A lot less Carrot and a lot more Stick

You can’t apply ideological solutions to a problem that stems from the system itself.  Modern politics operates under the rules of the permanent campaign.  The permanent campaign says that all leaders are running for office at all times and that their policies reflect this constant political jockeying for power.  The permanent campaign, for all of its’ faults, is still not quite as bad as the Republican leadership in Congress.  The permanent campaign does not call for putting politics and individual greed before your country’s national interests, which is what Eric Cantor did yesterday and it’s what John Boehner has echoed in the last 24 hours.

By applying an ideological litmus test to a party that doesn’t share your ideology, you create unnecessarily difficult constraints on an already fortuitous debate.  Compromise is hard enough without one side essentially holding the other hostage for things that neither side really wants or needs.  The fact of our current economic situation is that we need at least two years of expansionary economic policy before we can enact a meaningful long term debt approach.

This doesn’t mean that we don’t face an imminent problem with respect to our national debt, our deficits, and the long term sustainability of our entitlement programs; it means that there are things that need to happen before we can enact a regressive economic policy of fiscal restraint.  Without some kind of short term economic growth, we won’t be in a position to address our long term needs and Republicans are disillusioned about this to the point that they’re willing to sacrifice our economic recovery for ideological goals just like they’re prepared to default on our debt if their political demands are not met.

Responsible leadership isn’t simply singling out things that you dislike politically and refusing to deal with other contributing factors to the underlying problem.  If you’re serious about solving a problem, especially if you, yourself have made it a dogmatic issue in the first place, you must be willing to consider all possible solutions to that problem, not simply the solution that you’d like to see from a political and ideological perspective.  The fact remains that you can’t use austerity measures to grow the economy.  Cutting taxes, cutting spending and demanding that everything else remain the same in terms of federal outlays is not an expansionary economic policy.  This idea that government somehow “kills jobs” and cannot be responsible for any amount of economic growth whatsoever is a talking point, not a political or ideological reality.

As I’ve been saying from day one, you can’t balance the budget by only dealing with only one side of the equation.  Some lawmakers approach this issue and say that it’s simply arithmetic, they say that the reason we have a budget crisis is because government is spending too much money and that in order to balance the budget we need to cut spending.  That’s true, but only to a point.  Balancing the budget is algebra not arithmetic.  What you do to one side you must do to the other.  So stating unequivocally that the only possible way to solve this problem is by addressing just one side of the equation may lead to an answer, but it won’t be an answer that makes any sense.

If you go about attempting to solve this issue by only attacking spending, the only way you can balance the budget without raising taxes is to cut government spending to the point where government barely spends on anything.  Although this is ideologically appealing to Republicans, it’s politically untenable for both sides.  Republicans are fond of saying that we need to “tighten our belts” and make “tough decisions,” but subsequently find themselves in a situation where they can’t take their own advice.  If they really were willing to make tough choices they’d put some sort of revenue solution on the table, but their inextricable war on taxes has left their party in a situation where they’re trying to split hairs over everything as opposed to looking at plausible solutions and coming up with ways to make those ideas a reality.

If you’re going to restrict government spending, you need to cut programs that people like and you can’t do that without alienating your constituents in the process.  This idea that Paul Ryan has been throwing out there that his plan amounts to some kind of economic growth model without affecting the structural integrity of government programs like Medicare and Medicaid is simply untrue.  You cannot sustain government by cutting it.  That simply doesn’t make any sense and Republicans need to decide what matters more: their constituents who rely on the government to help them with basic needs and services or their ideological preference for less government spending, incredibly low taxes and little to no economic growth for the middle class and the working poor.

If we only attack spending and do nothing about revenues we’re going to wind up with a solution that creates more problems than it solves.  As Jared Bernstein pointed out:

“It’s harder to take bad policy and try to make it good than it would be to simply start over with a new idea.”

It’s important for Congress to understand why we are where we are.  The budget was balanced when George W. Bush took office in 2001.  Tax cuts, wars, and the negative affects of the aforementioned policies is what drove us to the point we’re at today.  Yesterday, the CBO came out with an analysis that said Congress is so bad at its’ job that if they simply left things alone, our fiscal crisis would simply work itself out (and that’s not adjusting for any of the positive aspects of the President’s policies, like health care and an end to hostilities in Afghanistan and Libya.)

Lawmakers need to realize that the problems they create with their policies are unsustainable and that in attempting to enact them, they’re making it harder to reach a successful conclusion to the problems surrounding our economy.  Democrats have all but given up on attempting to draw any direct government stimulus into the debt ceiling negotiations and are instead calling for a payroll tax holiday on employer side wage earnings.  The Congress is dead set on helping corporations at every turn, but doing little, if anything for the average consumer.  If Congress really wanted to stimulate the economy, they’d back a short term stimulus plan that goes towards things we really need like infrastructure as well as a payroll tax holiday on the employer and employee side of the equation to stimulate hiring and consumer spending.

It’s easy to try and force your ideological preference on everyone else, but it’s more difficult to find a mix of what you want with what you need.  This is the problem that Republicans face right now and they need a pragmatist somewhere in their party who can point this out.  Unfortunately, their leadership is all about the Charlie Sheen style of negotiating where winning is more important than things like economic growth, job creation, and solutions oriented policymaking.

I wouldn’t expect this to change as Democrats have little, if any backbone to speak of, but what I would like to see is some sort of mix of short term economic expansionary policy and long term debt reduction.  This was the balance that President Obama tried to strike when he entered office in 2009.  What he found was a Congress that wasn’t keen on this “hopey changy” stuff and was much more enthusiastic about turning the President into some sort of demonstrative figure bent on destroying everyone and everything in his path.

What would make sense here would be some sort of realistic interpretation of the Simpson-Bowles plan, which calls for debt restructuring once the economy has stabilized.  It does not make any sense, however to try and make austerity driven economic policies into expansionary economic policies.  These are two diametrically opposed ideas and to try and fuse the two together sounds more like an attempt to do something that won’t alienate voters as opposed to something that would actually help drive America toward economic recovery.

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