Circus Sign

Under The Big Top

Hey looky, the circus is back in town – and here come the two lead clowns, one red clown and one blue clown – specially chosen by the Ringmaster:

Like harbingers of a hard winter, anti-entitlement spokesmen Alan Simpson and Erskine Bowles have returned to the nation’s capital. These constituentless advocates for a widely disliked set of policies were given their usual unwarranted level of press coverage. Somewhat messianically, Simpson told Politico that ‘we have to be in reserve’ in case politicians ‘put their country at risk’ – by failing to impose the destructive austerity policies favored by Bowles and Simpson’s backers.

‘But don’t use our names,’ adds Simpson, ‘because that might be too volatile. We’re both on the witness protection program now.’ …

It’s all part of a wider Washington offensive. As another recent Politico news item reported, ‘Fix the Debt is ramping back up its lobbying efforts as government funding fights become the topic du jour on Capitol Hill.’ Politico listed a group of Republican and Democratic politicians who ‘met Monday with Maya MacGuineas, head of the campaign, and members of the group’s CEO council and small business members.’

The Ringmaster is busy as hell trying to pack all of the clowns into the car. The red clowns and the blue clowns keep complaining about each others flatulence while in the car and continuously stream in and out of it. The clowns all agree that they want to get into the car and get on with the show, but the Ringmaster needs to come up with the correct enticement. The Ringmaster proposes to rob the audience and distribute the proceeds amongst the clowns and their cronies; the clowns don’t trust the Ringmaster to take enough from the audience to make it worth their while.

GOP-White House ‘Grand Bargain’ Talks Collapse:

Senior Republican US senators say talks with the White House about a sequester-addressing fiscal deal have broken down, and they say any future talks must include Democratic members.

Sen. Bob Corker, R-Tenn., was the first among a group of GOP senators with whom senior White House officials had been talking all summer about a ‘grand bargain’ fiscal deal to reveal those talks had stalled. Corker told reporters the White House has lost credibility with Republican senators on several issues, including pursuit of a big fiscal deal. …

Several participants confirmed efforts with the White House to strike a deal that lessens or voids sequestration have been scuttled, and signs of hope for a Pentagon and defense sector eager to avoid more cuts to planned military spending began to recede. …

Democrats from states with a large defense-sector presence are eager to find a way to turn off the next round of cuts to planned defense spending.

The clowns all agree that the audience hasn’t brought enough stuff with them into the tent to make it worth their while. The Ringmaster has proposed to steal their retirement securities. Will he now agree to drop his demand for taxes on the clowns and their cronies to sweeten the deal? Stay tuned…

“All the cuts they need are there to avoid a possible shutdown:”

It’s impossible to know what will happen in a fluid situation like this, of course. But it pays to be a bit paranoid. When you find yourself in a position of counting on your enemies to be so stupid as to keep saving you from your friends, you are in a precarious position. …

[I]t’s important to remember that the earlier deals didn’t fail to materialize because the two sides disagreed on cutting Social Security. They didn’t. It failed because the president refused to give up on some sort of tax hike in exchange. … Republicans have added another demand: defund Obamacare. If they want to come up with some sort of agreement in which the GOP saves face, to me the logical way to do that would be for the Democrats to agree to drop their demand for tax hikes if the Republicans drop their demand for defunding Obamacare. What’s left of the deal? You guessed it.

Special Bonus – What Happened Last Time The Circus Was In Town

Remember the last time the circus was here? Yes, that’s right, you got fleeced by a bunch of carnies! One of the big clowns, Pete Peterson, paid a couple of academic con-persons to shill for austerity and the Ringmaster got away with the con. Take a look at what it cost you last time. Are you ready to let the Ringmaster do it again?

Once again, the Beltway fell for cherry-picked data—and you paid the price:

So what has austerity cost us in the United States? The full price is hard to calculate, but the Congressional Budget Office figures that sequestration alone has cut GDP growth by about 0.8 percentage points. Since sequestration accounts for less than half of total belt-tightening over the past couple of years, a rough guess suggests that our austerity binge has cut economic growth by something like 2 percentage points—about half the total growth we might normally expect following a recession. Ironically, this means that we have indeed suffered the halving of economic growth that Reinhart and Rogoff estimated we’d get from running up the national debt above 90 percent. But we got it from not running up the debt. …

The obvious question at this point is: Why? It’s not as if we needed the skills of Nostradamus to predict the consequences of austerity. It’s pretty much textbook economics. … Reinhart and Rogoff were pushing on an open door. There were lots of powerful actors—Pete Peterson, Grover Norquist, the Washington Post editorial page—ready to leap at the chance to pretend that their pursuit of austerity was motivated not by politics or self-interest, but merely by a virtuous desire for economic growth. The 90 percent paper provided them that cover.

So have we learned our lesson from all this? Of course not. No further stimulus is even remotely on the table, either in the United States or in Europe, and Republicans are already promising another debt ceiling crisis unless Obama agrees to yet more spending cuts. The inmates took over the asylum three years ago, and they show no sign of leaving.

Austerity is working out fine for the 1 percent: Their jobs are safe, their investments are growing, and their taxes are low. But the rest of us are paying a high price in the form of slow growth, high unemployment, and stagnant wages for years to come. All things considered, we’ve been remarkably tolerant of our fate. The folks who run the world might do well to ponder how long that’s going to last.

Photo by Jackie under Creative Commons license