Adventures in Arbitrariness: Interest Savings Edition

1858 Kabuki production. Via Wikipedia.

1858 Kabuki production. Via Wikipedia.

That the fiscal cliff negotiations involve, as Noah Smith describes it, a bit of “political kabuki theater” is inevitable — governance often seems to rest at the intersection of political will and public performance. But in the endless bipartisan Dance of the Sour Plum Pols this sometimes leads politicians to hold contradicting views, as evidenced this week by Republican’s (absurdly) insisting that savings on interest payments towards the national debt shouldn’t count when it’s proposed by Democrats. Zeke Miller at BuzzFeed Politics reports (all emphasis in bold mine):

Obama’s debt ceiling counteroffer to Republicans Monday night amounted to $1.22 trillion in spending cuts according to a source familiar with the negotiations, including $290 billion saved from lower-interest payments. House Republicans discount those spending cuts, with Speaker of the House John Boehner spokesman Brendan Buck saying the Obama plan only included “$930 billion in spending cuts.”

But Republicans have employed this very same tool — counting the billions saved from not having to borrow billions more — to pad the size of deficit reduction, sometimes to placate their own restless base.

After the passage of the Budget Control Act of 2011, which raised the debt ceiling, and established the super committee and the fiscal cliff, Boehner bragged that the spending cuts outpaced the size of the debt ceiling hike, counting that as a major victory for Republicans. That was only a victory because the Congressional Budget Office included $156 billion in reduced borrowing costs.

Whether you view Boehner’s claim that interest savings don’t count probably depends on your partisan leanings, but the presumption that such savings don’t count in some objective sense is silly. Paying interest represents a real cost;

FE_PR_1119_interest2

And reducing that cost would, therefore, produce real savings. Believe it or not this actually holds true for the private sector as well. Otherwise, why would individuals bother refinancing mortgages or consolidating debts to pay a lower rate? If such savings didn’t meaningly and effectively count no one would be persuaded to achieve them.

In a way this touches on my other pet-peeve, which is asserting that spending less money in the future doesn’t qualify as a true spending cut unless it fulfills some special definition beyond spending less money. Now usually that means “less than last year,” or something, which might perfectly conform with your ideological standards but fails the smell test of being anything other than arbitrary.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s