These budget cuts are entirely minnows. If we release a minnow, it’ll just be eaten by a whale. If we cut funding for the Special Olympics do we honestly not believe it’ll just be reallocated to the military, or health-care costs, or to tax cuts for the top 1%? And if we know that you can bet the bond market knows that. This theory requires the bond market to be terrified of a permanent rent-seeking hegemony of people with challenges getting to compete in sports while being recognized as equals among each other in a public space and poor women having reasonable access to pap smears, and thus we need to smash the Special Olympics and Planned Parenthood immediately to show “political will.” It just doesn’t make sense within its own theory (emphasis added).By the way, I'm not sold -- yet -- on Ezra Klein's sense that the outcome of the budget showdown will be a big GOP win on the substance, even if they lose on the politics. At least, if he means it in terms of a bargaining victory beyond what one would extrapolate from the election results last November. That is, the result will certainly be very different than what the 111th Congress would have produced, but it's not clear, yet, that the GOP negotiating strategy of demanding numerous policy riders and far larger spending cuts than anyone thinks are possible will actually wind up pushing the final result in their favor. We're not quite there, yet, I don't think.
At any rate, Mike Konczal's (Rortybomb) post is excellent on the substance of budgets and economic growth, and well worth reading in full.