I swear, there sometimes seems to be little difference between politicians and college students. Besides juvenile behavior on the Internet, in the case of the debt limit debate, it seems that politicians can't meet a deadline to save their lives (I seem to remember all my English major friends constantly getting extensions on their papers). According to Politico, Senator Dick Durbin is pushing for some sort of short term deal as he believes there is no way they will reach an agreement by August 2nd, less than a month and a half away. A short term deal would raise the debt limit by a smaller amount than the one requested in order to give them more time to negotiate. The only problem is that if they extend the deadline, you know that they will just wait until a month or two before it in order to start really negotiating. And once again we will be told how the sky will fall, dogs and cats will be living together if the limit is not raised at least temporarily. Kicking the can is the favorite pastime of politicians after all, who wants to actually do something that might create effective negative campaign ads by future challengers?
I'm also getting worried that the Republicans will chicken out of this fight like they did the 2011 budget fight, which after all the hand waving still increased government spending by $3.3 billion over 2010 (obviously nowhere near the $38.5 billion in cuts they were claiming). Apparently there is talk about cutting $220 billion over the next decade by changing the way the official CPI is calculated from the current method to a "chained" method in order to lower cost of living adjustments. The chained method does have a certain logic to it, as it better accounts for switching between product categories due to cost (for example if you start eating more pork instead of beef because of increasing prices) and it would lead to a slightly smaller CPI.
But I have a few problems with this tactic. First, and most importantly, the GOP was not swept into control of the House in 2010 to fiddle with statistics. They are supposed to be making structural cuts in government to help bring our budget back under control and to take government out of our lives as much as possible. If they fold on this, voters in 2012 may look at their performance and realize they have accomplished nothing. This could lead to a loss of the House to the Democrats, another four years of Barack "insane in the membrane" Obama and possibly the formation of a third party which could draw many of the more fed up members of the GOP coalition (remember it wasn't that long ago that the Perot people cost the GOP the 1992 and possibly also the 1996 election). Second, there is no guarantee that this change will actually lead to lower baseline spending because inflation might be higher than the current group of government beancounters expect. It doesn't look like the Federal Reserve will be raising rates anytime soon and unfortunately our zero interest rate policy is creating structural weakness in the dollar and stoking commodity prices which increases inflation. Also, it is not outside the realm of possibility for a broader conflict in the Middle East, either involving Israel or some of the current or future Arab Spring countries. That could cause oil prices to go completely out of control. Third, I have a problem with the government fiddling with statistics constantly. When statistics like the CPI and unemployment rate are manipulated it just makes it that much harder to get an objective view of the economy and to compare where we are to prior historical periods.
Let's hope the Republicans show more backbone this time. It's not like there isn't room in our budget for cuts, it's grown 28% since 2008!