Fiscal Jabberwocky

"Beware the Jabberwock, my son! The jaws that bite, the claws that catch!"

It’s not often I get to post pictures of mythical beasts for a few days in a row but here I go again. Plus, I’ve gotten another chance to use one of those wonderful Alice in Wonderland book illustrations.  Too bad they’re attached to posts where the perverse wonderland rules.  It seems to be a year for fictional monsters in Op-Eds and real ones in congress.

David Stockman, Budget Director for Ronald Reagan, has joined the ranks of Republican advisers calling shenanigans on the Boehner/Tea Party Republicans AND the dithering Obama Dems.   He must be very financial and professionally secure.  His op-ed in the New York Times draws blood on all sides.  He starts out telling President Obama what is what then moves on to hammering that petulant ninny from Wisconsin, Paul Ryan.  Go read it if only for the creative use of words like that in the heading above.

On the other side, Representative Ryan fails to recognize that we are not in an era of old-time enterprise capitalism in which the gospel of low tax rates and incentives to create wealth might have had relevance. A quasi-bankrupt nation saddled with rampant casino capitalism on Wall Street and a disemboweled, offshored economy on Main Street requires practical and equitable ways to pay its bills.

Ingratiating himself with the neo-cons, Mr. Ryan has put the $700 billion defense and security budget off limits; and caving to pusillanimous Republican politicians, he also exempts $17 trillion of Social Security and Medicare spending over the next decade. What is left, then, is $7 trillion in baseline spending for Medicaid and the social safety net — to which Mr. Ryan applies a meat cleaver, reducing outlays by $1.5 trillion, or 20 percent.

Trapped between the religion of low taxes and the reality of huge deficits, the Ryan plan appears to be an attack on the poor in order to coddle the rich. To the Democrats’ invitation to class war, the Republicans have seemingly sent an R.S.V.P.

Stockman call the entire situation “fiscal jabberwocky”. Good turn of phrase that.  He then moves to skewering the FED and adds Chinese currency pegging into the villain mix.  I guess there’s nothing like a good rant when you can get primetime ink.  This seems to be an interesting foray into harsh policy critique for economists with a republican bent.

Stockman, like Bruce Barlett and even David Frum are yet more Republicans who are pointing out the current GOP leaders are no more serious about budget reform than the Democrats are. The main difference is the GOP has better slogans and marketing, and slides into full blow demagoguery more easily.

But in terms of actual strategies for intelligently addressing the issue? The most glaring truth is the lack of leadership on both sides of the aisle.

The Barry Ritholtz blog post  on Stockman’s op ed does score some points on mentioning the leadership chasm, but, even more telling is the absolute adherence to fairy tales over reality in policy making these days. Is there an economist in the House?  Joe Wiesenthal says that Stockman is suffering from “fatalistic populism”.   Here’s Stockman’s ending barb to prove that point.  It’s also the two sentences that offer up the policy solution.

So the Ryan plan worsens our trillion-dollar structural deficit and the Obama plan amounts to small potatoes, at best. Worse, we are about to descend into class war because the Obama plan picks on the rich when it should be pushing tax increases for all, while the Ryan plan attacks the poor when it should be addressing middle-class entitlements and defense.

I’ve said many times that the Bush tax cuts just need to expire.  I’ve also said that since the Reagan years we’ve basically started chumming our economy by jumping into interventions wherever and whenever.  Afghanistan and Iraq are two such adventures that need to be de-funded and ended.  We also need to reign in the congressional and pentagon weapons fetish which is basically whipped into a frenzy by free spending lobbyists for companies like Halliburton, GE, and Boeing.  I can only image what they all want the drone budget to look like.  MENA appears to be filled with hives these days.

So many of our fiscal problems would go away if we would just put things back to the where they were 10 years ago.  This includes putting  Wall Street back in its box instead of letting it go completely gaga  with nonstandard, unregulated financial innovations. We can’t afford Obama’s muddling policies that seem like voting present while Republicans go wild with his inability to stand any firm ground.  I believe he got elected to undo the Dubya years. Instead, he’s put the Dubya policies on steroids.  So, if most of us–that would be voters–are saying let’s take it all back to the Clinton years, what I’d like to know is who are the real conservatives and who are the real radicals?