Friday, April 15, 2011

The "Grand Bargain" - a tale told by an idiot, full of sound and fury, signifying nothing

- by New Deal democrat

Regular wonky economic blogging will resume shortly, but bear with me briefly while I point out an ultimate truth: all of the blogging, all of the MSM commentary, all of the television punditry, in short every last pixel and paragraph of the monumental sturm and drang of intellectual writhing about federal deficit reduction, and the Grand Intellectual Bargain of trading social insurance for tax increases so entailed, is ultimately so much drivel.

No matter how great a part of an envisioned long-term legacy Barack Obama wishes it to be, no "Grand Bargain" struck on his watch will survive even two years past his presidency.

In 1987 Congress actually passed a tax simplication act. Many deductions and loopholes were removed in return for lower tax rates. Within a decade a plethora of new deductions and loopholes had returned.

In 1993 Bill Clinton and a democratic Congress, without a single republican vote, passed a tax increase which by the end of his presidency resulted in budget surpluses - surpluses that were scheduled to go on as far as the eye could see. Within a year, George W. Bush and his kleptocratic reckless Congress had blown them all up.

In 2006 the democrats retook Congress and Robert Reich created something of a firestorm on the progressive blogs by suggesting that the democrats learn from the Clinton experience, and blow out the budget further themselves, but spend the largesse on more populist programs.

In short: if the next president after Obama is a republican, there will be another round of monumental tax giveaways to the rich, blowing another huge hole in the budget - exactly as contained in the Ryan plan. For the republican party, fiscal insolvency is a weapon, and any such "grand bargain" is nothing more than winning the first battle in the war to destroy 20th century social programs. If on the contrary the next president is a democrat to the left of Obama, and s/he has a democratic Congress, you can expect the Clinton tax rates or something very similar to return, and increased or restored government spending on social insurance and infrastructure, at very least.

So every single bit of hand-wringing angst you are reading boils down to this fundamental truth: are we willing to begin the actual demolition of the crown jewels of Medicare and Social Security in return for the brief glistening of a chimera of deficit reduction on the distant horizon of the future?