The dull topic of deficits and fiscal policy are no where near as compelling and interesting at the moment when compared with all the other topics at hand such as the current civil unrest in Ferguson, Missouri, the ongoing militarization of a growing number of local police forces in American cities and all the incredible suffering overseas due to war and human rights abuses. So I deviate from these pressing concerns with a further bit of boring political economy about our present fiscal matters. One of the reasons is not just that the economy is always an issue but that it does appear that McConnell & Co. are already threatening another costly government shutdown should they take back the Senate this November. According to DNC chairperson Debbie Wasserman Shultz, “We now have it confirmed — electing a Republican Senate majority would put us back on the road to another shutdown...” And House Minority Whip, Steny Hoyer lamented of the prospect of a GOP majority in the Senate; "I am deeply disappointed that Sen. McConnell is already threatening a government shutdown next year if Republicans’ yet-to-be-named partisan demands aren’t met...This further shows that Republicans are more interested in partisan, political games than in governing on behalf of the American people."
But the GOP shows no signs of wanting to avoid another costly shutdown. It is unlikely that we'll see the new Tea Party dominated GOP back down. It seems, rather, that they've been doubling down on their old strategy despite the obvious long term harm to the American people. Congressman Steve Israel (D-NY) has referred to the GOP threats as "partisan tools" when it comes to using the threat of a shutdown as bargaining chips for unreasonable and unpopular legislation and called for such abuses to cease. But it is unlikely that we'll see the new Tea Party dominated GOP back down. It seems, rather, that they've been doubling down on their old strategy despite the financial cost and long term harm to the American people.
The fact is, however, that cutting spending is a bad idea at a time when the economy is finally making a comeback and deficits, in the short term are completely irrelevant to the economy's long term health. It's not just that austerity now would shutdown the recovery; it's that deficits generally don't matter. These are times when many economic ideas are coming from unlikely sources and Warren Mosler, an economist and president of a capital management firm called Valance Company, is just one of those sources!