On Murray-Ryan Budget Deal It's Time to 'Embrace the Suck'

      Just another reason to love Nancy Pelosi.

      "House Minority Leader Nancy Pelosi (D-CA) on Thursday reportedly whipped enough Democrats to "embrace the suck" and back the new budget agreement on the floor for the bill to pass.

“We need to get this off the table so we can go forward,” Pelosi said in a closed-door meeting of House Democrats, an anonymous source who was present told Politico."

     "Pelosi expressed disappointment that the budget agreement hammered out between Sen. Patty Murray (D-WA) and Rep. Paul Ryan (R-WI) did not include an extension of unemployment benefits, but said it wasn't worth holding up the deal, according to Politico."

     "Instead the minority leader told the caucus there were better fights to pick and Democrats could focus on the "do-nothing GOP message" if they allowed the budget bill to move forward, the anonymous attendee told Politico."

     http://talkingpointsmemo.com/livewire/nancy-pelosi-whips-dems-on-budget-deal-embrace-the-suck

    I agree with Ms. Pelosi. While it's appalling that the GOP is demanding this as their pound of flesh to do what they should do anyway and pass a budget and get alleviate the pain on this appalling sequester, it's not s surprise and it's not worth doing nothing. The choice of the status quo which would mean a budget next year of $968 billion dollars is not worth fighting over a UI extension which the GOP doesn't want to do anyway.

    This morning I quoted from Diary of a Republican Hater reader Greg's own blog that argued that as far as he is concerned economists can be divided into 'sycophants' and 'henchmen.'

    "Classifying economists is becoming quite a challenge these days. Austrians, classicals, neo classicals, keynesians, new keynesians, monetarists, post keynesians, market monetarists and now new monetarists.  I have two classifications. Sycophant or Henchmen. When I read an oped by an economist these days they usually are trying to make the non economist believe one of two things."

      
    "One;  they want you to believe that the people who are on top of the world calling the shots and determining much of your economic fate, are hardworking smart guys who know what is best and have studied these things like finance and the economics and if you just don't tax them too much or make them follow too many rules, they'll make the world you inhabit with them a more livable place and you'll be happier. These are the sycophants."

     "Two; they want you to believe that "There is no alternative"  this is how its going to be while they are in charge so get used to it. These are the henchmen."

    "Either  belief you come away with is fine with the guys running the economy."

     http://gbgasser.blogspot.com/2013/12/sycophants-and-henchmen.html

 

    http://diaryofarepublicanhater.blogspot.com/2013/12/greg-on-difference-between-sycophants.html

 

    So which category is Sumner here? What needs to be understood is that the GOP isn't just refusing to extend UI for tactical reasons but they truly do believe in this. Sumner is important here-whether he admits to being a Republican-or whether he even votes Republican or votes at all is besides the point. He provides the theoretical and ideological basis for these miserable Republican politics that the majority of the country does not want.

 

    "If Congress doesn’t renew extended UI benefits, as now seems likely, we’ll have an interesting experiment in 2014.  I’m on record as believing extended UI raised the unemployment rate by around 0.5% (DeLong seems to agree with me on this point), but have an open mind on the issue."

 

     http://www.themoneyillusion.com/?p=25288

 

      Here's the trouble though. He has an open mind on the issue but what would he have to see that would change his mind?

 

      "There’s also the issue of whether monetary offset applies to this sort of policy change–I say partly but not completely as these are lower skilled workers (on average) and hence RGDP changes less than employment when they find jobs. Also it’s a positive supply shock that does not raise inflation.  Of course monetary offset does apply to the demand-side effects of lower UI payments, and with Yellen coming in I think monetary policy will be as aggressive in doing offset, if not more so, than under Bernanke.  My hunch is RGDP growth might pick up slightly in 2014 because of:"

 

1.  Yellen.
2.  Less UI supply-side effects.
3.  Possible European recovery boosting US manufacturing.
4.  Stock market seems optimistic.  Rising long term rates.

     "I emphasize slightly faster–I’m not expecting a boom.  We are also getting a slight reduction in austerity, but probably not a big enough policy swing there to have another offset test.  Most forecasters expect a slight pickup in growth, so I’m not exactly going out on a limb here."

     I think he and the forecasters are probably right. However, if the effect is expected to be modest and he sees UI as just one out of 4 factors it'll be fairly hard to tease out how much is due to 2 but probably a pretty modest amount.