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

A Super Failure, But Not a Super Surprise

November 21st, 2011 . by economistmom

Ezra Klein puts it well:

The “supercommittee,” it turned out, wasn’t so super.

By the end, it hardly mattered whether the Joint Select Committee on Deficit Reduction came to a deal. The 12 members had long since decided against “going big.” They were just trying to eke out $1.2 trillion in savings so they could avoid the $1.2 trillion in deep, automatic cuts to defense and domestic spending that would come if they failed…

If that happens, the ratings agencies could decide that, far from simply failing to make any deals, we’re backsliding. And that could lead to another round of downgrades and, eventually, a loss of market confidence in our ability to pay our debts more broadly.

As a recent Goldman Sachs analysis concluded, Moody’s and Standard & Poor’s “have indicated that while a stalemate in the super committee would be negative, they expect $1.2 trillion in planned deficit reduction to materialize through automatic cuts if not through the super committee, so their fiscal outlook should remain unchanged.”

Nor is there reason to think the markets will be particularly rattled. The dysfunction of American government has been priced in at least since the summer’s debt-ceiling debacle…

But what the markets, the rating agencies and ordinary Americans should care about is Congress’s inability to make deals in general. Because over the next few months and years, there are deals that absolutely must be made…

Whatever confidence boost might have come from an agreement is clearly dead. New stimulus is very unlikely. And perhaps most worrisome, the extension of the payroll tax cut and the unemployment benefits may well not happen. That could deal a big hit to growth next year and, alongside further trouble in Europe, toss us back into recession.

Similarly, most economists think we need somewhere in the neighborhood of $4 trillion in deficit reduction over the next decade or so. We don’t necessarily need it right this second; interest rates on Treasury debt are still at near-record lows, indicating that the market considers us a safe bet and isn’t overly concerned by our debt load.

Part of what’s keeping the markets off our back, however, is a series of down payments we have made in recent months: the automatic spending cuts that kick in if the supercommittee fails, for instance. But some Republicans, including Sen. John McCain (R-Ariz.), have indicated that they consider the automatic defense cuts too deep and intend to defuse the trigger.

And apparently, Jon Stewart agrees that the scary-sounding “sequestration” is not nearly as scary as it sounds, for the “trigger” can be simply “de-triggered.”  And he points out that perhaps this is (one reason) why people don’t like Congress very much these days.  So the next time around, how can we translate this public dissatisfaction into real costs for the politicians who dissatisfy us–so they’ll stop such behavior?  The super committee didn’t have to come up with all the policy solutions and certainly didn’t have time to figure all that out.  But they could have at least acknowledged their own dysfunction by recommending some rules and processes–which could have been voted on and adopted as law even before any fiscal policy options were considered–to help break this endless cycle of promises and disappointments.

So even though most of us thought it unlikely that the super committee would actually “go big,” it still feels like a gigantic missed opportunity that they didn’t at least put a procedural “step stool” in place.  I’m not really sure what’s going to happen now, even though what needs to happen hasn’t at all changed.

21 Responses to “A Super Failure, But Not a Super Surprise”

  1. comment number 1 by: Gipper

    Paul Sammuelson has a great column today regarding the timidity of both sides. But special blame must be laid upon the President for failing to take the first step, specifying specific cuts in entitlement programs, and then challenging Republicans to match his courage with revenue increases.

    Hell, that’s what Simpson Bowles basically laid out, and the President couldn’t even get behind his own Commission’s report!!!

    Indepedent voters understand that there must be a mix of spending cuts and tax revenue increases. Should we reach 21% of GDP, 19%, 25%, 28%? This is what the political process is all about.

    Thinking like an economist, Republicans should offer a tax revenue plan that raised revenue on a schedule based on achieving reductions in federal expenditures as a percentage of GDP in prior fiscal periods. That way the incentives are in place that prevent Democrats from using the additional revenue to finance additional spending.

    Instead the President is doing his usual demogogic appeal to his base. He is truly a failed leader. He deserves to lose big in 2012. I hope that it is a humiliating defeat just to teach future politicians a lesson that playing the demagogue doesn’t pay anymore.

  2. comment number 2 by: AMTbuff

    Yeah, Simpson-Bowles *was* the supercommittee. Obama stiff-armed them, HIS OWN COMMITTEE! Obama fumbled our best chance to step back from the fiscal brink.

    When the bond market finally becomes skeptical, it will need to see retrenchment in promised government benefits. Bowles-Simpson would have been a very good start. Sequestration is no start at all, since it maintains the fiction that promised benefits will be paid.

  3. comment number 3 by: Brooks


    If Paul Samuelson had written it, it would have been extraordinarily prescient considering he died a couple of years ago. You mean Robert Samuelson.

    (That snark was meant to be good natured)

    Considering the counterfactual scenario of Obama having gotten involved, I do wonder if Republicans/conservatives would have automatically claimed Obama had ruined the process by injecting himself into it, thereby “politicizing it” so he could “have an issue to run on” (the “do-nothing” “obstructionist” Republicans or the “protect the rich Republicans”).

    That said, even if that’s the case, it wouldn’t make it necessarily right for Obama to be less/not involved. But THAT said, I really don’t know which is a better approach, the president getting heavily involved or not. My sense is that the ideal would have been the president and leadership of both parties huddling with super committee to try to “jump together” so to speak with some compromise deal that would leave both sides taking heat from their respective ideological purists. Otherwise, why should a super committee member expose himself/herself for something that won’t have much chance of passage and enactment anyway. By contrast, something that would be actively and openly supported by party leadership as well as committee members might have been seen by committee members as having a decent shot at passage and enactment.

  4. comment number 4 by: Gipper


    Thanks for the correction on Robert Sammuelson. The President, like Economistmom, has been long on suggestions for taxing the rich but silent about SPECIFIC proposals for cutting entitlements.

    The responsibility for leadership is the President’s. He must make the first move. He would demonstrate to the public that he is serious about fiscal reform instead of just demagoguing Republicans regarding “taxing the rich.”

    He’s running for re-election. He’s not interested in leading. He’s not interested in cutting entitlements either. And he’s trapped by his stupid campaign promise not to raise taxes on the middle class.

    Both sides have to be willing to violate their campaign promises or no compromise will be reached. President has to be the first one to move and challenge the Republicans.

  5. comment number 5 by: Jim Glass

    I don’t think the super-committee failed, I think it succeeded — they kicked the can down the road for another year.

    This is exactly what both parties wanted. Kick the Can is now the national political sport. (Though looking at how the rest of the world is doing we could certainly have a very competitive international event in it at the Olympics).

    If the committee’s mechanism had been serious about forcing it to reach a resolution it would have imposed the mandatory cuts in 2012, before the election, instead of after.

    Now both parties can happily run for re-election in 2012 saying they have lived up to their #1 obligation and most important principle — not conceding anything at all to the other — without anybody’s consitituent having been discomforted by the loss of a penny.

    How is this failure for the politicians running for re-election? It is success.

  6. comment number 6 by: Vivian Darkbloom

    Keith Hennessey has a very good piece on the failure of President Obama to lead on the deficit reduction effort. He also shows, very graphically, that the new D political mantra will be “blame Congress”. (This likely does not indear the 6 D members of the Committee to him).

    Keith also has a more recent piece on why Republicans have moved away from the Norquist pledge by agreeing to increase tax revenues in the course of these negotiations. I have a great deal of respect for Hennessey, whose arguments are always civil and almost always pass logical scrutiny, but the latter piece is disingenuous. I would have commented directly on his site; however, he now requires that login occur via Facebook or Twitter, neither of which I will ever join. So, here is what I wanted to say about the latest on Republicans and tax revenue increases, after the initial quote from the Hennessey piece:

    “The six Super Committee Republicans proposed a deficit reduction package that would increase net income taxes by about $250 B, plus another $40ish B in higher revenues that would result from correcting the way that inflation is measured.”

    Keith, you have argued persuasively that the correct interpretation of the Super Committee mandate was to reduce the deficit by $1.5 trillion (or $1.2 trillion) *as measured by the current law baseline.* This interpretation was also strongly backed by Congressman Ryan (and, indeed, by the text of the Budget Act itself).

    Now, while it is quite possible that Norquist himself had a current policy baseline involved with respect to his “pledge”, when it comes to arguing that the R’s offered to increase net income tax revenues by about $250 billion, you neglect to say that this figure is only valid if one uses the *current policy baseline*. It seems inconsistent to me that, on the one hand, one would argue that the overall deficit reduction goal should be measured by current law, but that individual elements within a proposed deficit reduction package (specifically, here, taxes) should be measured by current policy.

    What gives here, exactly?

  7. comment number 7 by: Vivian Darkbloom

    Make that “endear”.

    I also have a theory about why our political leaders can’t seem to come to any agreement— on anything. Historically, these type of grand deals, which are based on horse-trading and compromise, are done in smoke-filled rooms. Perhaps if we were to lift the smoking (and perhaps horse) ban in public buildings, more deals would be struck.

  8. comment number 8 by: Brooks


    Good point.

    A related thought: no one committed to the pledge (except perhaps in some cases if one views the pledge as limited to the one term following signing it) can ever honestly say he supports some “temporary” tax cut, because once the tax cut is there, it is part of “current policy”, and if increasing taxes relative to the current policy baseline is a violation of the pledge, either he’s insincere in representing as “temporary” the tax cut he’s supporting or he intends to violate the pledge.

  9. comment number 9 by: Jim Glass

    Geeze, I should a been a NY Times PBS pundit. I just watched David Brooks on Charlie Rose, giving his opinion based (he said) on his personal knowledge of the supercommittee members:

    [My reasonably fair paraphrase after replaying the TiVo recording...]

    “The committee did just what they wanted it to do, kick the can [his words] down the road to after the election. Neither side ever had any intent to compromise with the other — to test what they could get, maybe, float some modest new ideas, maybe.

    “But the political leaders who created the committee never expected it to deliver a compromise. I mean, Patty Murray was on the committee while running the Democrats’ Senate campaign. That’s why the sequestrations are in 2013, after the election.”

    Rose: “But why *can’t* our political leaders reach the compromise we all know we need — they surely all know we need — to solve this problem, which must be solved, for the national good?”

    DB: “Because they have no reason to, and every reason not to. The Democrats get elected by promising their constituents never to cut a penny of entitlements and the Republicans by promising never to raise taxes, and if they break their promises they get unelected. So they are doing what makes sense for them. From the view of the national welfare the system is dysfuctional, but what they are doing what makes sense to them.”

    CR: “But how do they think putting things off until after the election helps?”

    DB: “Because they each think they will win the election — and this will help them win — and then they will get their way over the other side. I don’t believe that will happen, the whole process will just start over then. But the main thing is to get it all put off until after the election”.

    CR: “But then how are we ever going to solve this problem?”

    DB: “I don’t know … We’ll have to become Greece. At that point they have to do something.”

    CR:”This is world-wide problem. Not just us. Everywhere.”

    DB: “Yeah. It is innate in modern politics, modern government. Political reform is needed, nobody knows what it is and nobody has reason to adopt it. But as more and more nations become Greece somebody will figure it out, and we’ll adopt it. Then.”

    Keith Hennessey has a very good piece on the failure of President Obama to lead on the deficit reduction effort….

    CR: “Obama said very publicly that he would rather do the difficult, right things, and lose, be a one-term president, than take all the easy ways out and get a second term. But he has proposed no fiscal reform plan of his own at all. Nothing. He hasn’t even backed his own commission. Why not?

    DB: [Smiles, shrugs, half-laughs...]

    CR: “C’mon. You’ve talked to him. What do you think?”

    DB: “I haven’t had the nerve to bring it up. [Laughs] But I can tell you, he is an extremely competitive guy. He really wants to win the election. And any position one takes is going to draw fire from all sides. It’s the problem for everybody.”

    CR: “But how for him? He has the Democrats, they aren’t going to vote for a Republican, and a plausible compromise could attract the center and discomfort the Republicans.”

    DB: “You’re right. Obama has the most rock-solid base of any president I’ve ever seen. Liberals are going to vote for him whatever happens, never for any Republican. But the “chattering liberals” complain a lot on the blogs. This WH spends a lot of time up at night reading them, and doesn’t like it, responds to that.

    “So Obama has provided no leadership at all on this issue. It’s a WH decision.”

  10. comment number 10 by: Brooks

    I’m going to add a bit of unconventional cynicism to the conventional cynicism I share with others here and many people generally.

    The conventional cynicism is that members of Congress and the president are choosing not to reach a “grand compromise” deal because they think avoiding one ultimately serves a higher priority of theirs: improving chance of re-election of each (and in cases of party leaders and leadership aspirants, a better chance of increasing their individual power and status. I subscribe to that conventional cynicism.

    I’ll add a more speculative unconventional cynicism. Although reaching a grand bargain that solves or substantially mitigates our fiscal imbalance problem would bring them a better reputation among many (as responsible statesmen), an ongoing battle, particularly a passionate, dramatic (well, melodramatic) one along ideological lines, puts them in the spotlight more, and that is probably very attractive to many of them. I think many of them are in politics because they are attention-hogs. They want to be in the media. They want to be a star. After all, they do say that Washington D.C. is Hollywood for ugly people. Although I’m not sure, I think that on balance, collectively, the desire for the additional spotlight and drama outweighs the desire for credit for responsible statesmanship (insofar as they’d get it) and whatever satisfaction they’d get from actually doing the right thing, pragmatically speaking. Even that’s not the case on balance collectively, I think it is for some key individuals who are impediments.

    Anyone agree/disagree?

  11. comment number 11 by: Vivian Darkbloom

    “I think many of them are in politics because they are attention-hogs, etc.”

    That is very true and it echoes the well-known observation of Lord Acton: “power corrupts and absolute power corrupts absolutely”. It is quite possible that many politicians enter politics with some higher goal than simply obtaining power and influence; however, I’m absolutely convinced that the virtues of any political candidate who actually succeeds in getting elected are quickly overcome by the goal of simply holding on to power and prestige. If anything, your “many” should be amended to read “most”.

    But, let’s not limit this observation to politicians. I also would apply it to those in the public eye generally, including well-known bloggers and journalists, etc. The goals of these groups are always the same—one needs an audience to retain one’s power and prestige. Which audience (portion of the electorate, etc) that is is only secondary to simply having an audience and being in the spotlight.

    This explains how politicians find it so easy to change their spots, why bloggers and journalists tend to preach only to their respective choirs and why, on occasion, bloggers change their spots just like politicians in order to stay in the public eye. I strongly suspect that most of them don’t even realize that they are not being intellectually honest, even to themselves. It explains why the NYT is consistently “left”, the WSJ consistently “right”, etc., even though logic and occasionally common sense would dictate they dissapoint their respective “audiences” on a particular issue. It explains why Krugman is Krugman and Limbaugh is Limbaugh, etc., etc., etc.

    As an example of a non-politician changing spots to cling to power, I would list Bruce Bartlett, who is obviously a bright guy, but his recent “conversion” is, in my view, is not he result of a sudden revelation, but merely the result of spite and the narcissistic need to stay in public spotlight—having lost one audience he was in need of pandering to another.

    There are very few who are able to be intellectually honest without the need to pander. I would put David Brooks in the category, as well, perhaps, as someone like Christopher Hitchens. These types tend to surprise on specific issues and I don’t think that means they are pandering to the middle. I’ve also been impressed by a few politicians such as Tom Coburn who seems to want to put the public interest above his personal interests, but these examples are very rare.

  12. comment number 12 by: Jim Glass

    I think many of them are in politics because they are attention-hogs. They want to be in the media. They want to be a star.

    Oh, I agree completely. Anthony Weiner and his picture show for adoring fans. :-)

    David Brooks actually spent most of his time talking about how social standards have changed over the last 50 years (his next book). One item he mentioned was that in public polls 50 years ago the question “Do you want to be famous?” drew very few “yes” answers, today it draws geat number. That seems like a natural pull for politicians.

    But I don’t think that’s the problem with the fiscal policy logjam — people can become famous by fighting for the right cause as well as the wrong. I think the problem is that those blocking compromise think they are fighting for the right cause.

    The conventional cynicism is that members of Congress and the president are choosing not to reach a “grand compromise” deal because they think avoiding one ultimately serves a higher priority of theirs: improving chance of re-election of each (and in cases of party leaders and leadership aspirants, a better chance of increasing their individual power and status. I subscribe to that conventional cynicism

    I’ll be counter-cynical and say I think most of these politicians blocking any budget compromise really believe they are doing the right thing. Not just saving their own jobs. (Though, of course, one must keep one’s job to have the power to do the right thing.  What’s good for oneself very often jibes very well with what one very sincerely thinks is the right thing.)

    After all, how does one become a liberal/conservative elected national politician? One self-selects by belief in the liberal/conservative cause, studies it, works for it, invests in it. One makes promises, both publicly and privately, to the public and one’s supporting interest groups, that one will stop all attacks on entitlements/increases in taxes. Then one keeps one’s promises — both because it is how one keeps one’s job and because it is the right thing to do.

    Do we really want politicians who make promises to get elected then *break* their overt promises after they are “in”? Just to make some convenient political deal with the other side? Don’t those politicians who abuse their constituents’ trust, and betray the principles they were elected upon, deserve to lose their jobs?

    When I keep saying the politicians are only responding to incentives (and DB says they are doing what makes sense to them) it’s not incentives to be selfish, “me first”, and weak. Not at all. Our politicians today have just as much character as any ever. They are fighting for what they think is right.

    But the right thing to them is to stand for the partisan groups that put them where they are, whose causes they believe in, keeping the promises made to them (and losing their jobs if they break their promises). And indeed, what’s *not* right about that?

    The real problem is a constitutional one. *No* group is elected in politics by those with an interest in protecting the long-term future of the govt as a whole, while making solemn promises to do *that*. So doing that is *not* the right thing for anyone. Thus the long-term is looted until it arrives in the present, crisis time. Greece today, Italy imminently … the German govt was unable to sell a bond issue yesterday!!

    The fact that this same problem is universal in our time, world-wide, shows it is *not* a defect of American politicians or Democrats or Republicans. It is a defect of the political systems that evolved before actuarial self-bankrupting, as modern governments can do, was possible.

    Natural selection among economic organizations has produced business firms with stakeholders who have a bundle of legal ownership rights that focus them on protecting the firm’s future — they have a legal *fiduciary obligation* to do so and can be sued (and jailed) if they neglect it. In our political systems no such corresponding entity has yet evolved. But, as DB said, when enough nations go the way of Greece, it will. Eventually.

    In the meantime the road to hell is being paved with good intentions laid down by roadworkers who sincerely believe they are doing God’s work (if Republican, if Democrat they believe they are serving some higher secular cause).

    I would *rather* have a Congress of disbelieving cynics who knew how to break their promises and get away with it to reach purely practical political back-room deals. If only.

  13. comment number 13 by: SteveinCH

    Interesting thread. My only add is to note that while politicians are definitely not long term thinkers, it is only with the advent of the expansion of government that they have really needed to be long-term thinkers.

    A limited government needs no compelling long-term strategy. An expansive one really does. Our government, largely speaking, was formulated to do very little. As the strategy has evolved from doing very little to doing a whole lot, the structure of government has become misaligned with its strategic focus.

    That’s not a good place to be and it creates interesting dynamics. There are those like me that think the government (federal) should go back to doing less and change strategy to realign with structure. There are those who want to change the structure to make government better at doing things although there are relatively few of these.

    Most of those who prefer the current strategy simply rail against government’s performance, not recognizing that is was actually set up to perform in this manner.

    Much is said about how effective compromise worked in the past. My reading of history says it is not so. With rare exceptions, government has never addressed strategic questions effectively. Slavery became a strategic issue decades before the actual war. Despite real evidence that a stronger military was necessary, the US entered WWI and WWII massively unprepared. The reaction to the Great Depression was pretty much awful and very non-strategic and on and on and on.

    Sure there are examples of compromise and strategic thinking. In my life however, there aren’t many that spring to mind (the SS compromise might be one but then I run out of examples pretty quickly).

    No I think what is going on is that we, like all who have come before us, wish to see our time as different than the times that have gone before. It really isn’t. We have and have always had a government that is best at slow and incremental change. What we now have is a government that needs to think more strategically because we have given it a far larger role in society than it has ever had before.

    Perhaps the real question that faces us is whether we want to create a more efficient and effective government realizing the power we have ceded to it.

    Unlike many in this thread perhaps, I strong prefer and inefficient and ineffective sovereign. An efficient and effective one would scare the ever loving hell out of me. I’m not a big fan of absolute power over my actions. Anything we do to make government more efficient cannot help but make its power more absolute.

    And on that uplifting note. Happy Thanksgiving to all. I’m off for a 6 hour car ride to the in-laws : /

  14. comment number 14 by: Vivian Darkbloom

    “I think the problem is that those blocking compromise think they are fighting for the right cause.”

    I agree with this, with the emphasis on the word “problem” and a clarification of the word “cause”. “Problem” is obvious, but I would define the word “cause” broadly, as I think it was intended in the above sentence, but that is not to say this is a virtue. “Fighting for the right cause” ususally means belonging to a group with broadly-defined goals. But, with respect to specific policy issues it should give way to “doing the right thing”. In the context of fiscal reform (or the absence thereof) the right “cause” might be interpreted as loyalty to one’s party and one’s party line generally, despite the fact that one might believe that doing the right *thing* in a particular case might be to deviate from that party line. If politicians were always acting according to their own consciences as to what is “right”, one would not need party whips to encourage them to do what is “right”.

    Also, the specific example of the fiscal issue aside, most politicians routinely change “what they think is right” for purposes of political convenience (that is, to obtain or retain power under cover of the idea that this is serving the “right cause”). We could mention, abortion, the death penalty, politicians tacking to their “base” during primaries and to the middle during general elections, etc., etc. To some extent this is just conscious hypocrisy, but of course it is all done “for the right cause”. This is a form of rationalization.

    To the extent politicians (and others) do not engage in conscious hypocrisy, much of their actions and beliefs are the result of unconscious self-delusion. This is, of course, consistent with the subjective belief that they are “fighting for the right cause”. It just so happens that “fighting for the right cause” or even “doing the right thing” is completely consistent with maintaining one’s position within a defined group (e.g. political party). If you aspire to be a leader of that group, that means maintaining your loyal following. Similarly, for a journalist or a blogger or other “public intellectual” it means maintaining your loyal following or your “ratings”. Without that, you are nothing even if you happen to be “right”. Being a member of a group not only gives comfort, but is also necessary for obtaining and retaining power, particularly political power. And, almost by definition, “fighting for the right cause” often means “doing the wrong thing”. As Jim says, “the road to hell is paved with good intentions” and, I would add to that, a lot of self-delusion along the way.

    At a certain juncture, one’s conscious or subconscious desire to retain power and influence informs not only what it means to “do the right thing” but also what the “right cause” is. This, I think, is the essence of what Lord Acton meant when he wrote “power corrupts”. He didn’t mean “corruption” literally; he meant that it corrupts the mind.

    Do you have any doubt whatever that Qaddafi, Castro, Mugabe, Hitler, Stalin, or whichever tyrant you want to pick, didn’t actually delude themselves into thinking they were “fighting for the right cause” as a rationalization for clinging onto power and doing all the wrong “things”? No, politicians are not necessarily any less virtuous today than they have ever been, but they are not likely any better.

    Politicians are always going to be subject to these temptations—they are human (I think) afterall. The writers of the Constitution seem to have understood this better than almost anyone, but I don’t think they could have predicted how the worst aspects of human nature might be exacerbated by a two party system or that “modern” civilization might mean that the individual and individual thought would give way so completely to the group and groupthink.

  15. comment number 15 by: Patrick R. Sullivan

    ‘Patty Murray was on the committee while running the Democrats’ Senate campaign.’

    Writing from Seattle, I can assure everyone that she wasn’t there to provide intellectual heft to the proceedings. She was teaching some basket-weaving class at one of the local community colleges here, when she found out if was going to be cancelled for lack of interest. That’s when she discovered politics; it was a means to keep her job.

    She’s a classic ‘hedgehog’ who ‘knows one big thing’; her own survival.

  16. comment number 16 by: Patrick R. Sullivan

    ‘The writers of the Constitution seem to have understood this better than almost anyone, but I don’t think they could have predicted how the worst aspects of human nature might be exacerbated by a two party system or that “modern” civilization might mean that the individual and individual thought would give way so completely to the group and groupthink.’

    Oh, yes they did. What we’re seeing is ‘faction countering faction’, just as they intended. Our Constitution deliberately makes it difficult to get anything accomplished, because the alternative is much worse.

  17. comment number 17 by: Vivian Darkbloom

    “Oh, yes they did. What we’re seeing is ‘faction countering faction’, just as they intended. Our Constitution deliberately makes it difficult to get anything accomplished, because the alternative is much worse.”

    I don’t seriously think that *that* is what they intended. What I actually had in mind was the system of checks and balances that the Constitution explicitly adopted, which puts somewhat of a damper on the corrupting influences of pwoer. But, you are mistaken if you think that the Constitutional founders formally, or even informally, wanted, or even sanctioned, a two-party system. The two-party system as we now know it was not contemplated in the Constitution–if I’m misaken, please point me to the reference.

    Here’s Tom Jefferson on the subject of parties:

    “I never submitted the whole system of my opinions to the creed of any party of men whatever, in religion, in philosophy, in politics, or in anything else, where I was capable of thinking for myself. If I could not go to heaven but with a party, I would not go there at all. - “Thomas Jefferson to Francis Hopkinson, 1789.”

    And, George Washington, albeit not a real player in formulating the Constitution, had much to say about the party system in his farewell address:

    “I have already intimated to you the danger of parties in the State, with particular reference to the founding of them on geographical discriminations. Let me now take a more comprehensive view, and warn you in the most solemn manner against the baneful effects of the spirit of party generally.

    This spirit, unfortunately, is inseparable from our nature, having its root in the strongest passions of the human mind. It exists under different shapes in all governments, more or less stifled, controlled, or repressed; but, in those of the popular form, it is seen in its greatest rankness, and is truly their worst enemy.

    The alternate domination of one faction over another, sharpened by the spirit of revenge, natural to party dissension, which in different ages and countries has perpetrated the most horrid enormities, is itself a frightful despotism. But this leads at length to a more formal and permanent despotism. The disorders and miseries which result gradually incline the minds of men to seek security and repose in the absolute power of an individual; and sooner or later the chief of some prevailing faction, more able or more fortunate than his competitors, turns this disposition to the purposes of his own elevation, on the ruins of public liberty.”

    The Founding Fathers were, by and large, independent thinkers, not party hacks. That development, unfortunately, came later.

  18. comment number 18 by: Jim Glass

    Tyler Cowen relates my argument about the difference between accounting and economics.

    He answers others who say (for instance) that Italy is a rich country and the bulk of its debt is owed to Italians, so it has no real debt problem at all but only “a simple issue of redistribution” … and anyhow Germany has plenty of wealth on its balance sheet to cover Italy’s debt if it only will … so Europe can easily afford all its debt, if only its poltical leaders can find the personal character to cover it. He replies…

    Is it easy to guarantee Italian debt? No, no no, says I… [Some reasons why.]

    “You don’t need complicated arguments why I am wrong in my europessimism when there is a simple argument. If countries are willing to dig into their wealth, they can pay off their debts. Basta.

    “At the core it is a public choice problem, not an accounting argument. The optimistic forces can win the accounting argument, but so far the optimistic forces have called the crisis wrong every step of the way.”

    It’s the very same with the USA’s $100 trillion of unfunded entitlements, which is on course tol put us where Greece and Italy are about 15 years from now.

    Can we afford it? From an accounting point of view, sure…


  19. comment number 19 by: Vivian Darkbloom

    Of course, it is both. You need the accounting first to measure the scope of the problem and possible alternatives. When people argue “we can afford it” what they really mean is that we can pay for X if you follow *my* priorities. As I wrote above, it is like saying we can afford the car if we cut off the electricity. At the end of the day, whether we can “afford” something is ultimately jpolitical until, of course, one reaches the point where even under accounting one cannot make ends meet, in which case you are insolvent or, shall we say, Greece.

    The “we can afford it” argument in recent US history is usually just another way of justifying current irresponsibility in the hope that it will force a later political capitulation by the other side. It’s either increasing spending in the hope that it will force increased future taxes or cutting taxes in the hope that it will cut future spending. (Depending on your political slant, of course, either approach will “pay for itself” anyway).

  20. comment number 20 by: Vivian Darkbloom

    I should add to the above that, actually, when people argue we can “afford” something in the context of the US budget, they not really using accounting at all but implying it only in the vaguest sense. It is quite possible the unfunded liability of the United States is $100 trillion, as Jim Glass states. However, our public books don’t even use that accounting. And, when is the last time you’ve heard someone argue “sure, we’ve got a $100 trillion unfunded liability, but we can afford it”. If we were to first improve the public accounting we could have a much more meaningful political discussion.

    The case for better accounting also fits well with the Greece example. Did Greece actually account for their budget deficits and accumulated debt until recently (or even now?) even under the rules they were supposed to follow under EU treaties?

  21. comment number 21 by: Brooks

    Vivian, Steve, and Jim,

    Thanks for your interesting responses to my question. I don’t have time to comment now, but wanted to say thanks.