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The Seen and the Unseen of the Debt Ceiling Dealings

July 26, 2011

                                                                                          There is a lot of murkiness surrounding the debt ceiling talks, and rational argument and discussion based on reason has quickly given way to political name calling and demagoguery by both sides. It is important, in all of the swirling uncertainty surrounding the myriad of debt ceiling deals to keep in mind the message Bastiat tried to convey in his influential essay “That Which is Seen, and That Which is not Seen.” Bastiat saw that with any policy or proposal, there was the obvious, intended effect, that which was seen. This effect was often used to justify the proposal as meeting its usually well intentioned goals; Bastiat saw that there was in every case, deeper, more subtle effects of these policies, and percieving these ‘unseen’ effects was crucial:

“Of these effects, the first only is immediate; it manifests itself simultaneously with its cause – it is seen. The others unfold in succession – they are not seen: it is well for us, if they are foreseen. Between a good and a bad economist this constitutes the whole difference – the one takes account of the visible effect; the other takes account both of the effects which are seen, and also of those which it is necessary to foresee”

The debt ceiling debates and deals unfortunately fall into this trap. The surface figures of nominal cuts in spending or revenue increases mask what would be the true effects of the proposed deals, and this causes the debates over the debt ceiling to devolve into political manuevering, with a lack of meaningful discussion. The result for the typical American is predictable, a sense of frustration and indignation that the politicians were unable to make any meaningful progress, but also an uncomfortable uncertainty as to what the true situation is, and an innate suspicion of believing wholeheartedly what is heard from the mouths of politicians, whatever their political affiliation.

This post is more about the concept of seeing the unseen, piercing through the surface levels of the situation to determine what is really happening based on one’s own reason. It would be lacking, however, if it did not provide at least one instance of what I am talking about, a concrete example to look at.

In terms of the nominal spending cuts in the proposed deals, two things that fall under the unseen must be kept in mind. Most people assume that a spending cut means spending less next year than we spend this year, but that is not the case. Washington operates under “baseline budgeting,” meaning that if Congress plans to spend $2 billion more on a program than it spent this year, but only spends $1 billion more, that is a $1 billion “cut.” Thus, the $2 trillion in spending “cuts” currently being discussed are based on a baseline projection that incorporates growth in government spending; even with these cuts, government spending would  increase from current levels by $1.8 trillion.  All of the proposed deals, no matter how large the nominal spending cut, would actually allow federal revenue, federal spending, and the national debt all to increase over the next decade.

Another of the unseen aspects of these proposals, and one with a perhaps darker bent to it, is that all of these proposed spending cuts are just that, proposed. This congress has no authority to bind the hands of future sessions, so in the future these promised spending cuts could simply be ignored. This would not be such a concern if politicians did not have such an abysmal record in making politically unpopular decisions such as spending cuts, which is in some ways understandable as politicians in most cases are well intentioned, rational beings who believe they can do some measure of good and thus seek reelection. The other reason to be concerned about the future uncertainty of the promised spending cuts being realized is that the proposed cuts take place over a number of years, in most of the proposed deals they take place over a decade. This provides more opportunities for the political will of the congress to break, and for the spending cuts to fall by the wayside.

Both political parties fall prey to this trap of the seen and the unseen, as do their supporters among the American people. If they keep Bastiat’s words in mind, perhaps they will find more room for reasoned, meaningful debate, and the citizenry will be better informed.


From → Politics

  1. Does anyone want to step in and explain Obama’s persistently fallacious economics? If the federal government’s credit rating is downgraded that will make it more expensive for it to borrow — not anyone else. Potentially it will keep it from borrowing as much, and leave more credit for private and other borrowers, lowering their rates.

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