11 O’clock Tick Tock

In a White House meeting intended to break the impasse, John Boehner, the Republican speaker of the House of Representatives, instead pushed for deeper spending cuts as part of a deal that would keep the government running past a Friday deadline, according to a Democratic source.

Though the two sides have been working for nearly a week on a package that would cut $33 billion from current spending levels, Boehner said he wanted that raised to $40 billion, the source said. Aides to Boehner declined to comment.

Democrats and Republicans had been at odds over just how those cuts would take effect, and now they must resolve the size of the cuts with only days to reach a solution.

Top lawmakers said they were losing hope that they can finalize a deal before funding expires at midnight on Friday.

"I am not optimistic, no I’m not," Senate Democratic leader Harry Reid told a news conference.

Republicans and Democrats are locked in a game of brinkmanship over how to fund the federal government for the final six months of the 2011 fiscal year. Republicans are eager to fulfill a campaign promise to scale back government, while Democrats say sharp spending cuts could hurt the fragile economic recovery.

Government shutdown looms despite Obama’s intervention, Reuters

In Washington D.C., the talk here is about 11th hour talks to avoid a government shutdown. It seems all but certain now. This issue has been brewing since the midterm election. I said then that:

it does no good for the Republicans politically to compromise with President Obama. His policies are rightfully seen as failed. The right thing to do politically (but not morally) is to try and strike as much contrast to the President as you can, especially if it makes him look more failed. So that means favouring gridlock and pushing deficit reduction, looking for spending cuts and so on – even if it leads to a government shutdown stare-down as it did under Clinton. Is this the right thing to do?  I don’t think so, if only because it reduces the number of potential positive economic outcomes.

A few comments about Tuesday’s election’s impact on the economy

Subscribe to our newsletter

So that’s where we are right now in the U.S.. Remember, we’re talking about $40 billion in a budget of nearly $4 trillion. It’s not like this a real debate over the issues that actually matter like military spending and entitlements. That’s where the real fiscal discussion is. This is just Kabuki Theater.

Related Posts
1 of 934

At a minimum, this will be a disaster for state and local government s dependent on transfer payments. There is the possibility if this gets out of hand and spooks business, that it crimps economic growth, nascent job growth, and that this leads to a double dip recession and a debt deflation. Who gets blamed for that? I think the whole thing shows a recklessness in American politics that should be rewarded with a sovereign debt ratings downgrade. This is the sort of irresponsible brinkmanship that you don’t see in other developed countries – even Belgium. For me, it is a clear sign of the decay of American governance and the political system.

Anyway, I got the 25th Anniversary Under A Blood Red Sky U2 video last night and it is a brilliant piece of cinema showing U2 at their concert best on the dawn of super stardom in 1983. These guys look impossibly young. Bono has an androgynous earnestness that is captivating. He is sporting a Robert Smith-style ‘Flock of Seagulls" hairstyle. Adam Clayton has a weird perm and hair dye thing going. The Edge and Larry Mullen look very cool. It’s all very 80s and very wonderful too.

So I thought I’d cue up the video of 11 O’clock Tick Tock from that concert as a night time ode to the dysfunctionality of the American government.

Enjoy.

Advertisements
Advertisements

Get real time updates directly on you device, subscribe now.

4 Comments
  1. Anonymous says

    I would at least condition my comment as follows: “it should be rewarded with a ratings downgrade, if the electorate rewards the GOP’s behavior with another two years’ control of the House.”

    I see absolutely no reason to think that Government Shutdown II will work out any better for the GOP than the first episode. Perhaps much worse, as you point out the states are more dependent on Federal transfers than they were in ’95, and the population as a whole was less dependent on Federal transfers because the economy wasn’t stuck in a deleveraging cycle.

    1. DavidLazarusUK says

      Obama needs to get some serious bank reform in place and even have a conference with the G20 nations to get a unified deal on big tax increases on individuals and corporations so that there will be no beggar thy neighbour strategies. If corporations want to move offshore close the big markets to them. It will create a huge opening for new and smaller companies to fill those gaps. If a multinational is offshore with the top 20 markets closed to them their shareholders will be livid.

      1. Anonymous says

        I guess the first country to start off should be the United States, which for some reason seeks to establish itself as a VAT tax haven.

        The Federal Government needs to pass an 18% VAT immediately, and also raise income and intangible wealth taxes to French levels, so as to avoid being criticized by the French for having taxes that are “too low.”

        In the interim France can shut its market to US goods. It might cause a problem with the WTO, but the cause of raising taxes is more important than some piddly treaty obligations. Smaller French companies will fill the gaps in any case.

        1. DavidLazarusUK says

          A Value Added Tax is very regressive. It hits the working and middle classes much harder than the very rich. It is also very much easier for the very rich to avoid altogether. A business owner could put his TV through the business claim the VAT back and he would have effectively evaded the tax, but without enough tax inspectors it will be hard to catch, so the burden will be shifted on to those that cannot use such illegal methods to evade the tax.

          Better to have higher income, dividend, corporation and capital gains taxes and unify them at the same rate, so there is no incentive to opt for capital gains. I bet you would see Steve Jobs up his salary from $1 to somewhere much higher.

          If there was an agreement between the G20 nations to harmonise taxes and have the same anti avoidance regime then it could work.

  2. Anonymous says

    I would at least condition my comment as follows: “it should be rewarded with a ratings downgrade, if the electorate rewards the GOP’s behavior with another two years’ control of the House.”

    I see absolutely no reason to think that Government Shutdown II will work out any better for the GOP than the first episode. Perhaps much worse, as you point out the states are more dependent on Federal transfers than they were in ’95, and the population as a whole was less dependent on Federal transfers because the economy wasn’t stuck in a deleveraging cycle.

    1. Anonymous says

      Obama needs to get some serious bank reform in place and even have a conference with the G20 nations to get a unified deal on big tax increases on individuals and corporations so that there will be no beggar thy neighbour strategies. If corporations want to move offshore close the big markets to them. It will create a huge opening for new and smaller companies to fill those gaps. If a multinational is offshore with the top 20 markets closed to them their shareholders will be livid.

      1. Anonymous says

        I guess the first country to start off should be the United States, which for some reason seeks to establish itself as a VAT tax haven.

        The Federal Government needs to pass an 18% VAT immediately, and also raise income and intangible wealth taxes to French levels, so as to avoid being criticized by the French for having taxes that are “too low.”

        In the interim France can shut its market to US goods. It might cause a problem with the WTO, but the cause of raising taxes is more important than some piddly treaty obligations. Smaller French companies will fill the gaps in any case.

        1. Anonymous says

          A Value Added Tax is very regressive. It hits the working and middle classes much harder than the very rich. It is also very much easier for the very rich to avoid altogether. A business owner could put his TV through the business claim the VAT back and he would have effectively evaded the tax, but without enough tax inspectors it will be hard to catch, so the burden will be shifted on to those that cannot use such illegal methods to evade the tax.

          Better to have higher income, dividend, corporation and capital gains taxes and unify them at the same rate, so there is no incentive to opt for capital gains. I bet you would see Steve Jobs up his salary from $1 to somewhere much higher.

          If there was an agreement between the G20 nations to harmonise taxes and have the same anti avoidance regime then it could work.

Comments are closed.

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. AcceptRead More