Super Committee, Super Fail

By Lloyd the Idiot

It was born of failure, destined for failure.  Congress, which for 30 years had been unwilling to match federal spending with federal revenues, expertly and predictably did what any astute politician would do – transfer responsibility to someone else and defer any unpopular decision – by creating the so-called Super Committee.  No doubt, the committee will take its place in the Pantheon of Epic Failures alongside Waterloo, New Coke and Joanie Loves Chachie.  Oh, and certainly don’t forget to include Gramm-Rudman-Hollings on that list.  Remember that?  The magnificent Budget Bill to End all Budget Deficits. Yup, big success that was.

With each passing day, and the $5 billion increase in the national debt that comes with it, my growing despair causes me to look closer and closer at the Tea Party.  Yes, they’re flat out crazy on some economic issues, but, like the only single girl in the bar at the end of the night, Tea Party ideas on spending are looking better and better.  If we are going to get serious about our children’s economic future, drastic measures must be taken now.  I know my co-bloggers disagree, but the nuclear option – that is, default – should not be taken off the table.  Better to suffer the consequences now than to feed the $15 trillion monster with further congressional cowardice.

The Super Committee is tasked with slaying the beast but armed only with spitballs – and unable to agree on how to use even those limited weapons.   Ultimately, our only  real hope is for the Republican freshman in the House to hold strong when the debt ceiling is voted on again. Let’s just hope for some real courage and leadership this time.


Comments

  • JTR says:

    And the slope of the curve does not even think about slowing down!

  • David Dickinson says:

    Yes, Lloyd. Come to the dark side. Use your anger.

    I think default should be considered, but likely isn’t the correct answer. The big advantage is that it guarantees there will be no more credit for the federal government and would force a balanced budget. But, obviously, it would change the entire world financially and would force an immediate balanced budget. That is, the credit cutoff would be immediate and we would have to make the immediate $180B/month cut needed to balance the budget. The world would be tossed into chaos, most likely.

    I think the better option is to not raise the debt ceiling. Then we can start to pay it off slowly.

  • edmundburkenator says:

    You do know this is solvable if we raise taxes and cut entitlements and Pentagon, right?

    It’s called Bowles/Simpson.

    But chaos through default is probably better. Carry on.

  • D-33 says:

    Lloyd – I admire the forcefulness of how you take up your moniker – the Idiot. The full faith and credit of the United States should never be on the table in a political debate. This problem can be solved with a mix of defense and discretionary spending cuts, entitlement reform and new revenue from allowing the Bush tax cuts to expire. What is missing is political will from both sides, but mainly House Republicans who are beholded to Grover Norquist. That debt default, and the ensuring fiscal chaos in the markets, is a Tea Party GOP weapon in a disagreement, disqualifies them from responsible political governing in our country.

  • David, next thing you’re going to say is you’re my father!

    Just to be clear, I don’t think we should default as a strategy, but we shouldn’t be panicked into increasing the debt ceiling because of the threat of a “default.” Cut everything- across the board cuts. Simple.

  • edmundburkenator says:

    The debt ceiling is largely a after-the-fact item. Not raising it says one thing: you don’t give a shit about your creditworthiness/your future costs to borrow.

    And borrowing has to happen. These bullshit folks that draw some equivalence between people’s home budgets and the Federal government are lying to you or stupid. More and more, I think they are simply stupid.

    A BBA for a state is one thing. For a country? No.

  • Ref says:

    It takes serious cognitive dissonance to preach that deficit spending will be the downfall of America while simultaneously encouraging policies that will decrease revenue. Grover Norquist is holding one of our two major political parties hostage with his own bastardized concept of conservative purity.

    The fact is, we could easily balance the budget via the means previously mentioned by EB. Capital gains should be taxed like all other income. Considering that some of the richest Americans derive their income solely or overwhelmingly from capital gains, the Tea Party-driven idea of eliminating the capital gains tax is suicidal. The Pentagon budget needs to be reined in to pre-Reagan levels. And yes, there is room to cut entitlements as well.

    The Tea Party solution is akin to saying “we’ve tried nothing and we’re all out of ideas”. The deficit is suddenly an issue for them, after 8 years of deficit spending, because it’s easy to prey upon an American populace that is deeply worried about the state of the economy. Tea Partiers love the idea of a government default because it will force the government out of places most of them don’t think it belongs in the first place. Most reasonable Americans, however, would prefer to maintain a reasonably clean environment, well funded schools, some social safety net, investment in technological advancement, and an infrastructure that reflects the greatness of our country. As far as I’m concerned, the Tea Party is gambling with our economic dominance and great quality of life to prove some sort of twisted political point, and I think it’s bullshit.

  • Cato the Elder says:

    “Capital gains should be taxed like all other income. ”

    Perhaps you should go shovel that shit on one of the prog blogs. First, in most cases the capital used to generate the gain has been taxed once as ordinary income. Secondly there’s a symbiotic relationship between risk and reward, and putting money to work is always a risk. The “reward” in this case is you get to pay a lower rate when the government put its hand in your pocket for the second time. Remove the incentive and you’ll have less risk-taking and therefore lower investment rates. Third, history tells us that we derive more revenue when the cap gain rates are lower: http://www.econlib.org/library/Enc/CapitalGainsTaxes.html

    Now, if you’re shilling for higher cap gain rates because you have some twisted idea that it’ll be good for “social justice” and it makes you feel all warm and fuzzy inside to make yourself think that you’re going to stick it to the rich, fine. However, you don’t get to pretend that it would be a significant driver of revenue, because the historical trends contradict that position.

  • Tax hikes, defense cuts, discretionary spending reductions mean nothing to the whole scheme of things. At best they will be short-term band-aids.

    There will be no long-term balanced budget without serious Social Security and Medicare reform. And that will never happen because 99% of the politicians in Washington are completely worthless. They only care about being re-elected and this would be political suicide.

    They will forever procrastinate until the day of reckoning, the eventual default of the American government.

  • Ref says:

    “Perhaps you should go shovel that shit on one of the prog blogs.”

    Funny, I mistook this blog for a place that welcomed alternative points of view. It’s also funny how suggesting a policy change that even Reagan agreed to automatically makes me a “prog” in your eyes, whatever the hell that means. It’s not a matter of “social justice” other than in the sense that people that make their money solely or predominately through speculation should at the very least be taxed the same as everyone else.

    As for the old “taxed twice” canard… what’s your point exactly? I gave my mechanic $400 of my already taxed income to repair my car. Does that mean that he shouldn’t have to pay any taxes on the payment he received? Or perhaps I shouldn’t have pay a sales tax because I already paid my state income tax?

  • Loudoun Insider says:

    Ref, we do welcome varied points of view, sometimes you just have to take a little grief!

  • Ref – Below is my ‘shovel full’ concerning tax reform.

    http://www.clarkeconservative.com/p/tax-reform.html

  • Cato the Elder says:

    @Ref

    I’m trying to see your point of view, but I just can’t seem to get my head quite so far up my own ass.

    But I like your auto mechanic analogy, in fact I’m going to use it. You probably handed that money to a guy with an ASE certification who used at least part of that to purchase parts and supplies that bear a warranty. In other words you paid to have a part replaced and the company guarantees that part for some period of time. If the part fails you point to the warranty and the company replaces it free of charge to you. Your 400 bucks bought a rock-solid guarantee that you’re going to have a functioning alternator for two years (or whatever).

    As you may or may not be aware, risk capital doesn’t work like that. In terms of return you have no such guarantee. Zip. Zero. Nada. If you make a 200K investment in IBM, the following year the value of that investment could be 100K and you have no avenue of recourse to recover your lost 100K. Most securities don’t come with a warranty. So, to encourage people with capital to invest it versus stuff it in a mattress the government generously offers a gains rate of 15% to compensate the investor for assuming the risk.

    You also seem to be laboring under the delusion that short term speculation is a capital gain. It’s not – you have to put your money at risk for a year or more to qualify for the 15% rate. If I or any other derivatives trader shorts an oil contract at the bell only to harvest the gain the next day it’s taxed at ordinary income. In other words, the eeevvvil speculators are paying the full freight.

  • G.stone says:

    “You do know this is solvable if we raise taxes and cut entitlements and Pentagon, right?”

    This is how we got here. Please just raise taxes and we will balance things out. Cut entitlements, no kidding.

    Raise which taxes and on who ?

    Bowles / Simpson, Super Committee, Graham / Rudman bla bla bla.

    These ” Blue Ribbon Committees ” are Washingtons ways of spending what they want, when the want and passing the buck forward. It always ends up that raising taxes in big part of the mix as the Size, Scope and Cost of Gov’t grows. Cuts are NEVER actual cuts they are always reductions in the size of growth whereas tax increases are actual increases. This is like compound interest on Steroids working in reverse.
    How many times do we have to go down this same road, be confronted with the same issue and the same tired respones that never fix the problem.

  • I was thinking about this this morning and would like opinions on the following idea.

    The idea is to “weaponize” the debt and, in particular, default on Chinese debt. The rationale is that, as I heard on NPR a few days ago, China steals an enormous amount of US Intellectual Property (it was either a total of $300B or $300B a year, I can’t remember). In effect, we are cancelling their debt for what they stole.

    This would put an end to Chinese held debt, but it would also slow the appetite for Govt bonds greatly and force better financials onto the US Gov without a complete default/collapse.

  • edmundburkenator says:

    “This is how we got here.”

    G, we got here by lowering taxes and raising spending. Remember Bush tax cuts and two wars? Now, it’s certainly more complicated than that, but I know you like to keep it simple.

  • ACTivist says:

    Fine ideas one and all. I particularly like the “I was listening to NPR” one. It is never a problem of lack of funds. The problem is discipline. The government continues to GROW and to what end? These created departments, entitlement programs, czars are and never were necessary. Remove them and take the entitlements to a term of extinction. This is not what the government was intended in either size or scope. Take compassion away from the issue and stick to the Bill of Rights. The first thing to do is to take Congresses automatic 11% yearly raise (this is different from the raise they vote themselves) and reduce their salary 20%. Flat tax, allow the markets to take care of the things the gov’t has no business meddling in and enforce EQUAL percentage trade agreements ($1 export to $1 import).

    The problem is trying to evolve/ change/ con-volute the system from its original intent and design. Do you people remember the saying “don’t screw with mother nature”? That’s because it makes an imbalance from a natural order. Any ancillary item you feel is necessary for our government to tackle/takeover can be taken care of by a PRIVATE scheme/charity using YOUR own time, YOUR own money and any FELLOW THINKERS you can coax into the fold. You don’t pull me into the collective if I don’t want to participate. I already know what I HAVE to commit to and that is written in the Constitution.

  • Ref says:

    “In other words, the eeevvvil speculators are paying the full freight.”

    I didn’t say the speculators are “evil”… I just happen to think there is no reason for the U.S. government to coddle them. FWIW, despite your assumptions, I know how the capital gains tax is structured. Medium to long term investments and speculation are not mutually exclusive. I’m surprised you didn’t already know that, because your insistence on acting like a haughty prick to perfect strangers had me believing you were an authority on the topic.

  • G.Stone says:

    “G, we got here by lowering taxes and raising spending”

    ED, Laffer is on line one, he wants go over this with you one more time.

  • G.Stone says:

    ED.

    Lets say for the sake of argument that we are going to raise taxes. Is it your assertion that this has ever worked before ? Is it your contention that when we raise taxes that our Gov’t will not simply spend that money and then some, via a broken budget system
    Please show me the signs of fiscal restraint, the history on this is dismal.
    We both know the dirty little secret is in the budget process itself. A deal is made along the lines that you want and here is how it as gone EVERY time since Jesus Christ was in the second grade.

    Deficit occurs. Oh Shit ! Lets raise taxes and cut spending. OK !
    Taxes are raised , marginal rates, Corporate, capitol gains , death tax , excise, bla bla bla. A tax or combination of taxes are selected in order to bring balance.
    Then it is time to cut . Everyone gets alligator arms like a Tight End going over the middle knowing he is going to get creamed by the Free Safety. It is a chicken shit half hearted attempt. In other words they make cuts to the RATE OF INCREASE and do not make actual cuts. They have been doing this so long that it is accepted by many ( majority of Dem party and those who flunked math in High School ) as an actual cut. Budgets are NEVER cut , their rate of increase is slowed in exchange for higher taxes. It is a budgetary scam !

    You do not need to be an Actuary to figures out where the trend lines go on this formula, a formula that has been in existence for a very long time. It componds upon itself. When you do this over and over for 70 plus years you create what we now have, a budget process that is dishonest and broken. A process not based on math and economics but political math, the kind that is bent, shaded, and yes even tortured to give you the results you want without having to admit to the charade, be grounded in the real science of crunching numbers, or cause any pain at all.

    By your own admission cutting spending is part of the solution. If so, why not make the cuts first and see what happens ? If we all agree that we have a SPENDING problem, then there should be no issue with a bill that rolls back spending. Then we can see how markets react , how the economy reacts overall in order to determine is additional revenue is required.

    BTW, we have not even touched on the flood of regulation that has become an anchor around the neck of this economy.

    I have to ask myself this , why in the hell am I arguing economic policy with a guy who supports the current Presidents economic policies ? You do believe he is doing a good job on the economy don’t you ? You do believe as he puts it we are heading in the right direction at the beggining of year 3 don’t you? You do believe that massive Gov’t spending via Stimulus and new Gov’t programs is key component of the solution don’t you ? You do believe that flushing BILLIONS down a rate hole via Energy loans to Political contributors for Green Energy Companies that are or on the verge of bankrupcy don’t you ?
    You do believe in an overarching philosophy that has Gov’t producing some 80,000 pages of new Gov’t regulation as a way to get the economy mocing again dont you ?

    You have hitched your wagon to the worst economic team in recent history. hell, you can make the argument these guys are the worse since the founding of the Republic.

    With the exception of Geitner, where are the members of the brain trust that developed Obamanomics ? They are all gone back to the fever swamps and faculty lounges from where they came. They are distancing themselves from this President , his economic policies knowing the results are not there, the predictions were not only wrong but that their program was actually counter to improving the economy.

  • edmundburkenator says:

    Usually G, you do Demint with less words. You should probably stick to that.

    Go read Simpson/Bowles again (or for the first time) and let me know what is wrong with that approach.

    I know you want to roll the country back to, what, 1880ish, but couldn’t you just say so plainly?

    For you, the 20th century was when the US was lost in some kind of ideological wilderness…

  • G.Stone says:

    EB. Nice try. A very Red Herring indeed. As usual when asked pretty simple questions, very specific I might add your answer to to say, look over there or in this case , look he wants to roll back to the 1880’s and drown puppies in the river on the way.

    I point out the corrupt and unworkable budget process and you want to whistle past the graveyard passing the buck to yet another “Commission ” or Super Committee.

    Does Simpson / Bowles have some good points sure. No shit, but so what ! Where is the evidence that this Gov’t in the last 50 years has extracted those things that are good and helpful without heaping into the mix counter measures that do nothing to solve the problems , and in fact after it is all said and done expand the size and scope and hence the costs of gov’t.

    For Chrits sake we can’t even tackle a tax code that is the basis for that great sucking sound and a massive anchor to economic growth.

    This from an article in which they talk about GE’s corporate taxes.

    “I asked the GE tax officer, ‘How long was your tax form?'” Ryan said. “He said, ‘Well, we file electronically, we don’t measure in pages.'” Ryan asked for an estimate, which came back at a stunning 57,000 pages. When Ryan relayed the story at the townhall meeting in Janesville, there were audible gasps from the crowd.

    It took 57K pages to take advantage to every loop hole in a tax code built over decades of stacking crap atop more crap. All of this to pay $0. on 14 billion in profits.

    Was Graham / Rudman a good idea ? Legislation put together by grown ups, serious men and woman living in the now. Sure , and like every other commission providing political cover to both houses failed.

    Let us pretend for a minute that you and I agree 100% on the findings of Erskin Bowles and Sen Simpson. If implemented and we end up in the same place because the plan does not reform the budget process and totally gut the tax code, will you then concentrate your focus on where the rubber hits the road and stop trying to define your detractors as neighbors of Wyatt Earp.

    You don’t do yourself much good by making the assertion that those for whom you disagree are simply 100 years behind the curve and that you and a segment of the enlightened have the solutions based on the intellect it takes to dissect such complicated issues. Complicated yes, but by our own making and to no good end.

    It was this minset that gave us 57,000 page tax returns.

  • edmundburkenator says:

    “Let us pretend for a minute that you and I agree 100% on the findings of Erskin Bowles and Sen Simpson. If implemented and we end up in the same place because the plan does not reform the budget process and totally gut the tax code…”

    (I’ll leave off the hyperbole)

    I agree we need to reform the tax code (and said so often, so I don’t know why you’re bring this up). S/B was tasked to fix a wicked-hard problem and it does. Take it and move to the next problem. The boil-the-ocean approach you seem to advocate is an ideological DREAM.

    Either wake up or get used to being consigned to being that guy that want’s to start at zero when negotiating to buy a car.

  • edmundburkenator says:

    Just read this and thought it germane:

    “Requiring the American people to actually pay for all of the government they receive is, as [William] Niskanen and others have convincingly argued, the most effective way to limit its growth. Right now the anti-tax bias of the Right results in shifting costs onto future generations who do not vote in today’s elections, and enables liberals to defend against spending restraints very cheaply. Instead of starving the beast, conservatives should serve the check.”

    http://breakthroughjournal.org/content/issues/issue-2/modernizing-conservatism.shtml

  • G.Stone says:

    Interesting read indeed. Much of which I am in total agreement. I do suggest however, the author gives too much credit to those in Washington believing that they would know what to do with the check when it was handed to them. It is in their DNA to hand the check to the adjacent table and dine and dash.

    The all or nothing argument and the general misconception that conservatives want to remove all welfare , Gov’t assistance and programs is not productive and frankly not relevant. We all know the house we built, and know full well it will never be gutted to the studs. Your mention of the 1880’s yesterday is along the same vein, cute, but a waste of time. ( Boy do I miss Jack Kemp )

    “Political and economic indicators bring more grim news. Thirty years after the arrival of the Reagan Revolution, government is bigger than ever. The Reagan years appear to have been little more than a mild speed bump in the progress of ever-larger government. The regulatory state advances relentlessly on every front. The soaring national debt threatens economic oblivion sooner or later. In short, the Reagan era, for all that was accomplished, was not an analogue to the New Deal era. In fact, the much-vaunted Reagan Revolution was not revolutionary and failed to alter the nation’s basic long-term political trajectory.”

    So true, the present day numbers prove this to be accurate .Now square this with support for the current administrations agenda to spend more, expand more and make parring back or turning the ship next to impossible.

    “The regulatory state advances relentlessly on every front. The soaring national debt threatens economic oblivion sooner or later. ”

    If you believe this statement to be true and yet support the current Presidents agenda then I suggest you don’t know whether to shit or go blind.

  • Steve says:

    There’s a critical Presidential Debate taking place in Iowa today but since the group putting it on is conservative it isn’t getting much press outside of Iowa

    http://www.citizenlink.com/2011/11/18/thanksgiving-family-forum-available-worldwide/

    http://tinyurl.com/tfforum2011

  • […] Good luck with that. Not to be too much of a downer, but it sounds a lot like the congressional  Super Committee, and we know how well that worked out. […]

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