StanCollender'sCapitalGainsandGames

Washington, Wall Street and Everything in Between



As you travel from Wall Street to Pennsylvania Avenue, economic rationality stops and political rationality takes over just as you hit the Beltway. This site is your ticket across that gap, analyzing what makes political sense, what makes economic sense, and rarely what just makes sense.
Posted by Stan Collender

It was 1994 and Rep. John Kasich (R-OH), the soon-to-be-named chairman of the House Budget Committee for the just-elected GOP majority, was telling anyone and everyone who would invite him to speak that he didn't care if President Clinton submitted a budget for the coming year because House Republicans were going to ignore it. Kasich didn't use the standard "dead-on-arrival" line, he simply said that nothing Clinton proposed would be of interest because it would be "irrelevant."

Fast forward almost 20 years. The Obama fiscal 2014 budget proposal, which technically was required to be sent to Congress by February 4, now is not expected to be released until late March or even early April. That will make it irrelevant to the House and Senate Budget Committees, which are set to markup their respective versions of the fiscal 2014 budget next week, that is, two weeks or more before the White House's proposal will be available. The president's plan also won't be released before the full House and Senate are expected to debate and vote on what the budget committees produce.

Posted by Stan Collender

How did the sequester happen? How is it possible that what supposedly was the worst possible way to cut the deficit somehow became what actually happened?

Over the weekend Ezra Klein, in a much retweeted blog post that was the talk of large parts of the political blogosphere, said that the GOP was never going to make a deal to avoid the sequester if it included a tax increase. Nothing...not the prospect of reductions in military spending, not the projected reduction in GDP, not the estimated increase in unemployment, not the lost possibility of a bigger deal to reduce the deficit and not the overwhelming likelihood that Republicans would get blamed for all of this...made any difference.

The GOP's position seems to defy all economic and political commonsense until you realize how much GOP politics have changed in recent years.

Posted by Stan Collender

I don't use the word "defense" much when talking about the federal budget because it always prejudices the conversation. U.S. military spending isn't always defensive; it often is appropriately offensive and changing the name in 1949 from the Department of War to the Department of Defense should go down as one of the top 10 greatest public relations achievements of all time.

So why did I violate my own rule and use the word "defense" in the headline to this post? To make a point: In spite of all the spin and all the warm feelings Americans supposedly have about the military, Congress was more than willing to throw defense spending under the budget bus in the sequester. When it was a question of tax increases and Medicare reductions vs the Pentagon, not only did the Pentagon lose, but it wasn't even on the field or the same game.

Posted by Stan Collender

What's happened so far on the sequester is the equivalent of spring training in baseball and pre-season in football: It doesn't count and isn't necessarily indicative of what's ahead.

But everything changes today as the sequester that so far has only been hypothetical and something primarily discussed inside the beltway starts to become real for increasing numbers of voters outside Washington.

This is not an insignificant number of people. Polls taken over the past week or so show that only about 25 percent of Americans say they have been following the sequester argument (It's really hard to call it a "debate"). That number will increase rapidly as the sequester spending cuts reduce federal services that people rely on and like and voter emotions change from amusement to annoyance to outrage.

Posted by Stan Collender

The Clinton administration didn't play as much hardball as it could have during the 1995 and 1996 federal shutdowns because it decided that the air traffic control system was a critical government activity.

Doing the opposite -- and it definitely was a discretionary presidential decision rather than a legislated mandate -- likely would have ended the shutdowns much faster because of the outcry when planes were grounded and everything from Fed Ex to business trips to honeymoons were affected. The economic damage and anger would have been immediate and intense.

The Obama White House appears to be going in a very different direction with the sequester. As this story by Matthew Wald in today's New York Times shows, not only will the air traffic control system be included if the sequester occurs, the administration clearly is not reluctant in the slightest about making it clear that flights will be canceled or seriously delayed...or both if the sequester happens.



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