Regardless of the title of the blog, I’m not an economist. I like to think I’m pretty well read on the subject, and I try to stay informed, but I refrain from blogging on purely economic matters because I just don’t have the background to be sure of myself.
That said, I know sense when I see it. And Bruce Bartlett and David Frum are making a lot of it. Here’s Bruce today:
Continuing resolutions are like omnibus appropriations bills. They simply say that departments and agencies may continue operations at the previous year’s appropriations level, or they may allow spending at a higher level to account for inflation, or they may have detailed instructions for changes in appropriations levels. The C.R. passed this week contains $4 billion of cuts in a $1.3 trillion budget.
Total spending, of course, is much greater than $1.3 trillion; this is just the portion appropriated annually to run the government’s core functions. The rest – another $2.5 trillion – is on automatic pilot, so to speak. This is spending for entitlement programs such as Social Security and Medicare, as well as interest on the debt, which have, in effect, permanent appropriations. Spending for such things cannot be cut simply by spending less each year; the law governing benefit formulas and eligibility would have to be changed…
I think it’s mostly simple ignorance about how the budget process works that is preventing House Republican freshmen from accepting that they simply can’t do everything they promised they would to rein in spending right now. House veterans know that the freshmen have bitten off more than they can chew, but are too frightened of retaliation by the Tea Party to say so. In a few months, when the freshmen have finally exhausted themselves with futile efforts to balance the budget instantly, they’re going to greatly regret that they didn’t develop a long-term plan and properly use the budget process, which was created to do exactly what they claim they want to do: get the nation’s finances in order.
I already blogged on my frustrations with politicians today. I won’t do it again.
With a new Republican majority in the House, you’d think this would be a moment to advance a positive Republican economic alternative. But no. Today’s GOP is a party with a budget policy, not an economic policy. As Bruce Bartlett notes, it is not even a well-considered budget policy.
In an alternative universe, the opposition Republicans could have coalesced two years ago upon an active anti-recession program consistent with free market principles and grounded in modern economics:
- A payroll tax holiday put into place early
- A two-year extension way back in 2009 of the Bush tax cuts to increase confidence that tax increases would not hit in 2011
- A small and temporary program of federal spending on infrastructure and aid to state governments
- Calls for active monetary policy, including a second round of quantitative easing back in April 2010 rather than waiting till late fall
- Extension of jobless benefits for longer periods of time
- A program of deficit reduction over time, going into effect only after the job market began to recover
- Enforcing immigration laws more tightly and lowering legal immigration flows
Instead, constrained by politics and by economic popularizers who rejected not only John Maynard Keynes, but also Milton Friedman, Republicans have for two years coalesced around a program that might be described as: “No soup for you.”
David Frum was an economic speechwriter for President George W. Bush. Bruce Bartlett was a domestic policy adviser to President Ronald Reagan and a Treasury official for President George H.W. Bush. I don’t think either qualifies as “liberal”. And yet, in today’s climate, I bet there’s many that think they’ve abandoned “conservatism”.
I really don’t care. They make a lot of sense to me.
*Bonus points for those of you who can identify the source of the title.