The wisdom of the New York Times comments section

As I write this, an agreement on raising the debt ceiling appears imminent and, posturing aside, some agreement was always inevitable.  Never mind that this is the stupidest conceivable policy debate: Congress has already approved the budget on which this spending is based so this debt ceiling battle is entirely about Republicans positioning for the 2012 elections.  The agreement, when it comes, will look like this: they will extract the maximum possible spending and tax cuts and then Republicans in vulnerable seats that could go Democratic or facing stiff (and, for their senior leadership, unwelcome) primary challenges will be allowed to vote ineffectually against raising the debt ceiling.

But having remarked on the dark sentiments given voice in the New York Times comments section, I feel duty bound to point out that the weight of their opinion on the debate to reduce the debt — which can be seen on this nifty interactive New York Times graphic — appears pretty sound.  Most of them propose, in effect, to split the difference between the two parties by raising taxes and cutting spending.  As a basis for compromise, splitting the difference has a certain intuitive appeal but it contributes, indirectly, to the bogus posturing that led us to this shameful political moment: by staking out the most radical position possible the Republicans have succeeded in moving the equilibrium point of the debate so that the difference gets split far closer to their true policy preference.  That, really, is what the last week of kabuki has been trying to achieve, setting them up nicely to run as the ‘tough love’ fiscal guardians.  As a side note, slashing government spending when the private sector economy is going through an extended period of deleveraging would be suicidal, but maybe that won’t be evident until after the elections.

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Postscript: So, if this whole debt ceiling battle was a tactical move by the Republicans, how should Obama and the Democrats have countered?  By committing early to the principle of lowering the budget deficit and setting certain economic growth and employment targets for when those spending cuts and tax increases would kick in: for example, in the first budget after twelve months of 3%+ growth and unemployment below 6%.  This would have achieved a number of things: it would have robbed the Republicans of the improbable but still somehow effective assertion that Obama’s policy preference (as opposed to crisis response) is for 10%-a-year budget deficits; it would have kicked the can of debt debate down the road, which would ordinarily be bad but is therapeutic when faced with a manufactured doomsday such as this; and it would have forced the debate, once it does happen, to recognize that there are growth and employment consequences to massive budget cuts, a fact that has been obscured by making the primary consequence seem like it is the breaching of the debt ceiling.

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Update (1 Aug): The agreement was announced, to much consternation.  It falls in the top left quadrant of the New York Times matrix (click image above to enlarge) — that is, in the vast field of mostly white space where few Times readers said they wanted the agreement to come out.  It contains no new revenue and significant spending cuts that become swinging across-the-board cuts if in the future bipartisan agreements are not reached on the outstanding issues.  Expect another round of hostage taking at that point.  But confirming my thesis that this was principally a platform-setting stunt for 2012, all the Republican candidates criticized the debt ceiling agreement and positioned themselves to run against it even though their colleagues were its principal authors.

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