Wednesday, July 20, 2011

Weird Al Yankovic Explains President Obama's Debt Ceiling Negotiating Goals

Matt Yglesias hints at the reason President Obama is bending over backwards to get a bipartisan vote on a spending cuts-plus-tax increases austerity package: anything that's going to pass through Congress will require Democrats to swallow cuts they're incredibly unhappy about, and he wants to make sure that Congressional Republicans share the pain by eating a tax increase. It can be the Gang of 6 plan, the grand bargain, Bowles-Simpson; heck, it doesn't matter who's wrong or right on the merits, just eat the damn tax hike:

If you believe that messaging and policy positions matter in elections, rather than economic outcomes, then this makes sense. Obama's goal here is pretty straight forward: get Republicans to go along with any tax increase, and the right-wing infrastructure will implode, all the GOP Presidential candidates will immediately go on record as against any sort of compromise, the veneer of reasonableness will be peeled off, etc. But as something of an economic reductionist, the direction of the unemployment rate seems much more likely to matter.

Perhaps the most charitable way to interpret this situation is that Obama is playing a bad hand the best he can. Any sort of fiscal stimulus isn't going to pass. Federal Reserve nominees who might be supportive of monetary policy that would help boost aggregate demand and thereby pick up some of the slack in the labor market haven't been able to get through Senate confirmation. So all he can do is wedge the Republicans somewhere where the public agrees with Obama and try to paint the GOP the party of tantrum-throwing kindergarteners. It seems unlikely to work, but somehow more likely to work than actually enacting policy that might improve economic outcomes.
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