Professional Centrism Now Adding to Trade Deficit

It appears that the Washington Post could not produce enough fake, pompous indignation against both political parties to satiate the domestic market. So, in order to satisfy demand, we are now importing it from England. The Economist, in its May 25th edition, has perfected the production process. They declare that there are three areas in which President Obama can work with Congressional Republicans: immigration, entitlements, and tax reform. They fail to mention important caveats, though.

With regards to immigration: while significant progress has been made on the Senate side, we still don't know whether or not enough Republicans will flock to the bill to get it to the desired 80-vote threshold. What's even less certain is if the Republican-controlled House will take up a large bill dealing with comprehensive reform, let alone vote for such a bill.

With regards to entitlements: the President has already proposed moving Social Security to a chained CPI as well as raising the Medicare eligibility age to 67. These proposals went nowhere. (Granted, these proposals were tied in to a larger compromise. But the compromise was centrist, so centrists should have loved that.)

With regards to tax reform: Representative Camp and Senator Baucus are working on reforming the tax code. The only missing ingredient? The President's blessing, according to the Economist.

Not to skew the Economist too hard. Prima facie, the argument for bipartisan compromise on these three issues is compelling, and the Economist spells out a particularly good case for why compromise should appeal to both sides on the issue of tax reform. But the fact is, the current incarnation of the Republican party has neither the desire nor the incentive to compromise with the President and Senate Democrats on important issues.Compromise with the Democrats helps the Democrats build their brand as a serious, centrist party, while tarnishing the Republicans' brand of unapologetic conservatism that appeals to the only voters that the Republicans need in their heavily gerrymandered districts in November: their base.

Searching for the GE of My Thoughts on DSGE

Noah Smith has an interesting post on the encouraging further developments of the DSGE model which got me to thinking about my last post: I feel as if I come off strongly in favor of DSGE models. While I have a certain fondness for DSGE models (it was the first macroeconomic model I was able to modify and simulate to my own whims; and it's still influential in economic circles) I am completely aware of their limitations. What I do feel, however, is that Mark Buchanan did not address these limitations and, instead, attacked the model from a more populist viewpoint that adds little to the conversation of economic modeling.