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Tin ceiling

By Michael J. Smith on Friday July 22, 2011 02:40 PM

A bright young kinswoman of mine -- who has, unfortunately, a bit too much respect for NPR; but I hope to change that -- was bemoaning, the other day, the terrible "divisiveness" that we hear so much about, in connection with the current absurdist Kabuki theater surrounding the debt ceiling. I was trying to tell her that what struck me, as usual, was the unanimity of the parties, rather than the tiny areas of (supposed) disagreement. I ended up drawing a little chart:

Less revenue Same revenue More revenue
Less expenditure R R D
Same expenditure X X X
More expenditure X X X
Obvious enough, huh? We have two variables: expenditure and revenue. For each we can either decrease, maintain, or increase with respect to the current level. This gives us a 3x3 matrix.

Note that six of the resulting nine cells are, by mutual agreement, entirely off limits. So the Reeps and the Deeps are completely in agreement over two-thirds of the potential space of responses. They are completely unanimous on the need to reduce Gummint expenditure -- this in the midst of the finest depression we've had in seventy years.

Given the restricted range of responses that are left, it's hard to avoid the sense that the Reeps have the better logic -- may, in fact, be the lesser evil in this restricted domain. Of course they insanely want to reduce expenditures -- but then so do the Deeps. However, the Deeps want to compound the problem by raising taxes. Decreasing expenditure is insane; but raising taxes is also insane, and so the Deeps are exhibiting two different kinds of insanity, whereas the Reeps only have one.

It's easy enough to see why Joe Citizen -- maybe not Jane, quite so much -- tends to confuse government finance with household finance. Both evils, the greater and the lesser, are singing in perfect harmony on this topic; so what's Joe to think?

My chart actually exaggerates the extent of the disagreement. It might make more sense to rework it as follows:

Less revenue Same revenue More revenue
Less expenditure Rd rd D
Same expenditure X X X
More expenditure X X X
The little 'd's indicate things the Democrats could live with; the big 'D' indicates what seems to the the Congressional party's center-of-gravity preference. Same for the 'R's and 'r's, of course.

Surely the outcome is foreordained -- less expenditure (though soldier boys and cops are, of course, sacrosanct) and either no alteration in the revenue picture or a slight diminution.

Best we can hope for, eh? Sooner the Democrats cave, the better. At least NPR will have to find something else to natter about.

Comments (26)

Calling it Kabuki theater is an insult to Kabuki theater. How about a diarrhea eating contest?


My apologies to Kabuki. It's hard to think of any kind of theater sufficiently insensate to serve as a point of comparison.

Of course, there's always Broadway. Between David Mamet and Tony Kushner....

It's a morality play, maybe? As with the Catholic original, the outcome is already assured.


How about Bunraku? It's a low budget version of Kabuki done with puppets where the "actors" have no opinions of their own, are manipulated in everything they do, and rarely deviate from the script--just like our political class.

The difference between the Republicans and the Democrats is war, plutocracy and the police state with gun rights and war, plutocracy and the police state with abortion rights. Other than that, it's hard to tell the difference and I wouldn't count on either gun rights or abortion rights being protected.


Sandwichman leapt to the defense of Kabuki, and so do I of the morality play, which was often very witty and original, and was never insane. The deficit "debate", by contrast, seems insane to me, in the most literal sense.

I vote for inane rather than insane. Or perhaps both.

And just where would we be if it weren't for war, plutocracy and the police state?


Why is raising taxes insane? Clinton did it and the world didn't end.


Clinton wasn't in the middle of a depression. I mean an economic one. He's probably never had an emotional one. I wish he would suddenly be visited by a really bad specimen of the emotional variety. Sunny Bill almost certainly wouldn't know how to cope, and would cut his throat, and that would be one less voluble irritating bore polluting the air with maddening nonsense.


I would propose that a raid on the cash reserves of the US domiciled corporations would do no harm to the US working class "economy" or to employment here or anywhere.

Similarly the wealth of the top 5% that has burgeoned ever since Reagan's across the board tax cuts could be tapped without hurting the bottom 3 quintiles. Maybe things would not get better for working folk but also not get worse.

The Federal budget deficit, however, would no longer serve as an excuse to savage SSBs etc. The piles of wealth accumulated over the last 30 years are incredibly huge and if the elites insist on pretending that everything is on the table, then put everything on the table, including revenue. Then you have to look at where the wealth is, at what it is doing for everyone and then grab it.

Of course this won't happen. The citizenry must be punished even more harshly before the next Huey Long appears.

I would propose that a raid on the cash reserves of the US domiciled corporations would do no harm to the US working class "economy"
Of course -- if every dollar we got from them was a dollar we didn't have to pay. But the liberals, with their anal-sadistic budget-balancing mania -- remember Bill Clinton! -- want it all. As far as I can tell, they want to increase total revenue -- not shift the existing revenue burden from us to the rich. And all this is in the name of "reducing the deficit."

The contrived quality of the discussion derives from this deficit-hawk imperative: it's a bipartisan consensus.

A "raid on the cash reserves of US corporations", lovely as that would be, will certainly not happen on the Democrats' watch. And in fact nothing the Democrats say they want will happen on the Democrats' watch -- because they don't really want it.

Except for the reduction in "entitlements", which is, of course, another matter of complete and quite explicit bipartisan consensus.

The "contrived quality" is why I think "morality play" is an apt description. Certainly, there were itinerant future Matthyses and Johns of Leiden among them, but where the Church was involved, a significant devotion to pious fraud was also attendant.

And that's what the Dems and Repubs are offering, each towards their own ends - pious fraud.

Pious Fraud would be a great name for a character in a novel -- or a morality play.


Great post, Michael, and the outcome is surely foreordained. Though I do think in this instance the donkeys are proposing that the fat cats chip in more. However tepid and tentative the Dems' entreaties, what they're suggesting is not insane. Further taxing Joe Citizen right now would be, but I don't think that's what's being proposed.


Indeed, taxing the rich into penury would be eminently sane -- if it led to a corresponding diminution in the burden on ordinary Joes. But nobody is proposing that either, as far as I can tell. What the Dems do want is a net increase in revenue. I'll let the house economists comment on the sanity or otherwise of that idea, in the current circumstances.


I submit father has his index finger on the key node here

The liberals and apparently lots of rads like taxations

The use of taxes as punishment for wealth hoarding
Is a fatally best reserved till the rev
For now in reform mode stick to wage max hour min
Uncle social dividend max
If the issue becomes

Whether by tax or borrowing ?

Always by borrowing

Tax burden shifting from job holders and petty consumers is noble
But secondary

On the other side of the coin
The demote colicity in payroll tax robbery and
Growth incentive alibis for corporate bribes

Well that speaks for itself

Nice to see several postings that tightly fit the sites original mission


On the expenditure side
Obviously we have a structural corporate preference for minimized safety nets and social dividends
The transfer system fueled by borrowings increases the wage bargain strength of the jobseekers

Sandy for years has pushed for essentially higher wage rates and shorter hours
Not only directly by hours and rate min and max laws
But also
thru greater more sweden like
entitlements for the people as mere resident humans


Considered opinion
Always oppose any tax increase any tax increase.....ANY

If we could show you a nice model of tax burden dynamics you,d quickly see the point of extraction hardly ever determines the distribution of that tax's burden among various economic classes

Borrow max inflation max nominal rate min
The trinity of strategic wage class macro


Leave. The optimal national whole people reformer role
to the mandarin freaks
The science of economic needs to be applied by class oriented and motivated social engineers

Not personally class sublated paragons of whole ness


Always always more e and less r
Note democrat preferred position today is exactly the reverse

Prolly too many comments by this social engineer manque
but I hope I can smoke out some opposition
With some meat on its bones and teeth that bite more then drama queens


U post industrial nihilists are such aesthetes
And dabbling generalists

More sharply defined context restricted mental cogs
less cortical free spirits of the circus wagon as tumbril variety


Ironically, given all of the deficit hysteria and conventional wisdom, Joe and Jane Citizen would quickly rally to a cut taxes\increase spending platform. But of course, who in DC or on Morning Blow even remotely cares what they think?

I suspect the demand for WPA type programs will grow as the pain intensifies, Owen's misgivings (I think) about that old FDR fave notwithstanding.



The unemployed over hang isn't big enough or angry enough
Or for that matter wretched enough to prick the liberal conscience enough
No wpa in our time

I ought be clear
I'd love a wpa
Haryana hopkins is a great figure to me
But hell I'm beginning to like Hugh Johnson
The " fascist" head of the NRA

My objection to wpa btw is as a permanent liberal built gulag
Those pwogs who push it tend to be poorly infused with the larner viceroy
Macro paradigm

Example minsky
Yes he saw clearly the internal contradictions of a credit driven market guided economy
But he had no notion of the up side to post war Keynesianism
Primarily because he never deeply contemplated the various price level management mechanisms

Perhaps he quite reasonably figured he needed to cobble his remedy out of elements with cleaner "priors "
Like in this case the wpa
Though I suspect he had public goods fetish too
Like most anti profit
non profit fat cats of the left annex of the academy

There are other better ways to maintain full employment
And lift wage rates


whatever, op. retire already.


Chart du jour, US long-term unemployment edition
From FTAlphaville, Posted by Cardiff Garcia on Jul 07 21:00.

The 1970-present chart indicates the percentage of unemployed who have been in that condition for 27 weeks or longer, and sheesh what a spke [becoming plateau] relative to last 41 years.

Before I forget - http://ftalphaville.ft.com/blog/2011/07/07/615961/chart-du-jour-us-long-term-unemployment-edition/

So, comp of capital will be forced to decline and/or corporates will have to change their mode of organization. Govts are commodities.

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