Friday, April 8, 2011

Loss Leaders

It is being reported that to reach an agreement to fund the federal government and avoid a shutdown the parties are only $5 billion apart, with Republicans insisting on $39 billion in cuts, while Democrats are willing to cut $34 billion.  They are this close because even though the Republicans keep moving the goal posts, the Democrats keep agreeing to to more and more cuts in order to reach a "compromise."  And now, the key sticking point seems to be the Republican insistence on riders, including one that would transfer Planned Parenthood funding to the states.  As Ryan Grim put it, "the United States government is on the verge of shutting down over a dispute about subsidized pap smears."

It seems to me that the Republicans don't really expect to pass these ideologically-charged riders, but are using them as bargaining chips to get more concessions out of the Democrats.  And it appears to be working.  While the Democrats are "bravely" resisting GOP attempts to use the budget standoff to to score points in the culture wars, they are willingly agreeing to massive budget cuts.

The Democrats long ago lost the argument that "slashing spending in the face of high unemployment is a mistake," because they never made it.  (See, e.g., Economics For Dummies, What Krugman Said; Must Read Krugman.)  Instead, they have quibbled with Republicans over the amount of spending to slash.  As a result of the Democratic failure to contrast their vision from that of the Republicans, if there is a government shut down, both parties (and the President) will be blamed for the ensuing damage.  (See Paul Ryan's Pitch.)  

And if a budget deal is reached because the Democrats have agreed to more cuts in domestic spending that will stymie the economy, maintain the inequality between rich and poor, and gut needed social programs in return for the Republicans dropping their demand to defund Planned Parenthood, the Democrats will not have a whole lot to be proud of.


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