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KRUGMAN: Whose answer would best solve budget issue?

  • FILE - In this Nov. 30, 2010 file photo, former U.S. Sen. Alan Simpson, left, and former White House Chief of Staff Erskine Bowles take part in a news conference on Capitol Hill in Washington. Simpson on Wednesday, July 13, 2011 said he fears politicians on both sides of the contentious fight in Washington over whether to raise the national debt limit are losing sight of the most important question: what’s best for the United States _ not how they can advance their own political agendas. (AP Photo/Alex Brandon, File)

They're baaack! Just about two years ago, Erskine Bowles and Alan Simpson, the co-chairmen of the late unlamented debt commission, warned us to expect a terrible fiscal crisis within, um, two years unless we adopted their plan. The crisis hasn't materialized, but they're nonetheless back with a new version. And, in case you're interested, after last year's election — in which American voters made it clear that they want to preserve the social safety net while raising taxes on the rich — the famous fomenters of fiscal fear have moved to the right, calling for even less revenue and even more spending cuts.

But you aren't interested, are you? Almost nobody is. Bowles and Simpson had their moment — the annus horribilis of 2011, when Washington was in thrall to deficit scolds insisting that, in the face of record-high long-term unemployment and record-low borrowing costs, we forget about jobs and concentrate exclusively on a "grand bargain" that would supposedly (not actually) settle budget disputes for ever after.

That moment has now passed; even Bowles concedes that the search for a grand bargain is on "life support." Let's convene a death panel! But the legacy of that year of living foolishly lives on, in the form of the "sequester," one of the worst policy ideas in our nation's history.

Here's how it happened: Republicans engaged in unprecedented hostage-taking, threatening to push America into default by refusing to raise the debt ceiling unless President Barack Obama agreed to a grand bargain on their terms. Obama, alas, didn't stand firm; instead, he tried to buy time. And, somehow, both sides decided that the way to buy time was to create a fiscal doomsday machine that would inflict gratuitous damage on the nation through spending cuts unless a grand bargain was reached.

Sure enough, there is no bargain, and the doomsday machine will go off at the end of next week.

There's a silly debate under way about who bears responsibility for the sequester, which almost everyone now agrees was a really bad idea. The truth is that Republicans and Democrats alike signed on to this idea. But that's water under the bridge.

The question we should be asking is who has a better plan for dealing with the aftermath of that shared mistake.

The right policy would be to forget about the whole thing. America doesn't face a deficit crisis, nor will it face such a crisis anytime soon. Meanwhile, we have a weak economy that is recovering far too slowly from the recession that began in 2007.

And, as Janet Yellen, the vice chairwoman of the Federal Reserve, recently emphasized, one main reason for the sluggish recovery is that government spending has been far weaker in this business cycle than in the past. We should be spending more, not less, until we're close to full employment; the sequester is exactly what the doctor didn't order.

Unfortunately, neither party is proposing that we just call the whole thing off. But the proposal from Senate Democrats at least moves in the right direction, replacing the most destructive spending cuts — those that fall on the most vulnerable members of our society — with tax increases on the wealthy, and delaying austerity in a way that would protect the economy.


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