I made a mistake in running out of time to jot down some slope/cliff/crevasse/precipice notes and now there's just too much reaction for my liking. This seems quite undeserving because I don't see much to cheer about. Somehow one side of the spectrum has made it out to be a deal-that-saved-mankind when the reality is completely different. That said, the House Republicans really do play nasty and have now wrought the wrath of the scary Chris Christie! I'd be scared, Christie could snap Cantor and Boehner with his left hand - yes, picture that for a second will you.
Anyways...this is what was going around before the deal passed, note the consistency at least! DeLong makes the point of the actual difference the deal made from the status-quo negative impulse the economy would have suffered - not that great you see:
" The big reason to make a deal before January 1, 2013 was that detonating the "austerity bomb" would impose 3.5% of fiscal contraction on the U.S. economy in 2013, and send the U.S. into renewed recession. It was worth making a good-enough deal--sensible long-run revenue increases and tax cuts to close the long-run fiscal gap plus enough short-term fiscal stimulus to make the net fiscal impetus +1.0% of GDP--in order to avoid renewed recession. But by my back-of-the-envelope count, the deal the Obama administration has agreed to still leaves a net fiscal impetus of -1.75% of GDP to hit the U.S. economy in 2013. That is only 40% of the way back from the "austerity bomb" to where we want to be."
Krugman is more severe on Obama, claiming that although it seems like a 'progressive' victory - no benefits cut and tax increases for the first time - you can't help feeling cheated. To him, the POTUS has been drawing lines in the sand and repeatedly proceeded to erase them and draw another...and another.
And Jeffrey Sachs is on the next level of critical. From the HuffPo:
"Even Mitt Romney could never have accomplished for the Republicans what Obama has just done for them...Allowing the Bush tax cuts to expire today would have raised tax collections by around 2.5 percent of GDP, to around 21 percent of GDP by the end of the decade, thereby allowing the government to pay its bills assuming that the useless wars are ended and the bloated Pentagon budget is brought under control...With a revenue baseline of around 18 percent of GDP, there will be years of harsh spending cuts ahead. What will they be? Medicaid? Food Stamps? Roads? Water? Renewable energy? Education? Pre-School? Environment? It will probably be "All of the above." ..."
And lastly, Mankiw came down hard as well - from another angle - stating that everything the BS (yes that's what it is!) commission had espoused has largely been ignored - a perfect example of poor fiscal reform.
You see, the problem is in everyone pretending to be two saviors at once - for the country's 'bankruptcy' (let's face it, some people are still hell bent on comparing the economy to a household!) and for social insurances. And it's hard to be both at once.
Once the deal had been passed, naturally there was a varied response across the board. Tellingly, Andrew Semwick, the CEA's Chief Economist a decade ago, had this to say on the winner of the fiscal cliff,
"Obviously, former President George W. Bush. Despite how much he has been vilified in the years since his departure from office, the Congress and the President yesterday decided to ratify almost all of his tax policy agenda...that even if top marginal tax rates are not lower than in the Clinton years, taxpayers with the highest incomes are still paying lower taxes because all the tax rates below the top are lower...In over eight years of blogging, you won't find a single word of praise for the Bush-Obama tax cuts. As a matter of revenue, we now permanently have a tax system that will not raise enough revenue to cover our expenditures..."
Anyways...this is what was going around before the deal passed, note the consistency at least! DeLong makes the point of the actual difference the deal made from the status-quo negative impulse the economy would have suffered - not that great you see:
" The big reason to make a deal before January 1, 2013 was that detonating the "austerity bomb" would impose 3.5% of fiscal contraction on the U.S. economy in 2013, and send the U.S. into renewed recession. It was worth making a good-enough deal--sensible long-run revenue increases and tax cuts to close the long-run fiscal gap plus enough short-term fiscal stimulus to make the net fiscal impetus +1.0% of GDP--in order to avoid renewed recession. But by my back-of-the-envelope count, the deal the Obama administration has agreed to still leaves a net fiscal impetus of -1.75% of GDP to hit the U.S. economy in 2013. That is only 40% of the way back from the "austerity bomb" to where we want to be."
Krugman is more severe on Obama, claiming that although it seems like a 'progressive' victory - no benefits cut and tax increases for the first time - you can't help feeling cheated. To him, the POTUS has been drawing lines in the sand and repeatedly proceeded to erase them and draw another...and another.
And Jeffrey Sachs is on the next level of critical. From the HuffPo:
"Even Mitt Romney could never have accomplished for the Republicans what Obama has just done for them...Allowing the Bush tax cuts to expire today would have raised tax collections by around 2.5 percent of GDP, to around 21 percent of GDP by the end of the decade, thereby allowing the government to pay its bills assuming that the useless wars are ended and the bloated Pentagon budget is brought under control...With a revenue baseline of around 18 percent of GDP, there will be years of harsh spending cuts ahead. What will they be? Medicaid? Food Stamps? Roads? Water? Renewable energy? Education? Pre-School? Environment? It will probably be "All of the above." ..."
And lastly, Mankiw came down hard as well - from another angle - stating that everything the BS (yes that's what it is!) commission had espoused has largely been ignored - a perfect example of poor fiscal reform.
You see, the problem is in everyone pretending to be two saviors at once - for the country's 'bankruptcy' (let's face it, some people are still hell bent on comparing the economy to a household!) and for social insurances. And it's hard to be both at once.
Once the deal had been passed, naturally there was a varied response across the board. Tellingly, Andrew Semwick, the CEA's Chief Economist a decade ago, had this to say on the winner of the fiscal cliff,
"Obviously, former President George W. Bush. Despite how much he has been vilified in the years since his departure from office, the Congress and the President yesterday decided to ratify almost all of his tax policy agenda...that even if top marginal tax rates are not lower than in the Clinton years, taxpayers with the highest incomes are still paying lower taxes because all the tax rates below the top are lower...In over eight years of blogging, you won't find a single word of praise for the Bush-Obama tax cuts. As a matter of revenue, we now permanently have a tax system that will not raise enough revenue to cover our expenditures..."
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