of problems that were partially due to their own irresponsibility without extracting concessions to demonstrate they would be responsible moving forward.

There are other factors in play as well. EU member countries need to target a maximum of 3% for their deficit, and with the recession and subsequent slow growth this meant making tough decisions to bring themselves back to that line. For many years Greece cooked their books to make it look like they were in line with requirements when in reality they were amassing debts they couldn't pay back. It's also probably worth pointing out that for as much as austerity has been used as a synonym for spending cuts by the left which has held up the struggles of Europe to warn against cutting spending here, the austerity programs in Greece, Italy, Spain, Portugal and Ireland have all included tax increases.

We've been running 8-10% deficits over the past four years, and if we attempted to cut that by 2/3 to get under their 3% window, I'm sure we'd be growing more slowly or in recession as well. The problem is if we continue to spend four dollars for every three we take in and have an ever growing debt/GDP ratio, at some point our interest rates on Treasury bonds will start rising (especially if the Eurozone countries get their houses in order and their government debt starts look like a safer place to park money than ours does). When interest rates increase, they can start to spiral (which is what really added to the woes of Spain and Italy) because higher rates make it tougher for countries to pay back the loans, increasing the risk of those buying bonds and leading them to require a higher rate of return to cover the increased risk. If and when we find ourselves in a spot like a lot of the European countries, we'll need to make quick, painful choices to stop the bleeding that would lead to a prolonged tough period. Austerity may not have been a good solution for European countries, but they were in a spot where they didn't have any good solutions. We shouldn't be in a huge hurry to cut current spending beyond what we'd trim even if we didn't have a deficit and debt problem, but we do need to start moving closer to balance to make sure we don't end up in the same spot. And if we can cut our outyear liabilities through entitlement reform, that would be the biggest step we can take to prevent ourselves from going down that road.

TenuredVulture wrote:To be fair, though, a cut intended to slow the growth of entitlement spending wouldn't affect current expenditures, but future ones, so the current slow growth isn't an argument for doing nothing now. No one is talking about cutting SS and Medicare spending in FY 14.

Douthat and McArdle do disavow debt ceiling hostage-taking. But, in pox-on-both-houses, assert that the prospective response of minting platinum coins is just as bad. (McArdle: “Silly loopholes are exploited for bargaining power, and the resulting stalemates are generally solved with a temporary patch that solves the immediate problem by creating a bigger one down the road.” Douthat: “One party behaves irresponsibly, the other side counters with a wave of irresponsibility of its own.”) And so, if Republicans do refuse to raise the debt ceiling, they can assume that the result will not be a wave of abhorrence directed at them but instead a diffuse disgust at Washington in general, perhaps accompanied by more calls for third parties, as happened the last time Republicans flirted with financial disaster in 2011.

It’s true that, as a matter of procedure, the platinum coin gambit is just as much of a boundary-pushing exercise as debt ceiling hostage-taking, technically legal but violating the spirit of the law. But one is an exercise in boundary pushing that deliberately creates the risk of economic chaos in order to advance partisan ends. The other gambit is an effort to forestall economic chaos. Surely there are important differences between pushing the legal line to create a weapon and pushing the legal line to defuse one. And yes, both McArdle and Douthat argue that Republicans might retaliate by taking even crazier and more dangerous positions, but that again does not make defensive measures against destructive threats anything like an equivalent to threats themselves.

...

If the two sides agree the debt ceiling should go up, then having a vote on that one thing is not a condition. Adding policies on which they may disagree is a condition. It turns a question on which the two parties agree (let’s not blow up the world economy) into one on which they disagree (what is the appropriate level of federal spending, and/or how much should Republicans get in return for not blowing up the world economy?).

I’m not a big fan of the journalism of Politico’s Jim VandeHei and Mike Allen. You could look it up.

But now and then, they offer something their fellow Beltway chroniclers of movers-and-shakers ought to take to heart. That is definitely true of their profile of freshman U.S. Rep. Tom Cotton (R-AR) as exemplar of what they call the “hell no caucus” of the House GOP.

They explain how Cotton won an open seat in Arkansas in no small part because of a sizable unsolicited Club for Growth contribution that gave him the resources to win one of the many “more-conservative-than-thou” GOP primaries. Thus he owes absolutely nothing to the NRCC or the House leadership. And Cotton does not appear to be a man interested in learning the mores and folkways of Washington, or how to “get things done.”

In an interview in his still-bare office a few hours before being sworn in, Cotton told us he would have voted against both Speaker John Boehner’s “Plan B” tax on millionaires, and the final tax hike that got the country off the fiscal cliff. He vowed to vote against raising the debt limit in two months, absent the sort of massive cuts the president opposes. He said he is more concerned about the “cataclysmic” consequences of inaction than the “short-term market corrections” of default. “I’d like to take the medicine now,” he said.

If the greater meaning of Cotton’s statement isn’t clear enough, he’s calling a potential return to national and global recession a “short-term market correction,” and “medicine,” the latter reference suggesting that phenomena like millions of people losing their livelihoods is good for the country if it ultimately leads to millions of people losing government benefits.

VandeHei and Allen do not mention the controversy Cotton aroused back in 2006 when he was serving as an infantry officer in Iraq. Having read a New York Times article on a covert Bush administration operation to gain access to the financial records of American citizens without warrant or subpoena in an effort to find possible links to terrorist networks, Cotton penned a letter to the Times suggesting that reporters and editors responsible for the story be prosecuted for espionage.

This is clearly not a man of nuanced views. But as VandeHei and Allen point out:

To much of the country, Cotton is nothing more than a straight, Southern, white, male, “radical” conservative — a befuddling relic of a fading slice of politics. But in Washington, he is the Republican Congress. Only through understanding lawmakers like him can you understand why the grand bargain collapsed, why raising the debt limit is not a given and why Boehner has vowed to quit for good his private chats with President Barack Obama, and instead invest more power in the Tom Cottons of the world.

Aside from confusing “much of the country” with “most of the people we talk to,” VandeHei and Allen are spot on here. And they also point out that Cotton is no ignorant yahoo from Dogpatch: he’s a magna cum laude graduate of Harvard and Harvard Law school who clerked for a circuit court judge and then volunteered for combat in Iraq and Afghanistan before joining McKinsey & Company.

Cotton is emblematic of a brand of movement conservatism that has slowly taken over the Republican Party after decades of struggle; saw its ultimate validation in the 2010 midterm elections; and isn’t about to loosen its grip on its trophy of ideological war. Its shock troops believe in a rigid, permanent model of governance that is impervious not only to Washington power games and deal-making, but to the social and economic consequences of its preferred policies and indeed to all contrary empirical evidence. Most of them believe the destruction of the Welfare State is the only path consistent with patriotism and constitutional government; many (I don’t know enough about Cotton to know if he shares this particular motivation) believe their ideology reflects obedience to the eternal laws of Almighty God.

pacino wrote:they are talking about 'fixing' SNAP and reforming Medicaid, though, plus lots of non-discterionary cuts.

pacino wrote:the hoops people go through to get approved for social security disability belies the idea that there is tons of fraud.

jerseyhoya wrote:...The problem is if we continue to spend four dollars for every three we take in and have an ever growing debt/GDP ratio, at some point our interest rates on Treasury bonds will start rising (especially if the Eurozone countries get their houses in order and their government debt starts look like a safer place to park money than ours does). When interest rates increase, they can start to spiral (which is what really added to the woes of Spain and Italy) because higher rates make it tougher for countries to pay back the loans, increasing the risk of those buying bonds and leading them to require a higher rate of return to cover the increased risk. If and when we find ourselves in a spot like a lot of the European countries, we'll need to make quick, painful choices to stop the bleeding that would lead to a prolonged tough period. Austerity may not have been a good solution for European countries, but they were in a spot where they didn't have any good solutions. We shouldn't be in a huge hurry to cut current spending beyond what we'd trim even if we didn't have a deficit and debt problem, but we do need to start moving closer to balance to make sure we don't end up in the same spot.

Essex County Sen. Richard Codey, who served as governor for 14 months after Gov. James McGreevey resigned, has the best showing, falling to Christie in a match up 59 to 29 percent. The poll found Buono getting 21 percent to Christie’s 64 percent, and behind her Senate President Stephen Sweeney, of Gloucester County, with 19 percent to Christie’s 65 percent.