Monday, March 21, 2011

The Rich and the Rest

Before this Matt Yglesias post gets lost in the Phantom Zone where all posts over a month old go, I wanted to highlight this sentence regarding the GOP's electoral alliance:

There’s a disjuncture between the funding base of a movement focused on rich people’s tax rates and the voting base of a party relying on older working class white people for the bulk of the votes. 

As one of my previous posts tried to address, I sense a lot of tension between how the Republicans win elections and what they do once they've won elections, and I wonder how this will play out once the economy starts to normalize towards the end of this decade.  And yes, we're only one year into this decade.    

Friday, March 18, 2011

Austerity for Austerities Sake

Austerity is now in vogue. From the beltway to Main Street, this phrase has infected our political discourse. I use infected intentionally. Budget cutting measures can be done right, but austerity itself invokes a sort of moralistic crusade of belt-tightening. The word austerity is synonymous with such puritanical ideals as Spartanism, simplicity, self-discipline and abstinence. All of these terms give those fighting for swift budget cuts the rhetorical and moral high ground. They play on the United States’ history of protestant ethics, which Weber showed dictate a sense of studious saving and spending patterns. Those that were righteous in our society were those that lived their life not just in moral temperance, but also in economic temperance. We should save for the future, forgo earthly passions in the form of luxury goods, and most of all live within our means. If one did not choose this path they risked eternal damnation, and no one wants to be associated with the damned.

Though this sounds morally persuasive, it is neither morally nor rhetorically persuasive. Let’s pretend you are stuck in a low-paying job and the only chance of escaping is a great new business idea you have concocted. Let’s also pretend that some bank offers to give you a loan for 3% a year that will allow you to realize your dream of self-ownership, and personal wealth. Would you take the offer? In the short run, you will definitely be in more debt, as your business takes time to get off the ground. Over time, however, the benefits will allow you to no longer climb out of that hole, no longer relying on Raman noodles as your only source of nutrition.

Interestingly, this is the exact scenario we as a country are in. Unemployment has been hovering around 9% for months, core inflation is less than 2%, and GDP keeps showing good, but not stellar numbers. Furthermore, the current interest rate on 10-year treasury bonds is near 3%. This is the lowest they have been since we have kept track of these numbers. Furthermore, to quote Mark Zandi, the former chief economist for John McCain’s Presidential campaign, “The stimulus is doing what it was supposed to do: short-circuit the recession and spur recovery.” The government has the opportunity to step in where the private sector is failing and provide an extra jolt in the arm of our economy. Providing increased business tax credits, more direct investment, and aid to states and cities would go a long way towards getting the economy going again.

Why are we not rushing to buy this hugely discounted lunch? The political and media forces in this country have been infected by this avid austerity that borders on ideology. Those that declare themselves budget hawks are deemed righteous and good, while those on the other side of the aisle are deemed weak and impure. Due to this, our current budget debates center over the size of budget cuts, taking for granted the type and necessity of them. That same Republican economist Mark Zandi predicts if the GOP house budget plans were to fully pass then job losses would total near 700,000. Now economic prediction is no set in stone science, but you get the picture. Budget austerity seems to pull on all those heart strings of Americans at the exact moment we should be tackling a different kind of crisis, our unemployment disaster. It is a shame when self-inflicted pain is neither necessary nor productive.

Friday, March 4, 2011

Negotiating with Terrorists

Reading this post by Jon Chait got me thinking--again--about the health care debate last year.  

In response to the blatantly socialistic approach to healthcare reform under Bill and Hillary, conservatives rallied around the notion of an individual mandate, which as Reason notes:

Since it's unlikely that Americans will allow their improvident neighbors to expire without medical care in the streets, is there a politically palatable alternative that can preserve and expand private medicine in the United States? Yes: mandatory private health insurance.

I know that much ink has been spilled complaining about President Obama's approach to health reform negotiations, but I have not seen* an argument that says Obama made a strategic mistake in adopting RomneyCare/ReasonCare from the outset because it deprived the Republicans of a legitimate (read: sane) position to hold during negotiations.  

Would it have served the administration better to fully embrace single-payer or a robust public option from the outset, and then only slowly back down and adopt an individual mandate without the public option?  Instantly emasculating the Republicans by adopting their only health care policy idea that includes universal coverage seems to have been a mistake--but I reserve judgement until the Supreme Court decides on the constitutionality of the law.

*Such an argument may very well exist, but I have no desire to search for it.