It's Hard for People to Believe It When Government Gets It Right

December 03 [Mon], 2012, 15:10
It's Hard for People to Believe It When Government Gets It Right
louis vuitton outlet storeI'll have more to say about this broader theme in coming days, but I've been talking to tons of people from all walks of life in recent weeks about the fiscal cliff and, more generally, the stuff the federal government is doing for better or worse. And while this is a "convenience sample" and not a scientific poll, the strong consensus I've found is that regardless of their political stripes, there is virtually no recognition of a lot of positive stuff that's actually occurred (and by "positive," I mean stuff they like -- not necessary stuff that I like).For this post, I'll focus on the safety net, but many of the people I talked to want the government to spend less. Putting aside the whole austerity-in-recession problem, when you point out to them that, in fact, we have very significantly cut spending -- $1.7 trillion over ten years (including interest savings) -- they refuse to believe it.When you tell them that health care costs are actually growing more slowly in recent years, and that this may be an early sign that cost controls of the type in the Affordable Care Act will actually work, they are incredulous (though at this point, to be fair, it's hard to separate out recessionary effects).The fact that the President's budget -- which is basically what he's working from on the cliff negotiations -- will stabilize the debt as a share of GDP, as scored by the CBO, is simply unacceptable to people.

louis vuitton outlet onlineAs is the fact that the safety net worked. The figure below is an update of one I've used before showing the trend in poverty rates as officially measured and as correctly measured. The Census Bureau has an alternative series of poverty measures that captures the economic impact of the benefits that flow to the poor. So, for example, it includes the cash value of food stamps and the impact of tax credits like the Earned Income Credit. It also adjusts for geographical price differences and out-of-pocket health care spending.While official poverty rates -- which exclude much of the value of the safety net -- increased from 12.5 percent to 15 percent, 2007-11, the alternative measure, though higher at a point in time (accurately measured, there are more poor people than the official measure reveals), was essentially unchanged. That's right -- the deepest recession since the Great Depression and poverty didn't go up, at least not when you measure it correctly.That is a real accomplishment and a sign of a far more civilized society here in the good, old USA then you might get from watching reality TV. And before you get all wound up about the government bestowing gifts on the lazy, remember -- this occurred during a massive market failure when work disappeared, particularly for folk in disadvantaged settings. As the economy comes back, the extent of assistance from many of these programs will also fade (e.g., food stamps).

www.louisvuittonoutletyear.comI'm not saying we don't have work to do when it comes to a functional, efficient government sector... there's a whole lot to improve. But folks really need to look at these issues with open eyes, minds, and non-jerking knees. You might be pleasantly surprised.Television networks devoted much of their Sunday news shows to the fiscal cliff -- and rightly so -- reflecting the urgency and importance of the topic.For the most part, the shows discussed well-covered aspects where already there tends to be broad analytical agreement -- from the impact on the American economy of going over the cliff to legacy commitments that inhibit Democrats and Republicans from iterating more quickly to good compromise solutions.The shows' decision to allocate scarce minutes to a well-trodden background is interesting in itself. It is not as though the threat of the fiscal cliff has just emerged. It has been on the 'important and urgent" radar screen for months now (e.g.,"The Fiscal Cliff Cometh" from last May. Yet Congressional dysfunction has stopped our political system from dealing with it in a timely and effective manner.So, if you are one of those familiar with the fiscal cliff, did you end up wasting precious weekend hours watching shows that just covered familiar old ground? No.Two guests were particularly insightful today.Maya MacGuiness (Committee for a Responsible Federal Budget) rightly noted that greater certainty on the fiscal cliff could -- and should -- be viewed as the "cheapest form of stimulus" for an economy still struggling with mediocre growth, excessively high unemployment, and excessive income and wealth inequalities.

louis vuitton outlet stores onlineThis is illustrates a broader and important point. Congress has slipped into a very unfortunate way of dealing with major decisions.Rather than proactive, the decision-making process has become extremely reactive. It has lost most, if not all of the critical strategic underpinnings.The numbers already point to a dramatic fall in congressional decisions at a time when America needs to navigate tricky domestic and global realignments. And the painful manner in which the few decisions are finally reached reduces the probability of subsequent good decision-making.Rana Foroohar (Time magazine) added significant value to the discussion by introducing an important analytical counterfactual -- namely, what would have occurred if our politicians in Washington were not bickering and dithering.She rightly noted that while America's economic situation is far from satisfactory, it sure is a lot better than that of the vast majority of other western countries. So, if we had overcome this home-made political dysfunction in a timely and proper manner, and given the amount of cash sitting idle on the sideline, the economy would have benefited in both a relative and absolute sense -- thus adding to the potential upside.These are two of the handful of key strategic issues that are being obfuscated by what has become an overly narrow debate (see this article, for example).The longer Congress is stuck in this unfortunate operational mode, the greater the probability that its decision-making will fall even further behind the situation on the ground. And that would be very harmful to virtually all Americans, and both for current and future generations.
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