Monthly Archives: July 2011

Paul Krugman and EJ Dionne agree that too much centrism is what ails the United States. What the country needs is fewer moderates and more people ready to stand firm on principle come what may. (Actually Dionne draws a distinction that eludes me between moderation and centrism–they are not just different but opposed–but let that pass.)

Lacking a Nobel prize, I find this theory odd. If only centrists would come over to the left and deplore Republicans more vigorously, all would be well? Right now, I would be willing to help out–but would this do much to reduce the House Republican majority? If centrist commentators only joined Krugman’s anti-Republican crusade, the country would see its mistake and put things right at the next election? It’s flattering, but surely we feeble soggy centrists have nothing to offer that would improve on the quality of the arguments already put forward by writers such as Krugman, Dionne, and many others. Surely they are refuting conservatism as effectively as anybody can.

House Republicans are dictating US fiscal policy not because centrists have given them a pass, but because voters have given them a majority. This is something that progressives tend not to mention, despite propounding the theory that “elections have consequences” for two years after 2008, and using that theory to justify, for instance, passing a health-care reform that the country was not sure it wanted. In Krugman’s view, of course, 2010 only confirms that more than half the country is evil or stupid. But in that case, what would centrists achieve by taking up arms with progressives? It won’t help. If Krugman is right, the idiots out there just don’t get it. We centrists might as well carry on saying what we think.

My column this week deplored the breakdown in Washington. I was having second thoughts, I said, on my previous optimism about the country’s prospects.

On one side you have the unrivalled energy and ambition of the American worker. On the other you have the unrivalled complacency, self-righteousness and bloody-mindedness of Washington. I never thought I would say this, but I am starting to wonder which will prevail.

Speaking of unrivalled complacency, self-righteousness and bloody-mindedness, you might be interested to read Paul Krugman’s response. He actually blames America’s plight on me, and on moderates like me. What can one say?

By the way, I don’t think that the blame for incapacity in Washington lies equally on both sides, certainly not in the debt-ceiling case. I think previous columns of mine (such as this one) have made that clear. But I do find it funny that Krugman is so appalled by the idea that, if positions were reversed, Democrats would be equally intransigent, and feel entitled to do whatever it took to frustrate what they regarded as a radical GOP agenda. I concede that this prediction on my part might be wrong. But one thing I’m quite certain of is that Krugman would be leading those who would say that the Democrats are not just entitled but morally obliged to stop the evil Republicans by any means necessary, and would be deploring and calling out all those who suggested, ugh, compromise, just as he is now.

 

If the test was likelihood of swaying the uncommitted, I saw no winner in last night’s broadcast contest. Obama and Boehner were both addressing mainly their own supporters. Neither rose above partisan talking-points.

The “balanced” approach advocated by Obama makes much more sense, though not because taxing corporate jets is a top national priority at the moment. Bearing in mind what is at stake, tirelessly underlining this point is ridiculous. The best thing about the White House’s approach is that it aims to backload the austerity (eg, by extending the payroll-tax cut). The GOP’s biggest mistake is to want to cut spending as much as possible as fast as possible: fiscally speaking, a self-defeating agenda.

So on the substance, Obama has the better plan–but his talk failed to make this clear. Presumably he thinks the argument for gradualism is already lost. Even if it is, though, his comments were odd. Almost in the same breath as “corporate jets” and “millionaires and billionaires”, he endorsed (admittedly without much enthusiasm) the Reid proposal, which includes no extra revenues. It was as though his remarks were written a week ago. Looking at where Congress stands at the moment, Obama’s main theme—we must have revenues as well as spending cuts–was simply beside the point. Congress is no longer even talking about this.

When I moved from Britain in 2005 to live and work in the US, I was a born-again admirer of the American people, the American project and the American system of government. I had no patience with the view that the country was entering its twilight years. I was a militant anti-declinist.

Robert Shiller cautions against concentrating too much on particular thresholds for debt ratios.

The fundamental problem that much of the world faces today is that investors are overreacting to debt-to-GDP ratios, fearful of some magic threshold, and demanding fiscal-austerity programs too soon. They are asking governments to cut expenditure while their economies are still vulnerable. Households are running scared, so they cut expenditures as well, and businesses are being dissuaded from borrowing to finance capital expenditures.

The lesson is simple: We should worry less about debt ratios and thresholds, and more about our inability to see these indicators for the artificial – and often irrelevant – constructs that they are.

The point about too much tightening too soon is especially important. The idea of fixed thresholds–debt is safe just below 90% of GDP and dangerous just above–is artificial and obviously wrong. On the other hand, the US is right to worry a lot about long-term debt projections–not because these cross some magic threshold, but because the ratio is already high by historical standards and is expected to keep on rising indefinitely. This, rather than debt in excess of 90% of GDP, or 110%, or whatever, is what makes the fiscal position unsustainable. There is time to fix the problem, and doing too much too soon will make matters worse. But that does not mean you ignore it.

Still, Shiller’s point is well taken. He is always worth reading.

Obama’s decision to campaign for a comprehensive budget solution is right, I think, but it came very late. His new posture conforms to the “leading from behind” model of his presidency to date. In the end, he advocates reasonable solutions capable of commanding sufficient support in the country–in this case, a “balanced” fiscal plan that mixes spending cuts with higher revenues–but he has to be dragged there, let alone led there. He gets to the right place reluctantly. It looks like defeat, so his advocacy is much less effective. Peggy Noonan says his intervention is a net negative. I disagree. It’s a net positive, but not nearly as positive as an earlier forceful intervention could have been.

One day this week he explained why he had decided to back the Gang of Six proposal. What was new about it, he was asked? He said it was new because it was bipartisan: for the first time a plan was getting support from Democratic and Republican senators. What? The broad outline of the Gang of Six plan (which is all we have) is very familiar: it is Bowles-Simpson for slow learners. Democratic and Republican senators on the president’s own fiscal commission all voted for a similar deficit reduction plan months ago. Where was the president back then?

I’ve obviously been in the US too long. My American wife draws my attention to this list from the BBC of Americanisms that have entered British usage and annoy fastidious Brits. Fastidious Yanks would probably feel the same way about most of them. To my surprise I find only a few of the items really infuriating. It’s worrisome. I think I’m more annoyed by the fact that Brits find these terms annoying than I am by the terms themselves.

I’ll make just three exceptions. “My bad [spoken by an adult].” This is in the same category as a grown man on a skateboard. How old are you, you child? “It is what it is.” I hear this constantly and it never fails to make me grind my teeth. Worst of all, “I could care less” instead of “I couldn’t care less”. I think we can all agree that that is despicable. (I recall David Letterman once attacking Michael J. Fox for using it on his show. Funny what sticks in the mind.)

Did the anti-tax activist misspeak when he chatted to the Washington Post, or is the following weirdness his considered position? From the Post’s editorial:

With an handful of exceptions, every Republican member of Congress has signed a pledge against increasing taxes. Would allowing the Bush tax cuts to expire as scheduled in 2012 violate this vow? We posed this question to Grover Norquist, its author and enforcer, and his answer was both surprising and encouraging: No.

In other words, according to Mr. Norquist’s interpretation of the Americans for Tax Reform pledge, lawmakers have the technical leeway to bring in as much as $4 trillion in new tax revenue — the cost of extending President George W. Bush’s tax cuts for another decade — without being accused of breaking their promise. “Not continuing a tax cut is not technically a tax increase,” Mr. Norquist told us. So it doesn’t violate the pledge? “We wouldn’t hold it that way,” he said.

Who knew?  Shortly after,  Norquist issued a clarification:

ATR opposes all tax increases on the American people.  Any failure to extend or make permanent the tax cuts of 2001 and 2003, in whole or in part, would clearly increase taxes on the American people.

So he’s against this $4 trillion tax increase–but his tax pledge, strictly speaking, doesn’t rule it out. That does seem strange. What is it about “oppose any and all efforts to increase the marginal income tax rate” that I am failing to understand? Signatories of the pledge have promised not to reduce tax deductions (expenditures)  by so much as one net dollar. But they haven’t promised to stop marginal rates returning to pre-Bush levels, which would raise a net $4 trillion. On what planet does that make sense?

Norquist’s pledge would seem to be a pretty incompetent piece of work, from his own point of view. But look, that’s fine. We need the extra revenues.

 

 

Slate’s John Dickerson takes the new Gang of Six plan (whose details are still sketchy) more seriously than TNR’s Jonathan Chait. Dickerson says a small bargain is no easier to get than a grand one, so you might as well be ambitious:

So now that McConnell’s face-saving deal looks as hard to get as the big deal, the big deal is back in play (at least for this sliver of the news cycle). All along the president has been saying that since a small deal was just as hard as a big one, why not go for the big one and at least get the credit? Yes, such a deal would require some kind of creative tax solution that would appeal to the president’s desire for balance. But it would also allow fiscal hawks to point to a big amount of savings as well as cuts in entitlement spending, which they have long sought.

Chait says the House Republicans will simply never agree to it:

In theory, you could image a minority of the House GOP caucus supporting such a plan along with a strong majority of Democrats. But remember that John Boehner needs the support of most House Republicans to keep his job. I suppose it’s possible to imagine a sequence of events in which Boehner supports a Gang of Six-style Grand Bargain, it passes over the objection of most House Republicans, and then Boehner quickly discovers a burning desire to help humanity via a private sector job.

Barring such a scenario, I don’t see how this goes anywhere.

I agree with Chait, mostly. Much as I wish they would, I don’t see how House Republicans can row back from their opposition to any and all revenue increases. But this does not mean that the Gang of Six resurgence is unimportant.

Its real significance–and the reason why Obama supported the new initiative so strongly (without knowing much about what it actually says)–is that it increases the risk to the House Republicans of refusing to agree to any deal. With an authoritative bipartisan proposal back in play, rejecting any and all compromise is a little harder to sustain: the House GOP looks even less reasonable and even more isolated. The political pressure on them to accede to a McConnell-like outcome (which calls for no increase in revenues) thus increases.

In other words, the (apparent) revival of the grand bargain improves the (actual) chances for a small bargain.

 

 

The emergence of the Tea Party in 2009 posed two questions. Would the movement capture the Republican party and, if it did, would this strengthen the resistance to Barack Obama’s liberal project or cripple it? The debt-ceiling fight in Washington settles the first issue: the Tea Party insurgency has indeed captured the Republican party in Congress.

Clive Crook’s blog

This blog is no longer updated but it remains open as an archive.

I have been the FT's Washington columnist since April 2007. I moved from Britain to the US in 2005 to write for the Atlantic Monthly and the National Journal after 20 years working at the Economist, most recently as deputy editor. I write mainly about the intersection of politics and economics.

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