Wednesday, December 5, 2012

Is Greg Mankiw right?

Did Bowles-Simpson really say we ought to lower rates?

I did not follow them closely enough but that sounds odd.

I can sympathize with him on some of these specific points, but this strikes me as Greg narrowly focusing on some favorite issues of his and confusing not doing what he'd like to do with not compromising. In a stand-off like this you have to always remember that both sides are going to be making initial offers that don't necessarily reflect where they want to be in the end. Modest dividend tax increases may be what Obama really wants - he may be demanding higher so that he can trade it for something else that the Republicans are being intransigent on. Because Greg, let's be honest - this is not a fight where you get a middle-of-the-road solution by laying all your cards out on the table on the first run.

Obama is a moderate Democrat. I think any partisanship is in large part a strategic reaction to Republican over-reaction to his administration. Given the environment of the Senate that Obama has been dealing with, the only way to not be a partisan Democrat is to be a partisan Republican and that's no solution. Partisan Republican bills have been the only thing with a chance of getting past the filibuster.

So Obama is betting that a negotiation between two partisan groups has a more likely chance of getting a moderate solution than offering a moderate solution and waiting for partisan Republican to accept it. He may or may not be right about that.

Whether Obama is right or not, I think Mankiw is being naive in his assessment here.

And, perhaps, a little bitter over the campaign and how people treated him during the campaign.


  1. Hey Daniel,
    A friend of mine told me about a story you wrote on First American Title, I can't seem to find it but I'd love to read it. Can you send me the link?


  2. Mankiw is naive or disingenuous. Paul Ryan himself turned Bowles Simpson down.

    It is possible that the Republicans could have gotten a better deal from Obama a year ago but after bitch slapping Obama for the last two years they should hardly be surprised that he finally puts his elbow in their face. The number one rule of successful negotiation is to "open high".

    The Republicans have been trying to have their cake and eat it too: (1) demanding big cuts to entitlement spending; and (2) campaigning against Obama because Obama proposed some cuts to Medicare spending. Now Obama is challenging them to lay out what their position really is. The Republicans problem is that they have no coherent, thought out position to put forward. Obama is quite right (and quite within his rights) to insist on the Republicans being specific.


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