Editore"s Note
Tilting at Windmills

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April 26, 2011

MANCHIN KNOWS NOT OF WHAT HE SPEAKS.... Sen. Joe Manchin (D-W.Va.), after about six months on the job, has struggled at times, occasionally badly. But on fiscal issues, the center-right Democrat appears to be getting worse.

Today, Machin will formally endorse a Republican proposal for strict new spending caps, saying it would be "irresponsible" not to. He joins the Senate GOP, independent Sen. Joe Lieberman (Conn.), and Democratic Sen. Claire McCaskill (Mo.), which suggests the measure, generally known as the CAP Act, now has the support of a Senate majority, or at least close to it. There's even some talk it will be included as part of a "compromise" on the debt ceiling.

To date, the proposal hasn't gotten much attention, but it's important to understand how dangerous this is. Ezra Klein, who's arguably even more cautious in his rhetoric than I am, recently described the spending cap idea as "completely insane."

Spending caps are bad policy, and the McCaskill-Corker spending cap -- which holds spending to 21.5 percent of GDP, or three percentage points lower than it is right now -- is a badly designed spending cap. But beyond all that, it's laughable to posit it as a compromise: It's arguably the most radically conservative reform that could be made to the federal budget. More extreme, by far, than Paul Ryan's plan.

Start with the shell game at the core of this discussion: We're worried about the debt ceiling but talking about a spending cap. This works just fine if you hew to the conservative conceit that "we have a spending problem, not a taxing problem." But that applause line is just an effort to deny the contribution tax cuts have made to the deficit and keep tax increases from being part of a solution. If you think we have a debt problem -- and that's what being upset about raising the debt ceiling implies -- then do something about the debt. The "trigger" proposal the White House included in is budget, for instance, is tied to the debt, not to spending or taxes.

Of course, to the Republicans, that's a feature, not a bug. The virtue of a spending cap is that by focusing on only one contributor to debt, it admits only one solution to it: spending cuts. Savage ones. The Corker-McCaskill proposal is so aggressive that there are years when even Paul Ryan's budget, with all its fantastical assumptions and hard caps, wouldn't qualify. "You put McCaskill-Corker into law," says Bob Greenstein, president of the Center on Budget and Policy Priorities, "and progressive policy is dead for the next quarter-century."

That's not an exaggeration. The CBPP published a detailed report on the proposed cap a couple of weeks ago, explaining that if it were to become law, policymakers would have no choice but to enforce devastating cuts in Medicare, Medicaid, and Social Security, as well as every other domestic priority.

Ironically, Machin, whose depth of understanding on these issues appears to be less than an inch deep, said he supports the CAP Act but opposes cuts to Social Security and Medicare. In other words, Machin doesn't understand the effects of the very policy he's endorsing.

To a very real extent, the cap would be a straightjacket intended to prevent the government from responding to any challenges, foreign or domestic, for the foreseeable future. The "solution" doesn't even match the problem -- any credible evaluation of the fiscal issue shows the same truths: we lack the necessary resources to deal with a growing elderly population and escalating health care costs. How would a spending cap help this? It wouldn't.

As Ezra added, "Health-care costs are rising far in excess of GDP growth, and a spending cap does nothing to stop them. Seniors will go from 13 percent of the population now to 20 percent of the population in 2035, which means America will temporarily have fewer people working and more people dependent on government support. But the spending cap does nothing to reverse the aging process. And amid all these trends driving up spending, Republicans are pushing to make the Bush tax cuts permanent and Democrats are pushing to make most of the Bush tax cuts permanent. A spending cap does nothing about that, either. A spending cap is an effort to deny our real problems, not to fix them."

Steve Benen 1:00 PM Permalink | Trackbacks | Comments (23)

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Comments

In a society of government-enforced poverty, people like U.S. Senators will have even greater wealth and power, relatively, than before. So they're for it.
That's the explanation that assumes people like Manchin and McCaskill are just as dumb as telephone poles, which they are.
I hope Americans like Grandma and Grandpa, 'cause they're moving in soon.

Posted by: JMG on April 26, 2011 at 1:03 PM | PERMALINK

And even if a spending cap weren't such a stupid idea on its own, it's moronic because it doesn't bind any future congress that doesn't want to be bound by it. All they have to do is repeal it or put a clause that says "notwithstanding USC blah blah blah" in a spending bill and it's gone. If legislators want to spend less than a certain cap, they can just write a budget that spends less.

So: self-destructive, stupid, ultimately ineffective. A perfect modern GOP initiative.

Posted by: paul on April 26, 2011 at 1:14 PM | PERMALINK

"But the spending cap does nothing to reverse the aging process. "

If the spending cap does away with Medicare then won't more people start dying sooner? If so then isn't it possible that the spending cap will effectively reverse the aging process?

Posted by: Ernie on April 26, 2011 at 1:14 PM | PERMALINK

Does it change the Constitution? If not it is a it is a cheap political stunt. It can be changed by Congress at will, just like any other piece of legislation.

Posted by: Ron Byers on April 26, 2011 at 1:21 PM | PERMALINK

it will be a test of Obama's fortitude, and whether do what is right is his highest priority. time to take the veto pen out and dust it off.

Posted by: zeitgeist on April 26, 2011 at 1:30 PM | PERMALINK

So, I ask again, where is the Democrat willing to filibuster or put an anonymous hold?

Posted by: martin on April 26, 2011 at 1:30 PM | PERMALINK

I think Manchin, and others, are attracted to the idea of spending caps because it relieves them of any responsibility to make decisions about how to fund different priorities.

Gives them more time to work on really important stuff like renaming post offices and highways in each other's honor.

Posted by: karen marie on April 26, 2011 at 1:32 PM | PERMALINK

With democrats like these we don't need any republicans. Lieberman is in his last term, but the other two ought to be challenged in the next primary they face. I'm sure the DNC invested millions in McCaskill and this is what we get in return--she's not even republican light.

Posted by: sparky on April 26, 2011 at 1:34 PM | PERMALINK

"and progressive policy is dead for the next quarter-century."

-feature, not a bug?

Posted by: DAY on April 26, 2011 at 1:44 PM | PERMALINK

So, which is it: a cheap political stunt that is easily undone by future congresses or the end of progressive legislation for a quarter century?

If it's binding, Obama should veto the bill and campaign hard in West Virginia and Missouri about Senators threatening the solvency of SS and Medicare. (IOW, club Manchin and McCaskill until they are bloody stumps, then club them some more).

If it's symbolic, Obama should reluctantly agree to sign the bill, with sad, sad eyes, claiming that the GOP is a really hard negotiating partner.

Posted by: danimal on April 26, 2011 at 1:52 PM | PERMALINK

All I can think of is that these wealthy senators are looking down the barrel of higher taxes on them, and would rather impoverish their constituents than pay their fair share of taxes, and create paying jobs for their people.

In a narcissistic culture (you know the 'end of the world syndrome' in which the narcissist believes the whole world should die if he does) I guess this is the caliber of representative we get.

And it doesn't appreciate the good leadership it does manage to get from time to time.

Posted by: jjm on April 26, 2011 at 2:04 PM | PERMALINK

"doesn't understand" describes about 90 percent of our country on just about anything ...

Posted by: stormskies on April 26, 2011 at 2:14 PM | PERMALINK

WOW! With Democrats like these we don't need Republicans to destroy the country. Now I think I better understand why the alleged libeal Senator Dick Durban wants to support Rep Senator Tom Coburn in not raising tax rates.

NO wonder the President looks like he's twisted in knots.

Posted by: davidi on April 26, 2011 at 2:14 PM | PERMALINK

As Paul Krugman frequently points out, when you talk about spending as a percentage of GDP, it's important to consider the numerator and the denominator.

It isn't necessary to get into the complexities of health care financing and such. Just ask anyone who endorses a spending cap, "Do you believe that when the economy crashes, government spending, including things like unemployment and small business loans, should automatically be cut?"

Yeah, there are mindless conservatives who will enthusiastically say yes. But for anyone else, this should be a test of whether they're qualified to be a legislator.

Posted by: Redshift on April 26, 2011 at 2:18 PM | PERMALINK

When will Blue Dog Democrats learn that republicans are not their friends. Because no matter what a Democrat does, republicans will deny them. In this political epoch that is just the way it is. Look at how Romney denies anything he ever did that could be construed as progressive.

On another note, I am making the prediction that Romney or some republican is going to pick a Democrat as a running mate. It is the only way they can win against Obama. That running mate might very well be McCaskill. Her chances in MO are slim and losing weight.
dep258s

Posted by: Daryl Pauley on April 26, 2011 at 2:37 PM | PERMALINK

This.

f you're a politician and the first two words out of your mouth aren't 'aggregate demand', you're blowing smoke up my ass. And if the next four aren't 'Marginal propensity to consume', then you're not being serious.

Posted by: Davis X. Machina on April 26, 2011 at 2:38 PM | PERMALINK

TAX increases for the wealthy are needed to save the government's budget BUT Republicans would have us believe cutting the government, ergo putting people out of work and on to unemployment, is good for the economy.  They gave is the Lie of Trickle Down economics, now they give us the Lie of Budget Cuts.

Since 1980 Republicans have worked to increase the income of the über rich and dismantle the federal government.

Reagan started the gutting of the federal rules protecting the workers and the poor so corporations could exploit those who have to work.  Incomes then stagnated and in some cases like those for auto workers have even gone backwards. 

Lately, they destroyed the economy by lax financial regulation coupled with tax cuts for the wealthy which forced great deficits upon the country. The proportion of income going to the upper 1%  in American income has increased from 10% to 25% since 1980.   Now they want to give that 5% of tax layers which owns 85% of the country's wealth more money by privatizing Medicare & Medicaid. 

I would be mortified to carry a $1500 Louis Vuitton gym bag when 25% of Arizona kids live in poverty.   America prospered when taxes on the rich were at their highest and the wealthy paid their fair share.  Tax the rich, I say, and repair our infrastructure by creating good jobs for good wages for good people while protecting those least fortunate.

Posted by: KurtRex1453 on April 26, 2011 at 3:07 PM | PERMALINK

Dear Sen. Joe Manchin,
To ensure the fairness of the CAP Act, please propose the following amendment:
No state shall receive more in federal funds than that state pays in federal taxes.
Thank you,
A 'Donor State' citizen

Posted by: waguy on April 26, 2011 at 5:21 PM | PERMALINK

you need 60 votes to achieve a majority in the US Senate. or so we have been told when the Dems controlled both the House and the Senate.

Posted by: some guy on April 26, 2011 at 7:14 PM | PERMALINK

@zeitgeist:

it will be a test of Obama's fortitude...

hahahahahahahahahaha

Posted by: nofortitude on April 26, 2011 at 11:18 PM | PERMALINK

Isn't this guy from West Virginia, the beautiful state where many people would be broke and unemployed if not for the federal government spending?

I wonder how his constituents are going to react when they realize that his vote is going to cutting the entitlements the whole state needs.

Posted by: alix on April 27, 2011 at 12:56 AM | PERMALINK

I'm glad this came up again.

Spending caps DO solve the health costs problem if you don't pay any attention to the quality of life issues.

Lots of suffering and premature deaths saves money and yes, reduces health care costs.

It's jaw-droppingly callous, but it WOULD work.

I mean, if we capped spending at .001% GDP, who thinks we wouldn't spend a lot less on Medicare, y'know? Sure, lots of Democrats would die, but then... that's a good part of the motivation. Just like the $3000 donut hole in drug coverage. Not enough to wreck their base, just enough to kill the financially struggling. Saves money, kills Democrats. Awesome GOP health care plan and political strategy all rolled into one. Rove rocks the vote.

Posted by: toowearyforoutrage on April 27, 2011 at 8:28 PM | PERMALINK

I strongly supported Manchin in his election to fill Byrd's unexpired term and as soon as he was elected he announced he was opposed to reversing Bush's tax breaks for the wealthy. I've had it with him. I wrote him a letter recently asking his help on a matter I am truly concerned about. Weeks later I received a canned reply that did not even address my request to him. Hey, if that's the way he treats me and I'm his friend, how does he treat people he doesn't know. The answer is-he has thrown the seniors not only from West Virginia, but from all across the nation under the bus to keep from taxing the rich. If we don't get a good candidate to take him on in the primary I'll run myself!
What a disappointment and embarassment to West Virginia. Byrd must be rolling over in his grave.

Posted by: Kelly Sparks on April 30, 2011 at 9:32 PM | PERMALINK
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