Apocalypse Now. Right Wing Style.

As a continuation on yesterday’s tirade against S&P, I see I am not alone. No lesser authority than the Financial Times also dismissed the rating agency as irrelevant. Good. It is.

The point, obviously, is that in any market so well researched, deep, and active as that for US bonds, it is practically impossible for anyone to have much to say that hasn’t already been thought by someone else. Not only that, but bond prices reflect all those thoughts. This is a rare instance where a market skeptic like myself is willing to agree that the market price is a good approximation of current information. So S&P’s announcement is hardly news. Even a relative duffer would know that there is quite a brouhaha brewing over the US deficit. Whether this turmoil is justified is neither here nor there. The noisy argument in Washington is not exactly behind closed doors.

Given this, we would expect the bond market to treat S&P’s statement with indifference. Which it did. Indeed, the bond market seems pretty much indifferent to all the fire and brimstone being spewed out about an imminent collapse in confidence caused by the sea of red ink that is supposed to be swamping the country’s finances. Rates are stable and the market’s waters calm.

This must annoy the austerity hawks no end. After all their best hope for fulfilling their dream of dismantling our safety net programs rests on creating sufficient panic that voters are fooled into acting for fear of some fiscal disaster befalling us. If the credit markets would cooperate and begin that panic, the hawks would get a terrific leg up on their scheme.

Alas no luck for the hawks so far.

The main point to bear in mind is that the entire discussion about the deficit is not about economics at all. It would be nice to get the debt down a bit, but we should harbor no illusions that it is either unmanageable or out of control. Think about it: the best cure for the deficit would be to get the unemployed workers we now have back to work so they can start to pay income taxes again. That would go a long way towards alleviating things. We could then focus on the longer term issues surrounding how to pay for health care, and how to raise revenues back to a more normal level of GDP. Remember that for all the angst and puffery, the US is a low tax state.

This implies that the big issues surrounding the deficit are all political.

There are two major issues: the first is defining America. Do we abandon social programs all together and throw our poor, elderly, and very young into an updated version of Hobbes vision of life – nasty, brutish, and short? Or do we shore up, and fix, the safety nets that have served us well for the last seventy years? In other words do we care about our fellow citizens? The current Republicans seem to think we don’t care. That is a novel position for them to adopt. In the past they have yelled about the safety net, but recognized its popularity. So that yelling was simply a smoke screen to cover their acquiescence of the reality that Americans like entitlements. Indeed the middle class owes its existence to the fact it can rely on a safety net whenever the going gets tough. Republicans have never liked the safety net, but have, grudgingly, accepted it as part of modern America.

This first aspect of the politics surrounding the deficit debate leads, inevitably, to the second: America is close to ungovernable at the moment. This is the bigger problem. Much bigger.

We are engulfed in a cultural war so deep and so wide that it has torn a rift between the world views of the two major parties. Common ground is scarce to non-exsitent. So much so that they seem incapable of talking to each other. In particular the dramatic shift of the Republicans out to an extreme right wing position on all social issues is the most salient feature of our times. They have adopted a zealous blinkered approach to issues that many Americans either don’t care much about, or take as resolved. The religious fervor motivating the attacks on our social programs and other features of modern society is a consequence of the long term unresolved nature of the arguments – unresolved, that is, at least in the minds of the zealots. Most voters appear to be pragmatic and motivated by near term needs: issues like unemployment, job security, and so on, dominate for most of us. The zealots though are crusaders. They want to alter the landscape so the country conforms to their point of view. They are radical. They want to carve out a new America. They represent a melange of minority views wrapped up into one dissenting glob. The issues near and dear to them have little in common except an objection to the consequences of modernity, and, in particular, the nature of modern America. The loss of power by the white population; immigration; the softening of social attitudes towards gay rights; the thickets of red tape spun by bureaucracy; the conflict between science and religion; abortion and the general perception of a decline in “values”, which is, as it ever was, an entirely subjective problem, are melded together into a particularly virulent populism that expresses itself as opposition to anything remotely left of center.

This populist backlash is both dangerous and destabilizing. At present it is the reason we cannot agree on a long term budget plan. The dissenters see no reason to compromise. They are, after all, imbued with religious rectitude. They have faith in their convictions. No amount of fact or evidence can shake them, or cause them to deviate from their path.

A path which is self destructive. Worse, which is destructive for us all.

This stubborn, willful adherence to righteousness is what makes the new right wing so difficult to deal with. It brooks no center. It recognizes no method other than its own.

We are fortunate that, so far, no leader has emerged to energize or exploit the putrid nature of the dissatisfaction these extremists harbor. We see local manifestations: the torrent of anti-labor legislation in Wisconsin and other states; the anti-immigration, pro-gun laws in Arizona; the oddities of the Tea Party in Maine and so on. But these are containable and reversible outbreaks of populism. They will wane and wither. The great worry is what goes on in Washington. The extremists have come close to closing the government. Now they making moves to stall debate over the debt ceiling. They are irrational. They are determined. They are a threat to modern America. Which is, of course, their goal.

So, we have entered a very dangerous period in history. For all the threats there are from abroad – and I think they are all exaggerated – the greatest existential threat to America lies within. It is the division of the country between its future and its past. We cannot but live in the future, yet many of us want to resurrect a version of the past. A past that inevitably conforms to some vision the historical record belies. The country is perilously close to being too big and too diverse to manage any longer. There is little common agreement over the problems, let alone the solutions. Corruption is rife – we elect far too many people; far too often; and pay too much for the privilege. Our electoral boundaries are rigged to preserve those in power. Our governance is antiquated and far too dependent on the world view of a group of deceased landowners whose grasp of issues we face today seems both remote and weak.

And yet we fail to look this in the face and recognize that action is needed. Perhaps that’s because were we to admit the scope of the problem we would all quickly agree that there is no one solution. Perhaps the US less U than S.

At least for now.

So the issues are not economic. They are political. We need to resolve what we can in order to make progress. We need to discuss what we mean by progress.

In a moment of true clarity the Financial Times editorial page called it when they said, today, of the extremist Republicans:

“Less deficit hawks than deficit lemmings, they seem perfectly prepared to bring the nation over the precipice in pursuit of spending cuts that would scare most Americans witless.”

That’s it in a nutshell.

One of our two major parties no longer is in touch with America. It has vectored off into its own imagination, where everyone has read Ayn Rand and wants to abandon all notions of civil society. There, in that rugged landscape of larger than life heroes, the healthy and the strong will dominate the sick and the weak. Conflicts will be resolved by might alone. And reason will take a back seat to faith. An apocalyptic vision drives them forward and enables them to be indifferent to the enormity of the mayhem they could unleash.

They are quite willing to burn America down in order to save it.

Lenin would be proud.

How ironic.