Enough With the Deficit Hysteria

Like I keep sayin', the only thing wrong with the deficit is that it's too small.  We're still in a recession, which requires large spending by government to boost demand and thus grow the economy.  That might be of slight concern if interest rates were high, but they're not; they're so low investors are actually paying us to take their money.

But the deficit hysterics never let facts and reality stand in the way of fear-mongering.

Kevin Drum at Mother Jones:

Republicans have been demanding action on the deficit practically from the minute Barack Obama was inaugurated. Over the past couple of years they've finally gotten it. Spending has been slashed, the federal deficit is declining steeply, and the 10-year deficit projection has been reduced by $4 trillion. So now, having gotten so much of what they wanted, does this mean Republicans are ready to soften up a bit on their deficit mania? You jest, of course. Jon Cohn rounds up the latest news:

Paul Ryan is about to unveil a new proposal for how the government should spend its money. According to multiple media accounts, it will look a lot like the budget plans he's produced before, the ones that famously called for radically downsizing the government. The main difference? The cuts in this proposal will be even bigger.

....With this new budget, Ryan doesn't appear to be offering new concessions. On the contrary, it looks like he's making new demands. And plenty of Republicans seem to think this is the right thing to do. That's perfectly within their rights: They believe it's best for the country. But it's a reminder that Republicans aren't sincerely interested in compromise for its own sake—or in taking more moderate positions on the issues. Yes, the voters delivered a pretty devastating verdict about this agenda just a few months ago. But if the number two guy on the ticket doesn't seem to care, why should the rest of them?

This comes as no surprise. When Ruth Marcus asked Ryan a few days ago if Republicans were planning to give us all a breather and avoid a showdown over the upcoming debt ceiling cliffhanger in April, he was unmoved: "Not this time," he said, "We're not leaving this session of Congress until we have a down payment on the problem."

So apparently conservatives are right: appeasing fanatics doesn't work. It just makes them determined to demand even more. Perhaps it's time to listen to them and adopt a new strategy.

Digby:

Jared Bernstein has posted some very important information that one can only hope both the White House and the Democrats are aware of and prepared to change direction because of.  It shows that our runaway medical costs are actually slowing down and he posits that there's good reason to believe that it's permanent rather than transitory:

My colleague Paul Van de Water recently noted that CBO’s 10-year forecasts for the growth of Medicare and Medicaid have come down by $500 billion relative to those from a few years ago. We don’t yet know whether any of this will last—whether we’re looking at another “whoops” moment. But because the initiatives ticked off above are targeted at changing highly inefficient incentives embedded in the delivery system, using technology to improve productivity (which typically lowers costs), and providing better oversight, they certainly have the potential to be lasting. And remember, while the recession is surely playing some role in recent cost savings, that role is surely less pronounced in Medicare and hospital readmissions.

So my guess is there’s something lasting going on here, and that means the doctor has just prescribed a very large chill pill for those who want to whack away at Medicare and Medicaid and CHIP because “they’re going bankrupt…bankrupt I tell you!” They’re not, and our energies would be much better spent on careful research on the factors behind these recent cost trends and how we can build on them. The goal is not to diminish these extremely valuable programs. It’s to ehhance their efficiency so as to ensure that they remain a solid part of American social policy.

Read the whole thing for the details. But the upshot is that we have just enacted a bunch of reforms to the system that are having an impact. Who knows if it will work over the long term, but the idea that we need to slash the hell out of our "entitlements" before all the data is in, is just daft. In fact, this whole discussion has been daft from the beginning. From the idea that austerity was a good idea in a downturn to the idea that we would make major changes to our health care system and then fail to see how they work before deciding that costs are too high, this rush to deficit cutting has been a disaster.

As Bernstein says, our leaders need to take a chill pill. We need to take a break from all the unnecessary Grand Bargaining and all the politicians need get out of this rut of thinking the world will end if they don't cut spending. Obama's legacy is going to be Obamacare. He doesn't need the grand bargain, it was always stupid. And if Obamacare succeeds in reducing the deficit as Bernstein's chart indicates may be happening, he can take credit for that too. That's a lot. It's enough.

 As Charlie Pierce always writes:  Fuck the Deficit. People Got No Jobs.  People Got No Money.