Friday, November 4, 2011

"You Can't Just Change the Rules Cuz You Don't Like the Outcome"

. Friday, November 4, 2011





Terrific Office last night. After Andy gets scolded by Robert California for his mistake-prone staff, Dwight creates a doomsday machine (he calls it "an accountability booster"): if the staff make five mistakes in a day, an email that incriminates them all and recommends that the branch be closed gets sent automatically to Robert California. They all get fired and the Scranton branch closes. Of course, they spend more time trying to figure out whether it's just a scare tactic and on how to turn it off than they do working hard to avoid mistakes. Consequently, they trigger the five-mistake threshold.

Today I learn that legislators are considering how to prevent the automatic cuts in defense spending that are scheduled to take effect when the bipartisan Panel that is supposed to find some way to reduce the size of the budget deficit fails to reach such an agreement. Of course, the automatic cuts were never supposed to occur. Instead, the threat of the automatic cuts was supposed to be sufficient to force the Panel to make the adjustments necessary to avoid them. In other words, the automatic cuts are a doomsday machine. But, of course, Congress is getting scared that the Panel will fail, thereby triggering unwanted large cuts in defense spending. "Shut down the machine! Shut it down!" they now scream (watch the clip).  David Camp (R-Mich) recently begged Doug Elmendorf of the CBO to reassure him that nothing prevented Congress from "changing the mechanism for automatic cuts." Elmendorf reassured Camp, "Any Congress can reverse the actions of a previous Congress."

To restate Elmendorf's point: Congress can't commit itself. Most members recognize this. As Representative  K. Michael Conaway, Republican of Texas and a member of the House Armed Services Committee, noted, "If the joint select committee does not do what it needs to do, most of us will move heaven and earth to find an alternative that prevents a sequester from happening.” So, the threat of automatic cuts isn't credible. And because the threat isn't credible, the Panel isn't really under much pressure to find some way to cut the deficit by $1.2 trillion. As a result, maybe we shouldn't really expect the Panel to find a way to cut $1.2 trillion from the deficit because they bear no short run cost for failing to do so. Oh wait, the Times says they'll be embarrassed.

Spoiler alert: In the end, Dwight shuts down his doomsday machine. Turns out that even Dwight has time inconsistent preferences. His desire to be liked by the staff over-rides his desire to force the staff to improve by holding them accountable. The problem, of course, is that because Dwight shuts down the machine the staff will continue to screw up, and thus move inexorably closer to losing their jobs anyway. Maybe there's a lesson in there somewhere for Congress.

1 comments:

Emmanuel said...

The lesson? More credit downgrades when the supercommittee fails to agree on anything.

I suppose they can't "groundhog" that...

"You Can't Just Change the Rules Cuz You Don't Like the Outcome"
 
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