Just a quick post with my thoughts on Treasury Secretary Jack Lew’s announcement today that by mid-October the U.S. will only be able to make payments with the cash it as each day. In other words, we’re hitting the debt ceiling a couple of months early. Kevin Drum posits that this means negotiations over the budget are going to be lumped in with the debt ceiling:
If mid-October really is the drop-dead date, it means that budget negotiations in late September and debt ceiling negotiations in early October pretty much run right into each other. It’s Fiscal Cliff v2.0.
I don’t quite know what this does to John Boehner’s fragile attempts to keep the lunatic wing of his party under control. Nothing good, probably. I’m also not sure what it does to President Obama’s promise not to negotiate over the debt ceiling. If all of this stuff get munged together, then everyone’s going to get mighty hazy mighty fast about what exactly is being negotiated.
The budget negotiations and debt ceiling running into each other will hurt President Obama and Democrats on both those issues. Raising the debt ceiling should be a technicality that no American would consider holding hostage. We know that House Republicans don’t believe that though. We also know that most Americans don’t follow politics closely and asking them to differentiate between Obama’s willingness to negotiate over the budget, but refusal to do so over the debt ceiling is difficult. Most aren’t going to understand the difference. and will expect Democrats and Republicans to compromise since there are two issues.
If the two were separate, Democrats could bargain with Republicans over the budget and come to a deal (or a continuing resolution). Then, a few months later, they could refuse to negotiate over the debt ceiling and explain to the public that this isn’t debatable. We don’t debate paying our bills. The two issues running into each other just muddies the water. That will allow Republicans to escape some blame on both topics and give the GOP more leverage in negotiations. It may even force the President to bargain over the debt ceiling (or do so subtly). Either way, Republican elites should be pleased with this outcome. It may make their party a bit harder to control during the process, as Drum points out, but the increased leverage they have over the President is a worthwhile tradeoff. As for Democrats, there’s nothing good about this at all. Get excited for Fiscal Cliff v2.0.
Kevin Drum penned a post last night about why people hate deficits so much. He runs through a few options, but settles on the following:
Liberals have done an abysmal job of explaining why deficits are good during periods of high unemployment, so ordinary citizens have no reason to think deficits are anything other than bad.
I think this all hearkens back to the graph from Obama Administration economists Jared Bernstein and Christina Romer in January 2009 showing the expected unemployment rate with and without the stimulus. American Enterprise Institute’s James Pethokoukis has updated the graph with the actual unemployment rate (this is his update from September of last year):
It’s tough to prove that deficit spending in times of high unemployment works when the stimulus seems to have failed so badly. Of course, Bernstein and Romer’s graph was so far off because the economy was much weaker than anyone realized at the time, not because the stimulus failed (it didn’t). But, try telling that to your average person. For most people, that graph is confirmation that deficit spending does not work. That’s a very deep hole for liberals to start in.
Kevin Drum is out with a post today refuting the idea that Democratic candidates want to scare liberals into voting. He quotes a friend of his who believes that Republicans vote no matter what, rain or shine, but that Democrats often stay home if they believe their candidate is going to win. It’s a widely held sentiment and one that I’m partial to but Drum doesn’t believe the campaigns themselves actually buy it:
But there’s an odd thing about this: professional politicians apparently don’t believe it. At all. Oh sure, they’ll keep sending out the scary emails all the way through November 6. “Folks, there are a bunch of races that are simply too close to call,” screams the latest plea in my inbox from Dick Durbin. “Contribute $7 now, before time runs out.” (Really? $7?) Publicly, though, presidential campaigns pretty much never do this. In fact, they usually go to absurd lengths to demonstrate that their campaign is a juggernaut that will sail to victory. They apparently believe—and so do I—that people are energized by being associated with a winner. Confidence in victory boosts turnout, it doesn’t suppress it.
Except, President Obama’s campaign has spent the past week trying to terrify liberals into voting and giving money. Just look at the recent emails I’ve received from the campaign (before Hurricane Sandy):
That’ certainly looks to me like the Obama campaign is trying to terrify Democrats into voting. I just went back a few days in these emails and, to be fair, the campaign emails before these were a bit more positive. But these are the more recent ones and they are extremely pessimistic! Ezra Klein also had a post on this a week ago. Drum’s friend is right – the campaign is worried that overconfident liberals won’t vote and is doing everything it can to lower their confidence levels.