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January 01, 2013

It's Called "Smart Power"

The president's cheerleader in chief on his much vaunted negotiating skillz:

Anyone looking at these negotiations, especially given Obama’s previous behavior, can’t help but reach one main conclusion: whenever the president says that there’s an issue on which he absolutely, positively won’t give ground, you can count on him, you know, giving way — and soon, too. The idea that you should only make promises and threats you intend to make good on doesn’t seem to be one that this particular president can grasp.


Posted by Cassandra at January 1, 2013 12:29 PM

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It's why he is 0. Not O. 0.

Posted by: Kbob_in_katy at January 1, 2013 10:18 PM

Amazing. I'd have thought I was reading a criticism of Republican leadership.

I enjoyed this part: "And that means that Republicans will go right from this negotiation into the debt ceiling in the firm belief that Obama can be rolled." Yeah. I don't think so. What are the odds the Republicans won't raise the debt ceiling, or that they'll extract noticeable spending cuts, either?

Posted by: Texan99 at January 3, 2013 11:03 AM

Glenn Reynolds had an interesting (and very astute, I thought) comment yesterday:

NICK GILLESPIE: Why Fiscal Cliff Deal is Terrible – But Will Lead to Lower Spending and Smaller Government.

UPDATE: Conn Carroll:
Remember, Obama’s first offer was for a $1.6 trillion tax hike and an infinite debt limit hike. Boehner countered with $800 billion. The final deal was for only $600 billion.

How is that not a “win” for Republicans?

MORE: Was the left taken to the cleaners? “The Democrats have made the Bush tax rates permanent for 98 percent of the public, which Republicans couldn’t even do when they controlled both houses of Congress and the presidency.”

Yeah, but there’s this rule: Anything less than a 100% victory for the GOP is instead a major victory for the Dems, according to all Democrats and most Republicans.

I'd laugh, but it hurts too damned much.

Click my name for the links.

Posted by: Cassandra at January 3, 2013 11:47 AM

I admit I did chuckle at that.

At the same time, taxes went up (and got more progressive) and spending did not go down. Not so much of a win when you look at it that way.

Especially since the debt ceiling and sequester are still looming out there which mean more tax increases in another "compromise" which will also not cut spending.

Heads Democrats win, tails we flip again.

Posted by: Yu-Ain Gonnano at January 3, 2013 03:27 PM

I think Yu-Ain has got the right of it. It is a spending problem, not a revenue problem. We all lose when the Republicans ive serious ground wrt spending cuts...

Posted by: Miss Ladybug at January 4, 2013 04:57 PM

I disagree about that, actually.

It started out as a spending problem. But once you begin to amass debt, it becomes a revenue problem too.

The interest on the federal debt is a pretty major factor in the national debt and it's compounding. So even if we stopped spending more than we take in on a year to year basis tomorrow, we would still need to make payments over an above current spending to pay off old debt.

It's both, really. I agree - it's primarily (and was originally) mostly a spending problem but at this point we also have a revenue problem.

Posted by: Cassandra at January 4, 2013 05:02 PM

The only thing that can increase revenue sufficiently is to grow the economy. You and I both know that "taxing the rich" won't do that.

I'm already calculating how much more needs to go into my 401(k) to avoid the tax increases.

Posted by: Yu-Ain Gonnano at January 4, 2013 05:41 PM

Me too, Yu-Ain. That's what we're doing this weekend.

Posted by: Cass at January 4, 2013 08:21 PM

Cass - I view interest on a debt as "spending". I am actively working to reduce the amount I "spend" on interest to my various creditors by making every effort to not add to those balances through retail spending and make monthly payments greater than the amount of interest added to the balance each month. That means I need to make different choices about what purchases I make (less dining out, for example, to have more funds available to pay on a credit card. Congress should view things no different. Unfortunately, that has not been the case for a majority of the Congress for decades...

Posted by: Miss Ladybug at January 4, 2013 09:35 PM


I agree with everything in your last comment.

My point was this: spending, in and of itself may be objectionable for moral reasons, but it does not become a practical problem unless you're spending money you don't have... and have no realistic hope of making in the future.

Up to a certain point, a person or a government can pay off current debt simply by reducing expenditures. But past a certain point (let's go way out there and say that you owe many times what you take in during any given year) you can't reduce current spending enough to keep up with the payments on your debt... which, due to the delights of compounding interest and penalties, begins to snowball.

Most of every payment towards your debt now goes to interest, leaving your outstanding balance no smaller (and possibly even larger) than it was the month before.

At that point, you have both a spending problem AND a revenue problem. It absolutely started off as a spending problem, but at some point it also becomes a revenue problem.

Posted by: Cassandra at January 5, 2013 11:57 AM

If paying interest on your debt is essential, then the only way to avoid stacking up even more debt is either to control all of your other spending, or finding a magic money tree somewhere. Our debt has reached the point that no realistic growth strategies can cover it, no matter how much we try to raise taxes -- especially since excessive taxes will restrict growth. I know Keynesians think that excessive spending cuts will do so as well, but the essence of a belief in free enterprise and private markets is that spending helps the economy much more if it is done in the private sphere than if it is done by the government. Our available resources can't support increased spending by both the private sphere and the public sphere, so if one has to go, I nominate the public sphere.

Also, we are looking at two different kinds of debt. Part of the debt is classic debt: instruments for borrowed money that have to be repaid or defaulted on. The other part of the debt is promises of future benefits. The latter has to give. The promises were bollocks to begin with, and there ins't enough money in the world to pay for them when they come due.

Posted by: Texan99 at January 5, 2013 12:15 PM

If paying interest on your debt is essential, then the only way to avoid stacking up even more debt is either to control all of your other spending, or finding a magic money tree somewhere. Our debt has reached the point that no realistic growth strategies can cover it, no matter how much we try to raise taxes -- especially since excessive taxes will restrict growth.

From everything I've read, there are only two ways out of this situation: inflating away the debt (which is ruinous for society and particularly the elderly and less well off) or default.

I'm betting on default, but not until all other alternatives have been tried (and failed) :p

Posted by: Cassandra at January 6, 2013 11:57 AM

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