Economic Policy -PPT

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28 Οκτ 2013 (πριν από 3 χρόνια και 11 μήνες)

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L ARRY D. SANDERS


JANUARY

2013

“DOOMSDAY” & “CATASTROPHE”
ECONOMICS:

CRAFTING POLICY FOR “CLIFF
-
HANGERS”

TROUBLING TREND


Periodic threats of economic crisis from government
shutdown increasing in frequency



Artificial crises that may have real impacts


Debt ceiling


Budget deficit


Budget passage


Sequestration



Impacts may include


Reduced credit rating for Federal borrowing


Private business uncertainty


Government uncertainty/preventative cuts in spending/programs


Economic slowdown

domestic & global

SHIFTING PARADIGMS OF GOVERNANCE:

HOW DOES THIS AFFECT POLICY &
POLICY EDUCATION?


Old paradigm:


Congress & Admin assume compromise essential in a democracy.


Congress Majority & Admin share primary role to govern.


The minority accepts role of “loyal opposition.”



New paradigm:


Congress fractured among


Some who consider compromise as desirable & some who do not.


Some who see that primary role is to govern, and some who see primary
role is to reduce/eliminate government.


The minority may play for destruction, not loyal opposition.


Forces policy to be conducted by crisis mgmt; recurring threats of
“doomsday” & “catastrophe.”

NEW PARADIGM OF “NO COMPROMISE”,
“CRISIS MANAGEMENT”


Old paradigm assumes


Continuous policy options available, with compromise
allowing politicians/decision makers to arrive at policy
option grudgingly acceptable to majority & minority


Negotiation process based on mix of reason & power
politics



New paradigm suggests


Policy options are discrete “either/or” choices


Compromising party may have to do so w/o reciprocation


Crisis may push choice in the direction of minority with no
compromise.

GOVERNMENT ABILITY TO DEFINE &
RESPOND TO DIFFICULT SITUATIONS


“Functional”


Relatively timely assessment & response that maintains
health/wellbeing of populace & functions of institutions


Requires strong majority support that can effectively plan &
implement response with consensus


Requires loyal opposition for long
-
term democratic health/ well
-
being to engage in negotiation & compromise


Assumes that government can be instrument of “good”



“Dysfunctional”


Breakdown in common ground evaluation/response


No consensus in definition of “healthy” solution
(economy/populace); Weak majority or split
govt

w/”
govt

is good”
battling “
govt

is bad.”

FINANCIAL CLIFF
-
HANGERS:

POLICY CHOICE AS GAME THEORY

(ASSUMES PROGRESSIVES HOLD SLIM MAJORITY)

Minority compromises as
“loyal opposition”

Minority refuses to
compromise; no loyalty

to
govt.

Majority


compromises

Resolution with both
giving some; could
result in long term
resolution with

maximum gov’t
fle硩bility

乯 long term resolution;
short term limited
success; minority pays a
political price, but may
see limits on govt.

Majority
refuses


to
compromise

No long term resolution;
short term limited
success; majority pays a
political price, but may
preserve
govt

programs

No resolution; crisis
dictates loss of govt.
flexibility to manage
events

CHALLENGE FOR PUBLIC ISSUE
EDUCATION


Resurrect a credible national forum for providing
public issues education.


Redouble efforts to provide science
-
based
objective information.


Frame the issue(s) objectively and based on the
reality of situation.


Continue to present relevant options that provide
flexibility even when the political posturing is
promoting illusion of “no choice.”


Do not accept patently false opinions; Recognition
by educator that just laying out options casts
educator as apologist/spokesperson for pro
-
govt

side.

CURRENT MACRO
-
ECONOMIC POLICY
SITUATION


2012 “fiscal cliff” successfully avoided


Compromise found half of $1.2 trillion in deficit
reduction


Pushed sequester of $600 mil. forward 2 months



New 2013 “dual cliff”


Debt ceiling

artificial Congressional requirement to
increase debt ceiling to allow gov’t to pay bills


Sequestration

to find remaining $600 mil


Half defense spending; half other program spending;
Some programs are exempt (SS, Medicare,
Medicaid, SNAP, etc.)

FUNDING ISSUES BECOME MOOT
ONCE OBLIGATIONS INCURRED


Mandatory vs. appropriated vs. authorized may
matter while legislation is being crafted.



Once legislation passed & federal government
incurs obligation, it must be paid.



Debt ceiling is about increasing what Federal
government can borrow to pay obligations, not
about whether obligations should be made.

DEBT CEILING CLIFF: PRECIPITATION OF
ARTIFICIAL CRISIS

MUST PAY?

PLANNING FOR FEDERAL CUTS…


President Obama’s acting budget director… told agency heads
… to step up their efforts to prepare for $85 billion in automatic
spending cuts on March 1 by planning for furloughs, contract
delays, hiring freezes, buyouts and other cost reductions. …



Zients
… cited the across
-
the
-
board cuts of 8 to 10 percent that
would take effect at most domestic and civilian military
agencies if Congress and the White House cannot reach a
deficit
-
reduction deal…



“If congressional Republicans refuse to pay America’s bills on
time, Social Security checks and veterans’ benefits will be
delayed,” Obama said.

“We might not be able to pay our
troops, or honor our contracts with small
-
business owners.


Food
inspectors, air traffic controllers, specialists who track down
loose nuclear material wouldn’t get their paychecks.”


Washington Post, Jan 15, 2013

LATE JANUARY UPDATE:

CONGRESS ATTEMPTS TO “KICK
THE CAN DOWN THE ROAD” … AGAIN


House GOP proposes to extend debt limit to Mid
-
May:


“The House plans to vote Wednesday (23 Jan) on a measure that
would leave the $16.4 trillion debt limit intact but declare that it
“shall not apply” from the date the measure passes until mid
-
May”
(18 May).

Washington Post, 22 Jan 2013.



Congress must make progress on budget, or
Congressional paychecks will be held up



Does not address sequester 1 March, & subsequent govt.
shutdown 27 Mar if sequester not done

THE POLITICS OF
FARM PROGRAM
PAYMENTS

16

Presidential Election

Map 2012

(Blue: Dem; Red:
Repub
)


Farm Program Payments

By Congressional District

(the darker, the more

payments)

2012 PRESIDENTIAL ELECTION CARTOGRAM: 332
-
206

(EACH ELECTORAL VOTE REPRESENTS 1 SQUARE)

17

http://www
-
personal.umich.edu/~mejn/election/2012/

Cartogram: map re
-
scaled according

to population, rather than according

to geographic size.

Presidential Election cartogram

popular vote by county, 2012

Presidential election
results, by

% of votes within
county, 2012

THANKS!


Contact:


larry.sanders@okstate.edu



Special thanks to:


Jim Novak (Auburn)


Jim Pease (
Virg
. Tech)