Hansel and Gretel

Hansel and Gretel
Hansel and Gretel meet Nanny Pelosi
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Friday, July 29, 2011

The Seen and the Unseen of the Debt Ceiling Dealings



The Seen and the Unseen

of the Debt Ceiling Dealings


                                                                                         























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.