Wednesday, December 18, 2013

The Ryan-Murray "Budget Deal" Primer

 "Fog and Feathers" for the Budget Deal

Amid the inevitable "fog and feathers" oozing from the corporate media about the "budget deal" are actual facts.  These are not particularly promising for those of us in the 99%, but they remain -- the facts.  

We have to assume that the President established a high priority for creating a Federal Budget.  The Congressional representatives of the monied class have been perpetually nervous about such a thing for years.  When the Budget is approved and voted into law, many of the "bait and switch" propaganda tools of the constantly harping right wing lose a little of their spring wind.

When there is a budget everything becomes visible.  Everything in the budget is laid out in the sunlight.  All the votes which approved that Budget in Congress become public record.

There was never any mystery that the tea bags in the House would fight "tooth and nail" to keep federal finances usefully obscured to host their unending incendiaries about the debt.  For them an electorate transfixed on the relentless flow of half-truths and out right lies concerning the government's business would provide a political base with essentially no idea whatsoever about what was going on in Washington.

The real secret being illuminated is a very dangerous one for politicians relying on a fickle "gas cloud" of misinformation to sustain their insatiable appetite for power.

Republicans can't govern.  They have no idea what to do about unemployment, crazy hedge fund operators, national debt, a crashed economy, the disaster in public education, health care or anything else.  The last Administration borrowed and spent like a drunken sailor, and the Congressional Republicans staggering around in the aftermath have no idea how to repay the loans.

For exactly this reason they are, of course, attracted to self-destructive opportunities such as debt default, but they are also attracted -- narcotically -- to protecting the loop holes enjoyed by the Party's owners.  This Republican obsession for protecting plutocrats has moved far beyond being a mere "bad habit." For them it has become the "First Cause" for which everything must be eagerly sacrificed.

THIS is what we see in the "negotiated" budget deal.

The GOP has lost faith.

Cursed with a morbid sort of Murdoch induced dystopian pessimism, the tea bags are no longer able to entertain the existential possibility that a flourishing economy would, in fact, remedy all the difficulties -- difficulties for which they can now only blindly continue to offer more and more failed, false austerity.  It is a chilling, tragic episode of the Denying Aspect gone insane.

Let's take a look at three interesting posts on the topic.  The first is penned by one of MeanMesa's favorites, Ezra Klein.


Here’s what’s in Paul Ryan and Patty Murray’s mini-budget deal

1. The total deal is $85 billion. About $45 billion of that replaces sequestration cuts in 2014. About $20 billion replaces sequestration cuts in 2015. About $20 billion is deficit reduction atop sequestration.

2. The sequestration relief is evenly divided between defense spending and non-defense discretionary spending. The sequester's cuts to mandatory spending are unaffected.

3. The new policies in the deal are split between revenue through fees -- travelers will see higher prices on airline tickets and federal workers will have to contribute more to pensions -- and spending cuts.

4. Spending will be $45 billion higher in 2014 than it would've been absent the deal.

5. The deal replaces about half of sequestration's cuts to defense and non-defense discretionary spending in 2014. It replaces about a fourth of them in 2015. That means most of sequestration will go into effect in both years.

6. The deal doesn't include any extension of unemployment insurance -- and no such extension is forthcoming. During the negotiations, Republicans proved hostile even to limited extensions in unemployment insurance. Right now, the House is expected to vote on Friday to pass the budget deal and delay the SGR's cuts to Medicare's doctor pay. They're expected to let unemployment benefits for 1.3 million long-term unemployed expire.

7. The deal denies both Republicans and Democrats what they want most. Republicans didn't get any changes to Medicare and Social Security -- much less any structural ones. Democrats didn't get any new taxes.

8.  Democrats flatly got beat on sequestration. Republicans are keeping -- and increasing -- the deficit reduction without ever giving up a dime in taxes. And many Republicans don't want to alter sequestration at all. Ryan entered the negotiations with a much stronger hand than Murray.

9. “I’m proud of this agreement,” Ryan said in a statement. “It reduces the deficit—without raising taxes. And it cuts spending in a smarter way. It’s a firm step in the right direction, and I ask all my colleagues in the House to support it.”

10. This deal is possible only because there are many Republicans who really hate the defense cuts. But there are fewer of those Republicans than there were in the past. There are many fewer of them than Democrats thought in 2011.

11. Whether this deal can be a model for future deals is an open question. The core principle of this deal is that Democrats didn't have to touch entitlements and Republicans didn't have to touch taxes. But a lot of the policies that made that possible got used up in this deal. It's not clear that another deal like this would work in 2016.

How much did the shutdown cost the economy?

There is an excellent short video in the original article which explains the cost of the shut down to the economy and the deficit.

eye-opener-logo6Shutdowns aren’t cheap. This year’s closure, which ended Thursday, has likely cost the government and the economy billions of dollars, according to economists and policy analysts.

Below are a few of the estimates we’ve seen, plus a video of Federal Diary columnist Joe Davidson discussing the financial impacts:

* $24 billion in lost economic output, or 0.6 percent of projected annualized GDP growth, according to the Standard and Poor’s ratings agency. Similarly, Moody’s Analytics estimated the impact at $23 billion.

The ratings agencies calculate their estimates using complicated formulas that consider past economic behavior, combined with the number of federal employees and contractors who were not paid during the shutdown, according to Moody’s chief economist Mark Zandi.

* $2.1 billion in government costs for the fiscal 1996 shutdowns, calculated in today’s dollars, according to Office of Management and Budget estimates at the time. The impact could be worse this time, since the 2013 shutdown forced more government employees off the job. Most of the cost of the fiscal 1996 closure resulted from agencies paying furloughed workers for hours they didn’t actually work.

* $450,000 a day in lost revenue at National Parks, according to the National Park Service. That was until late last week, when a handful of states agreed to fund operations for the some of the parks within their boundaries.  The costs may have been lower from that point forward, as some parks reopened and began collecting fees again.

The numbers come from top-line estimates by the National Park Service, which made projections based on October 2012 park attendance and fee collections.

$2.4 billion in lost travel spending, based on the U.S. Travel Association’s estimate of $152 million per day. The organization said it based its numbers in part on the National Park Service projections, as well as estimated reductions in business travel for federal employees and the federal government.

Bonus material:

As most politics junkies know, the government could soon shut down again if Congress and the White House cannot agree to another spending plan early next year. The agreement signed by President Obama early Thursday morning will only fund operations through Jan. 15.

The deal also suspended enforcement of the debt limit until Feb. 7, which means another confrontation over the nation’s borrowing could occur again sometime in March.

S&P said in a statement Wednesday that the threat of new debt-ceiling and shutdown standoffs early next year could “weigh on consumer confidence, especially among government workers that were furloughed.”

“If people are afraid that the government policy brinksmanship will resurface again, and with the risk of another shutdown or worse, they’ll remain afraid to open up their checkbooks,” the agency said. “That points to another Humbug holiday season.”

S&P* estimated that a default could force the government to reduce spending by 4 percent of annualized GDP, which would “put the economy in a recession and wipe out much of the economic progress made by the recovery from the Great Recession.”

[*Remember: Mitt Romney's hedge fund is the owner of the corporation which controls the corporation which owns S&P. Link to the MeanMesa post here.

Wall Street Journal

Politics and Policy

Deal Brings Stability to U.S. Budget [Excerpt]

Congressional Negotiators Avert January Shutdown and Soften Sequester Cuts; Airline Fees to Climb

The depth of conservative opposition will become apparent as lawmakers absorb the details, which were released to the public Tuesday night. To draw support from the GOP's fiscal conservatives, the deal includes additional deficit-reduction measures: While the agreement calls for a $63 billion increase in spending in 2014 and 2015, it is coupled with $85 billion in deficit reductions over the next 10 years, for a net deficit reduction of $22.5 billion

 How Americans Saw the Deal

Americans, as could have been expected, were as polarized in their opinions about the "deal" as they have been about everything else.  The most common responses can be characterized in three, far overly generalized groups.

1.  The confused, ideological Pollyannas who immediately expressed "love" for this "bi-partisan breakthrough."  This bunch "loved" the bi-partisan part much more than they "loved" the content or the consequences of the monstrosity, but these they became very determined to totally ignore as quickly as possible.  

We were familiar with the old, road weary mantra this bunch has been mouthing since the Reagan Administration.  "Why can't we just get along? If only we could just get along."  Now we can become familiar with their new mantra.  "We have to give in on things to finally reach an agreement." 

The prize delivered by "reaching" this particular agreement is that the oligarchs have "promised" not to shut down the government or default on the national debt until they regain control of the White House and Congress.

So, it's an absolutely GREAT deal, right?  We have to remember -- this is what we've been negotiating??

2.  The red meat fascists were under direct orders from the owners of the tea bag party to "hate" the budget agreement -- notably, in many cases even before they had read it.  The billionaire puppet masters of the GOP considered the agreement primarily as no more than a the next additional lever to further manipulate public opinion.

The mind set of this crowd is fueled exclusively by a self-indulgent mix of campaign money, racism and revenge.  Like all Republicans, content means nothing, and public opinion means everything.  It is precisely this awkward behavior pattern which leaves them so suspicious of actual leadership or governance.  For them all power is inescapably dedicated to what can be looted from the "null set of the nihilists."

For these overly public "servants of the right wing media moguls" it offered a fresh, shiny, new means of further punishing the poor while protecting the plutocratic tax loop holes which continue to wreck the economy. Paul Ryan has never proposed anything that was not another way of "disciplining" the wounded to never elect another black President, support any form of remotely slightly sensible health insurance or any other legislation which could deliver a subsidy to someone without a lobbyist.

3.  The billionaire oligarchs, in an rather surprisingly emotional manner, grudgingly "loved" it, but just not enough to quit bellowing about the other "media defined outrages" they were allegedly enduring on the pool side patio at their country clubs.  Without another government shut down in their financial future, the interest they collect on the billions they hold in Treasury bonds won't be lurching upwards next year.

Remember, these boys walked away with a very tasty chunk of the $24 Bn the last shut down siphoned off the national GDP.

So, What About the $20 Bn?

By lowering the deficit by $20 Bn, the "budget deal" utterly failed to service the tea bags' favorite complaint.  Here, we have to compare the actual economic figures [highlighted in post above] between the amount the Republican government shut down damaged the national GDP and the pittance of deficit reduction accomplished in the Ryan-Murray "deal."

The shut down lowered the 2013 GDP by around $24 Bn -- roughly 1/2 of 1% of what would have been, otherwise, economic growth.  The arcane, punishing provisions in the Ryan-Murray budget deal squeezed out $23 Bn in deficit reduction -- unhappily, by extracting more reductions in federal spending from programs benefiting everyone besides the billionaires.

So, as usual...

you lose.

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