Hennessey: better than me
January 14, 2013, 10:52 pm
Filed under: Uncategorized

By the way, lest anyone accuse me of cherry-picking low-hanging fruit when it comes to my complaints about commentary on ‘default’ and proving myself right all the time (which DOES get tiresome!), let me point you toward this piece by Keith Hennessey which is both reasonable and disagrees with me and all things considered is probably rooted in better ideas and (definitely) in more knowledge than my half-baked off-the-cuff ones.

In his parlance, what I’ve been complaining about are commentators who fail to distinguish between a default and a ‘technical default’. The solution I’ve been pushing, Split The Difference, is (mostly) a method of ‘passive prioritization’, which Hennessey calls a bad, irresponsible and strategically-misguided idea (and I’m not sure he’s wrong).

On the strategic point though,

Even if you disagree with me, and you think we need to take extreme measures to force President Obama to agree to spending cuts, and you’re willing to damage the U.S. government’s contracting credibility by starving it of cash by denying it the ability to borrow more, …

… what makes you think the President and his team are going to do so in a way that you like or that creates leverage for Congressional Republicans? Remember, he has the flexibility to decide which payments get delayed.

I guess part of where I’m coming from is that I don’t give a rat’s ass about ‘leverage for Congressional Republicans’ as such. *shrug*

Anyway, read the whole thing. I still like #SplitTheDiff though and it’s still the only least-squares, entropy-maximizing solution. You can’t take that away from me.

UPDATE: Also see this good round-up of some basic definitions of all these terms that everyone else would be using too if they were using all these terms correctly.

3 Comments so far
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I’m not sure why cutting spending in a way the republicans (I assume) don’t approve of would be bad. Aren’t we past the point where we’ll get the specific cuts that we want?

If I were the republicans in congress, I’d tell the president and congressional democrats to propose a budget that is balanced this year. Any way that they want to do it and then approve it. If 100% of defense spending was cut then that would be a good start towards balancing the budget. Only a half trillion to go.

Any cuts are good cuts, as far as I’m concerned.

Comment by Tim

I agree sorta. My read of his likely response is that:

1. going down that path just means delaying spending (not cutting), because everyone would ‘sue’ for (and get) payment

2. so you really need this threat to form the ‘leverage’ for a ‘deal’ for the real cuts you want. And so, that’s what he’s strategizing about. (And to be honest, that’s what ‘split the difference’ would be about too.)

So I don’t have a good response to any of that. In particular on #1, it seems correct (on contracts and such), *except* for something like Social Security. Theoretically I think no one could ‘sue’ to get backdated SS checks that weren’t paid due to a crunch. But: is that the outcome we want in order to get ‘any cuts’? All spending gets restored eventually anyway, except SS checks? Hmm. I’m not sure even *I’m* on board with that, and that’s saying something.

Comment by The Crimson Reach

While we both agree that SS is a mess we don’t want to end payments immediately. On the other hand nothing good is going to happen until changes are at least made to it.

I can’t see how we can continue with unbalanced budgets. And we could end all non SS, Medicare, Medicaid, unemployment funding and still have an unbalanced budget. I think that we are talking about which kind of eventual default that we are going to get, because default of some sort is what we are going to get.

Wend Murphy makes the case for repudiation, which sounds extreme but may be the best bad option.

I see why reducing entitlements is hard but somehow…

Comment by Tim

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