Tuesday, January 01, 2013

The Giant Absurdity That Is Washington D.C.

Here is Obama's statement on the "fiscal cliff" deal:

This agreement will also grow the economy and shrink our deficits in a balanced way – by investing in our middle class, and by asking the wealthy to pay a little more.

What's more, today's agreement builds on previous efforts to reduce our deficits. Last year, I worked with Democrats and Republicans to cut spending by more than $1 trillion. Tonight’s agreement does even more by asking millionaires and billionaires to begin to pay their fair share for the first time in twenty years.  As promised, that increase will be immediate, and it will be permanent.

There’s more work to do to reduce our deficits, and I’m willing to do it. But tonight’s agreement ensures that, going forward, we will continue to reduce the deficit through a combination of new spending cuts and new revenues from the wealthiest Americans.
Come again? This deal means that revenues will be lower and spending higher compared to existing legislation. It therefore increases the deficit, yet Obama depicts it as a deficit reducing agreement.  I wonder if Paul Krugman who criticized Starbucks CEO Howard Schultz for a similar misleading statement will criticize Obama for it too. Somehow I doubt it.

Yet even as they make a deal to increase the deficit and therefore also the debt, they didn't raise the debt ceiling. The politicians in D.C. seems to think they can decide to spend a lot more than what they earn without increasing their debt. In other words, they don't think the laws of arithmetic apply to them.

But of course, they do apply to them, which is why we will see another one of these absurd spectacles of last minute "negotiations" in a few months again, which will probably just mean more multi trillion dollar increases in the so-called debt limit combined with promises of future spending cuts that themselves will be stopped in yet another last minute spectacle just before they're about to be implemented.