A dazed and confused lame duck
by digby
Dday interviewed Senators Whitehouse, Brown, Cardin and Merkeley at netroots Nation about the lame duck "fiscal cliff" and frankly it sounds like nobody knows what the hell is going to happen. I would urge you to read the whole thing to get a sense of what they're all talking about.
Oddly enough, I am hoping that the biggest proponent of a Grand Bargain in the group is correct:
Cardin said the most likely scenario was an extension of everything, save the payroll tax cut, for a period of time, perhaps six months, while everyone regroups. Clearly there are a bounty of options on order here, ranging from a broad deficit deal that could harm the economy in the near term, to an extension that tries to expand growth while keeping the deficit steady.
It would be nice to put all this behind us, but I'm convinced that short of a total repudiation of the GOP (which can be read as a repudiation of their small government message) anything that happens in the lame duck will be bad. Perversely, it's the crisis atmosphere and lagging economy that's giving these deficit fetishists in both parties the opening they need to accomplish their nefarious goals, so delay is our friend. Who knows where we might be next year at this time? And at least these disaster capitalists won't have made things worse. As long as they insist on doing nothing real to boost the economy, the best we can hope for is that they do nothing at all.
Update: Paul Krugman the optimist:
America’s near-term outlook isn’t quite as dire as Europe’s, but the Federal Reserve’s own forecasts predict low inflation and very high unemployment for years to come — precisely the conditions under which the Fed should be leaping into action to boost the economy. But the Fed won’t move.
What explains this trans-Atlantic paralysis in the face of an ongoing human and economic disaster? Politics is surely part of it — whatever they may say, Fed officials are clearly intimidated by warnings that any expansionary policy will be seen as coming to the rescue of President Obama. So, too, is a mentality that sees economic pain as somehow redeeming, a mentality that a British journalist once dubbed “sado-monetarism.”
Whatever the deep roots of this paralysis, it’s becoming increasingly clear that it will take utter catastrophe to get any real policy action that goes beyond bank bailouts. But don’t despair: at the rate things are going, especially in Europe, utter catastrophe may be just around the corner.
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