PLEASE READ THIS.
As you read it, keep in mind that Reich is actually not all that enthused by recent events. Reich and progressives like him wanted to go over the fiscal cliff, in order to cut a deal with greater leverage against the GOP obstructionists. He doesn't say so explicitly here, but he clearly believes that had we gone over the cliff, the leverage would've been there to get an agreement not to hold the "debt ceiling" hostage in the next round of deficit talks.
I was sympathetic to the "go over the cliff" talk a month ago, but the federal government hit the debt ceiling about 3-4 weeks earlier than was projected as recently as Election Day, and that means that Treasury had to start with the usual round of "extraordinary" measures to keep government working. Going "over the cliff" in that fiscal climate would've been a blow to the market and the global economy, and it was probably less risky to get the quick patch that passed this week, even though that patch didn't address either the debt ceiling or the sequester.
Reich was more willing to take that risk than others, and we'll never know now whether the risks involved would've been worth whatever extra concessions could've been extracted from the 113th Congress up-front. Certainly, Reich's point (that deficit spending relative to GDP is declining) deserves to be better-publicized.
That said, the deficit as it stands now is not sustainable. At a bare minimum, it needs to be cut in half from 2012 levels. Pressure needs to be brought to bear on Dems and tea-party types alike to lower the deficit significantly in a balanced way: that means more revenue (fixing the tax code to eliminating or reducing many deductions) and spending cuts (but ESPECIALLY cutting military R and D), as well as tweaking the ACA to streamline health care costs. These are very difficulty politically, a daunting combination of tough medicines that will draw resistance from both sides of the aisle, from the GOP-led House and the Obama Administration. Tough to negotiate, tough to sell to the public and incredibly difficult to get past the lunatic fringe. But it has to happen, if we are to restore the ability of government to supply essential services without throwing the economy into the toilet.
Word Count: 387
PLEASE READ THIS.
Posted by Scott Hatfield . . . . at 1:22 PM