Goldman Sachs says divided government probably best

High-priced global strategists support divided rule for deficit reduction

Topics: 2012 Elections, Goldman Sachs, Federal Deficit,

Goldman Sachs says divided government probably bestPresident Obama and John Boehner (Credit: AP)

Goldman Sachs says if you want fiscal conservatism, vote to keep things exactly the way they are. The (presumably very well compensated) analysts at Goldman’s Global Economics, Commodities and Strategy Research team have released a note (summarized by Suzy Khimm) arguing that a divided Congress plus a Democrat in the White House equals “fiscal restraint.” This may shock people who vote Republican under the impression that the party’s primary goal is the reduction of the federal deficit as opposed to the elimination of the welfare state and the liberation of rich people from the shackles of redistributive taxation. But it’s pretty obvious.

If Democrats control the White House and both houses of Congress, they would likely extend the payroll tax cut and attempt more stimulative spending, because millions of people are still out of work. (They would also likely not allow defense spending to be significantly cut, because they don’t want people to accuse them of hating the troops.) If the GOP controls government, they will “fix the deficit” by passing huge tax cuts. Just massive tax cuts, on top of the permanent extension of the Bush tax cuts. (Which Democrats would probably only mostly extend.)

But with divided government, the status quo wins out, and right now the status quo involves horrific insurmountable gridlock coupled with the threat of billions of dollars in scheduled automatic (perhaps devastating) spending cuts and the expiration of various tax cuts. Goldman says that would mean that “a compromise on the expiring tax cuts will be necessary” (which would probably just mean a government shutdown followed once again by the “temporary” extension of the Bush tax cuts), but divided government is the only scenario in which the automatic cuts actually have any chance of taking effect.

You Might Also Like

This note is of interest only if you are one of those people with an obsessive interest in the size of the federal deficit as opposed to, like, “how many Americans have jobs and can afford to go to the dentist,” but give the money-grubbing world economy-destroying plundering high-finance pirates of Goldman credit for plainly stating that the deficit won’t go away without revenue, and “cut all taxes” is not a realistic means of generating revenue.

Smart “fiscal conservatives” have long understood that divided government is best for dragging all government business to a halt, which is generally the unspoken (or occasionally spoken) goal of professional “deficit hawks.” Goldman gets that you want Democrats in charge of most of the government if you want a balanced budget, because Democrats crave compromise and balanced budgets and fiscal responsibility, on account of modern Democrats being for the most part Rockefeller Republicans. (But if you let the Dems be in charge of all of it, they might try to “give everyone healthcare” again, or something equally awful.)

My question: How much do people pay for these GS research notes, exactly? Because the analysis seems “right” but it is also something you could read on a blog, for free. Like, a Slate intern could have also written this, and it would’ve been shorter, probably. Stop paying Goldman Sachs, and put some boring econ “wonk bloggers” on your Google Reader instead. Fiscal restraint begins at home!

Alex Pareene
Alex Pareene writes about politics for Salon and is the author of "The Rude Guide to Mitt." Email him at apareene@salon.com and follow him on Twitter @pareene

More Related Stories

Featured Slide Shows

  • Share on Twitter
  • Share on Facebook
  • 1 of 13
  • Close
  • Fullscreen
  • Thumbnails

    The 12 most incredible pint-size look-alikes in "Orange Is the New Black" season 3

    DAYA  
    Young Daya has yet to become entirely jaded, but she has the character's trademark skeptical pout down pat. And with a piece-of-work mother like Aleida -- who oscillates between jealousy and scorn for her creatively gifted daughter, chucking out the artwork she brings home from summer camp -- who can blame her?

    The 12 most incredible pint-size look-alikes in "Orange Is the New Black" season 3

    MORELLO   
    With her marriage to prison penpal Vince Muccio, Lorna finally got to wear the white veil she has fantasized about since childhood (even if it was made of toilet paper).

    The 12 most incredible pint-size look-alikes in "Orange Is the New Black" season 3

    CINDY   
    Cindy's embrace of Judaism makes sense when we see her childhood, lived under the fist of a terrifying father who preached a fire-and-brimstone version of Christianity. As she put it: "I was raised in a church where I was told to believe and pray. And if I was bad, I’d go to hell."

    The 12 most incredible pint-size look-alikes in "Orange Is the New Black" season 3

    CAPUTO   
    Joey Caputo has always tried to be a good guy, whether it's offering to fight a disabled wrestler at a high school wrestling event or giving up his musical ambitions to raise another man's child. But trying to be a nice guy never exactly worked out for him -- which might explain why he decides to take the selfish route in the Season 3 finale.

    The 12 most incredible pint-size look-alikes in "Orange Is the New Black" season 3

    BOO   
    In one of the season's more moving flashbacks, we see a young Boo -- who rejected the traditional trappings of femininity from a young age -- clashing with her mother over what to wear. Later, she makes the decision not to visit her mother on her deathbed if it means pretending to be something she's not. As she puts it, "I refuse to be invisible, Daddy. Not for you, not for Mom, not for anybody.”

    The 12 most incredible pint-size look-alikes in "Orange Is the New Black" season 3

    SOSO
    We still don't know what landed Brooke Soso in the slammer, but a late-season flashback suggests that some seriously overbearing parenting may have been the impetus for her downward spiral.

    The 12 most incredible pint-size look-alikes in "Orange Is the New Black" season 3

    POUSSEY
    We already know a little about Poussey's relationship with her military father, but this season we saw a softer side of the spunky fan-favorite, who still pines for the loving mom that she lost too young.

    The 12 most incredible pint-size look-alikes in "Orange Is the New Black" season 3

    PENNSATUCKY
    Pennsatucky had something of a redemption arc this season, and glimpses of her childhood only serve to increase viewer sympathy for the character, whose mother forced her to chug Mountain Dew outside the Social Security Administration office and stripped her of her sexual agency before she was even old enough to comprehend it.

    The 12 most incredible pint-size look-alikes in "Orange Is the New Black" season 3

    CHANG
    This season, we got an intense look at the teenage life of one of Litchfield's most isolated and underexplored inmates. Rebuffed and scorned by her suitor at an arranged marriage, the young Chinese immigrant stored up a grudge, and ultimately exacted a merciless revenge.

    The 12 most incredible pint-size look-alikes in "Orange Is the New Black" season 3

    HEALY
    It's difficult to sympathize with the racist, misogynist CO Sam Healy, but the snippets we get of his childhood -- raised by a mentally ill mother, vomited on by a homeless man he mistakes for Jesus when he runs to the church for help -- certainly help us understand him better.

    The 12 most incredible pint-size look-alikes in "Orange Is the New Black" season 3

    NORMA
    This season, we learned a lot about one of Litchfield's biggest enigmas, as we saw the roots of Norma's silence (a childhood stutter) and the reason for her incarceration (killing the oppressive cult leader she followed for decades).

    The 12 most incredible pint-size look-alikes in "Orange Is the New Black" season 3

    NICKI
    While Nicki's mother certainly isn't entirely to blame for her daughter's struggles with addiction, an early childhood flashback -- of an adorable young Nicki being rebuffed on Mother's Day -- certainly helps us understand the roots of Nicki's scarred psyche.

  • Recent Slide Shows

Comments

0 Comments

Comment Preview

Your name will appear as username ( settings | log out )

You may use these HTML tags and attributes: <a href=""> <b> <em> <strong> <i> <blockquote>