Friday, March 01, 2013

And Then the Wolf Finally Came

We've been artificially and needlessly pushed to the economic brink so often by GOPers in Congress that on the eve of the March 1 mandatory across the board cuts in the funding of all federal programs and employment, Congress went home early without doing anything, the stock market hit a new high, and the American people aren't exactly caught up in the drama.  According to the overview of the latest Pew poll:
"After a series of fiscal crises over the past few years, the public is not expressing a particular sense of urgency over the pending March 1 sequester deadline. With little more than a week to go, barely a quarter have heard a lot about the scheduled cuts, while about as many have heard nothing at all."

It's a living example of the old fable, The Boy Who Cried Wolf.  Cry "Wolf!" enough times with the wolf not appearing and people are no longer thrown into a panic, or even calmly take precautions, they just ignore it.
That's what most people take to be the moral of the tale.

But that's not the end of the tale.  Because the wolf finally comes.  And no one is prepared.

Absent some last minute miracle, the wolf finally comes tonight in the form of the across the board disappearance of money to fund the federal government. We will see in the coming days and weeks just what will happen, and how ferocious this wolf turns out to be.   But we could see February 28 as the apex of the economy for the rest of the year or longer.  The U.S. economy seems to be turning around, the dollar is strong internationally, and while the rich are still soaking everyone else, there is at least still unemployment insurance and Medicaid, and older people (and others) can count on Medicare and Social Security at current levels.  We'll see what and how much of what the wolf eats up before it's done.

Chairman of the Fed Ben Bernanke testified to a Congressional committee the other day, and said what most other economists and smart people have been saying.  According to the New Yorker:

Departing from his statutory duty of reporting to the Senate Banking Committee on the Fed’s monetary policy, Bernanke devoted much of his testimony to fiscal policy, warning his congressional class that letting the sequester go ahead would endanger the economic recovery and do little or nothing to reduce the country’s debt burden.

There are plenty of articles about how bad this budget sequester is, for everything from daycare to national defense, especially long term but with lots of short term pain.  Just allowing it to go into effect for one day (though it is scheduled to last for ten years!) will cost the federal government a lot of unnecessary expense.
But even though other crises have been averted or dialed back, there are reasons to believe this one will go on for awhile.

One reason is that its basis reflects a failure to communicate--or at least a failure to understand--the real situation of government spending and debt. There are those who think unleashing this wolf is worth it because finally the federal deficit goes down.  It turns out that most American know shit about the federal deficit, let alone the ins and outs of government spending. Something like 6% of Americans apparently realize that the Obama administration has been cutting government spending and dialing down the debt.  That's just a question of fact.  Just as serious is the failure to communicate that government outlays are a vital part of a healthy economy as well as a strong civilized society--that the decrease in government employment at all levels is in fact a major reason the economic recovery is as slow as it is.

The Pew poll is just the latest to show how confused the public is on this.  They say they want the deficit cut as their highest priority, but can name not a single program they're willing to cut.  Except maybe foreign aid, which is commonly thought to be a huge part of the budget, whereas in fact it's tiny.  And they also agree that spending shouldn't be cut when recovery is so tenuous.

The second reason is the most obvious: more than any time in my memory and possibly a lot longer than that,   the opposition between Democrats and Republicans in Washington is a state of war.  So far firearms are not involved, but the opposition is just as profound.

It is worse than it was six months ago or even two months ago, because Republicans have gone faster and harder to the extreme right.  Look no further than the sequestration:  all President Obama is asking for in terms of revenue is cutting tax loopholes on the wealthy and big corporations,which pretty much was supported by Mitt Romney in his presidential campaign.  That was way back in--do you remember?--October.

This time the wolf may be a dog of war.  Political war but just as total.

No comments: