…because I’m an economist and a mom–that’s why!

Commission-Eyed Optimists

February 20th, 2011 . by economistmom

In Sunday’s Washington Post, the “Topic A” question (at the back of the A section) asked about the (my italics) “prospects that the president and congressional Republicans would reach a serious budget deal this year.”  My answer was “basically nil” because politicians still view putting things on the table as admitting fault.  Bill Gale’s answer was “small” because the Republicans are still too entrenched in their “no new taxes” fantasy world.  Maya MacGuineas sounded a bit more optimistic that policymakers might actually try doing the right thing but only after they try all the wrong things first!  But Alice Rivlin, the only person who was on both President Obama’s fiscal commission as well as (co-chair of) the Bipartisan Policy Center’s version, was clearly the most optimistic of us all, saying (emphasis added):

Here is an optimistic scenario that could result in a serious long-run budget agreement this year: First, a bipartisan group of senators crafts a long-run budget plan that slows the future growth of Medicare and Medicaid, puts Social Security on sound fiscal basis, simplifies the tax code to raise more revenue from broader base with lower rates, and caps discretionary spending (defense and domestic). This step doesn’t take long, because the bipartisan group is already working and has the Simpson-Bowles and Domenici-Rivlin plans to build on. Next, the president and the House leadership join the negotiations. Political perceptions begin to shift. After the sharp world-market reaction to the brief battle over the debt-ceiling increase, all participants are scared of not acting. Fear of taking the first step to slow entitlement growth or raise additional revenue is replaced by fear of being blamed for blowing up the deal and throwing the economy into a new tailspin. The deal no one thought possible is signed in the Rose Garden in the October sunshine, markets react positively, business steps up hiring and economic growth accelerates.

I think Alice was thinking like Mitzi Gaynor’s “Cockeyed Optimist” (in South Pacific, above)–right down to the bright canary yellow skies!  Then when the Post came out with an op-ed by Alan Simpson and Erskine Bowles, the co-chairs of the president’s commission, also displaying an unusual helping of optimism (right above our Topic A responses), I realized that for one to want to chair a fiscal commission for a task as impossible (given the politics) as deficit reduction, one must be an inherently optimistic person.  So they’re just “commission-eyed optimists.”  ;)

Which, by the way, is the way you can tell a true devotee to fiscal discipline apart from a wannabe who plays a fiscal hawk for purely political gain.  As my boss (the Concord Coalition’s executive director) Bob Bixby likes to say, if it were all “doom and gloom” we wouldn’t keep doing what we do to try to encourage fiscal responsibility.

9 Responses to “Commission-Eyed Optimists”

  1. comment number 1 by: Anandakos

    Watch while the “compromise” that extended the Bush tax custs (but not Obama’s) in trade for extension of UI benefits is thrown out and the payroll tax reduction is used as grounds to severely reduce future Social Security benefits.

    Obama is incredibly stupid. He should have let every tax measure expire as House Democrats wanted and stuck the Republicans with the blame.

  2. comment number 2 by: AMTbuff

    The 1986 Tax Reform was described in retrospect as impossible, then inevitable. Cutting government promises to feasible and sustainable scope will follow this trajectory. The year might be 2011 or it might be as late as 2018. If it happens before a bond market crisis hits, I’ll be absolutely amazed.

  3. comment number 3 by: Rodger Malcolm Mitchell

    It would be helpful to you and your followers read Monetary Sovereignty

    Those who do not understand Monetary Sovereignty, do not understand economics

  4. comment number 4 by: AMTbuff

    To all the Free Money true believers: You can never convince us that you are smarter than professional economists. We can never convince you that you do not have the secret that all the world’s economic geniuses have never discovered. Please stop wasting your time and ours. Don’t go away mad; just go away.

    To everyone else: please don’t pollute this site by attempting to engage these people. We’ve tried it extensively in the past and it’s an even bigger waste of time. If we ignore them they will eventually go away.

    To Economist Mom: Please consider deleting posts that contain hyperlinks or other means to promote commercial products. Those posts reduce the value of your website.

  5. comment number 5 by: Centerist Cynic

    The optimism displayed by Bowles and Rivilin is grounded in two things.

    One, Democrats in the past have always compromised their positions on poverty and education to advert crisis, usually under great pressure. (I know this is a biased observation.)

    Two, Bowles and Rivilin think the coming debt crisis is so obvious and eminent the Democrats and Repbulicans will suddenly realize this and work together to solve the problem.

    The days leading up to March 4th will give us insight on how motivated Democrats and Republicans are to work together.

  6. comment number 6 by: markg

    The MMT crowd is made up of many professional economist. Prof. Wray, Galbraith, Mitchell, Auerbach, and let’s not forget 1997 Nobel prize in economics winner William Vickrey. You guys here are like the crowd that believes we did not land on the moon. These professors are like the experts that can take all your claims and prove you wrong. So go on believing your failed economistmom theories. The MMT professionals will keep trying to make our world better (even for you).

  7. comment number 7 by: Jesse

    “if it were all “doom and gloom” we wouldn’t keep doing what we do to try to encourage fiscal responsibility.”

    Are we really trying to encourage fiscal responsibility or just talking about it? The Nation and the States sure don’t and with all the bailout policies on both the corporate and individual level, as well as all the market interference by both Fed and Government we have a long ways to go until fiscal responsibility is encouraged. In the meantime the policies are geared toward survival of the “weakest”/irresponsible…

  8. comment number 8 by: SteveinCH


    How many professional economists are there, just curious?

  9. comment number 9 by: Jim Glass

    let’s not forget 1997 Nobel prize in economics winner William Vickrey.

    Let’s not! A curious character indeed he was. He got his Nobel for his micro work on auctions. His views on macro and managing the economy as a whole were, wel …, decide for yourself.

    His macro program was to:

    * Achieve “full employment” at an unemployment rate of between 1% and 2%, “with anyone who chooses to able to find a job at a living wage within 48 hours”.

    * Do this by stoking 10% annual growth of GDP for as many years as it takes.

    * Fuel that 10% annual GDP growth by permanently increasing budget deficits to 13+% of GDP as Keynesian stimulus — Vickery was very much old school Keynesian.

    * Create that budget deficit largely by slashing taxes, starting with employment taxes to be cut by up to 70%, “if this can be done in face of the outcries that it would jeopardize the fiscal
    soundness of the Social Security System, which ultimately depends not on any nominal social security amount, but on the willingness of future Congresses to make any financial arrangements needed to provide promised benefits, whether through payroll taxes or otherwise.”

    * Prevent the hyperinflation that otherwise would result from 10% growth and 1% unemployment by price controlling the entire economy, as he called it “direct inflation control”.

    * After reaching his desired full employment, run whatever deficits proved necessary, forever, to keep GDP growth stoked enough to keep unemployment at around 1% permanently

    Of course, he knew price controls have a very bad record at destroying economies, so he proposed to create a market in price controls (!) with businesses bidding to buy a limited number of warrants/permits issued by the govt giving them the right to raise prices — just like carbon-emmission permits. And they’d be sold off by the govt through of all things “Vickery auctions” (!). “Administration would
    seem to pose no insurmountable problems”, was his opinion.

    And thus, Vickery explained, the govt could flexibly administer the price level of an economy that is intentionally kept perpetually overheated by excessive stimulus from multi-trillion dollars deficts (while accumulating limitless debt!) while avoiding all the “absurdies” of normal price controls.

    See his 1993 AEA presidential address, “Today’s Task for Economists”.

    An interesting character indeed, he was. But as I said, he got his Nobel for micro, not macro. And his interesting macro ideas have not caught on elsewhere, except among some fringe circles, for reasons that are probably self-evident.