US Double-Dip Death Watch Continues

By Dan Kervick

I thought I would take a break from the latest outburst of debt ceiling mania to call attention once again to the bipartisan plan of budget austerity and recession-tempting economic devastation that will be implemented in March in one form or another, and from which the debt ceiling debate is designed to distract us.

Jay Carney’s press conference today leaves no doubt that the situation is substantially as I described it in my previous post.  The White House commitment not to negotiate on the debt ceiling is mainly fluff.  Their public position is that the Congress must lift the debt ceiling with a “clean” vote first, before a deal can be struck on the massive spending cuts that will take place automatically in March.  Carney implores listeners to believe that the debt ceiling and sequester are “separate” issues, and insists that “this not a negotiation the White House is going to have.”  But of course the entire press conference is itself a public gambit in an ongoing negotiation that obviously includes back-channel talks.

As before, the difference between Republicans in Congress and the White House is that the Republicans prefer a cuts-only form of austerity, while the White House prefers an alternative Shared Painer austerity party mix made up of both cuts and tax increases.  Both plans, of course, will cause a significant fiscal drag on a stagnant economy that is in no condition to endure such a drag.  But the European austerity disease, like an influenza virus slowly but inevitably spreading through the United States after making its way here from abroad, is now so deeply established in the US among the political class and the punditry  that any hope of ordinary Americans escaping infection is just about lost.

Both Congress and the White House long ago let Americans know that they have no particularly pressing concerns about the millions of Americans whose forlorn abandonment constitutes the human reality behind the massive 7.8% unemployment rate – a figure that never seems to budge.   Lowly working people without jobs don’t count for much in Washington these days.  But it is both interesting and mildly surprising to see just how willing both parties in Washington are not just to prolong the new normal of permanent  mass joblessness, but also to court a second recession and bring more serious political repercussions down on their heads.

Anyway, Republicans will try to spend the next few months convincing Democrats that they hate taxes so much that they are willing to swallow the 10% in defense cuts that are part of the sequestration.  The White House will gamble that the Republicans’ defense industry constituents will come down so hard on GOP members of Congress that they will eventually accept more tax increases.  They will split the difference no doubt, and also come up with some compromise on the debt ceiling.  Whatever the precise outcome, both parties are as one on the plan to begin sucking large quantities of scarce dollars out of the wobbling economy beginning sometime in March.  So get ready for the St. Patrick’s Day massacre.

11 responses to “US Double-Dip Death Watch Continues

  1. Since bleeding the patient seems to be inevitable, and near St. Pattie’s day no less, perhaps an infusion of green beer could substitute for blood, or at least anesthesia.

  2. Scott Hedlin

    This is slightly off topic, but I hadn’t heard of this effort before now.

  3. So social security and medicaid are not part of sequestration, and medicare cuts would be limited to 2%? On the whole, this seems like a not-SO-bad bargaining position for 99% of the citizenry. When politicians have to start considering discretionary and defense spending (and their accompanying constituencies), the prospect for a “deal” seems to get much dimmer. Hopefully, our do-nothing Washington can deliver once again with what it does best.

    I watched Charlie Rose the other night – which is only slightly more nauseating than listening to NPR – and Austan Goolsbee was kindly reminding us that “as long as the American people are both concerned about the national debt and unwilling to accept cuts in entitlements, we will continue to have a divided country”, or something to that effect. It would have been nice if someone pointed out that people like him are a major reason for the first part of that division, and that it is entirely unwarranted. But, to the extent that the people of this nation are ignorant of macroeconomics (and therefore how little of the MMT message has synthesized into the public consciousness), he was exactly right. Something has to give one way or another, or politics is going to continue on like this for the foreseeable future.

    • Yes, I’ve been trying to go back over the news reports for the past four years to chart the administration’s focus on deficits and debt reduction. Maybe something coming up in which I outline the sad history of the administration’s neglect of unemployment in favor of its bet on Tory-style “expansionary contraction” via confidence fairies.

      Agree about Rose and NPR. I listened to an NPR report yesterday morning about labor reform in France, and the reporter was dripping with disdain for the “extreme left” and its opposition to race-to-the-bottom labor flexibility. What happened to those guys? They are so conservative now.

    • Recently I have been wondering about this” not so bad” compromise we will be driven to. It is easy to say we need to compromise and that, while not perfect, it is “good enough”. Meanwhile, the progressive left has lost it’s way. We now tolerate poverty, inadequate health care and unemployment bc it is not as bad as it could be. We have all bought into the need for austerity. The left is no longer a force in politics for good.

      • Another bad recent phenomenon on the left is the tendency to explain away high unemployment as a symptom of something that is different this time – like the final triumph of robots that is going to free us all from the necessity of work.

        • Yes, I have seen that one. But not only robots. It’s about not having qualified people to do the work. It’s all just another way to justify the unemployment as you say. Years ago in another universe I thought the left was composed of some really bright people. Guess that really was another universe.

        • Kevin_global

          Govt in India made de facto consensus that poverty is acceptable phenomenon. Then came the age of liberalization and Globalization. The race started to marketize the economy and welfare was seen as unnecessary burden formality. Social security was taken off the agenda as Govt realized its impossible to provide Social security to over a Billion people.

          We now have 600-700 million in acute poverty. Poverty that is worse than North Africa. Though we have high GDP growth and “markets” that we never had before.

          My advice to Americans, do not tolerate and accept low standard of living, inadequate healthcare, low wages and high unemployment. You deserve better.

  4. Sadly, you are likely right about this, Dan. I have never expected the Pres to take any action to bypass the debt limit. In fact, it is convenient for both parties to use for their own benefit. The only questions here are what the ” compromise” will be on the cuts or tax increases and what impact the austerity will have on the economy. Meanwhile the twenty million plus underemployed roaming our streets continues. They have no representation in Congress. We have lost our way. Those who say differently are not paying attention.

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