Normal Confusion

Like all fevers that gripping Washington will break. I doubt any time soon though. Until then we will lurch from crisis to crisis as the two sides battle for a longer term period of supremacy.

Meanwhile for those of you interested in the real world  we seem to have hit a temporary peak. Consumer confidence is beginning to show signs of stress. Last week’s University of Michigan survey showed a slight decline in consumer attitudes towards the current situation. The index dropped from December’s 72.9 to a preliminary 71.3 in January. This is not a huge decline, obviously, but when combined with other measures, it is one that suggests the economy is being affected by the civil war raging in Washington.

The lack of political stability is leaking into the economy in many ways.

It clearly has ground policy making to a halt. The ebb and flow of the political battle is an engaging struggle for those who are committed partisans, but the collateral damage is now adding up. Anyone with a more detached perspective has to be more concerned about that damage and to the long term prospect for a return to normal.

With policy making now derailed uncertainty has risen. We are told constantly that uncertainty over policy outcomes in Washington is a primary driver of business indecision. I think it is important to be clear about that uncertainty. It is far less a concern over tax policy – the right wing always throws the prospect of higher taxes up as a sure concern for business – but is more likely to be a concern over the lack of demand. And the collapse in demand, which has only partially been offset by subsequent recovery, remains our biggest challenge.

Not that you could tell this by listening in on the conversation in Washington.

Within the rarified air of the elite whose grip controls the policy levers the only topic being discussed is government spending and the associated debt. Not only is this not particularly relevant it is damaging to our chances of recovery.

It is not relevant because we don’t have a debt problem, or rather, what debt problem we do have is way off in the future and can be dealt with after we have recovered. And it is damaging to our recovery because now is exactly the wrong time to drain resources out of the economy via a restriction on government spending.

In other words the entire discussion in Washington could not be more harmful.

We all know this. It continues nonetheless. Apparently no matter how many elections we have, we cannot end the fight. I am no student of American history back in the early years, but I cannot recall any circumstance in more recent years when the divide has been wider. There is no middle ground on which to build a shared vision. Centrism is a anachronism. The days of grand bargains seem to have passed us by.

At this point it doesn’t matter who is to blame for the war, the stark fact is that a war is going on. It must be fought accordingly.

Nor does it seem to matter who wins national elections. The real battle is being fought at the state level. In Virginia the Republicans pushed through a re-districting plan that disenfranchises minorities – explicitly – whilst a key Democrat was in Washington to attend the Presidential inauguration. That lack of a single vote made all the difference. In Kansas, which in many ways has become the test bed of extreme right wing views, a move is afoot to abolish income tax and defund many more government programs. In a few states legislators have called for open defiance of Obama’s proposed gun laws – weak though they are. And in others, Republican governors are refusing to cooperate with the implementation of health care reform. Each of these is an instance of the divide widening. Of the enmity building. Of the growing distrust and the emerging chasm between the sides. And of the downward spiral into underhandedness and outright cheating to win influence.

This defiance in the MidWest and South is not yet matched by an equal force in the Northeast or the West. So the GOP has the upper hand. But at some point tempers will fray. The reaction to the hurricane Sandy relief vote showed how thin is the veil drawn over civility at the moment. Never before had disaster relief been refused. Never before had it been held up for so long after the event. And never before had right wing partisan agendas intruded into such a humanitarian cause. The spectacle of a series of Southern legislators refusing aid to New York City despite the fact that they themselves had received aid in the recent past. This was a bald statement of intent. Those involved eventually backed down, but the message is clear. Even humanitarian aid is  now fair game in the partisan struggle.

There is precious little unity in a vast nation like America at the best of times. Regional aspirations, problems, and interests are more easily brushed under the carpet during good economic times. But we haven’t had such times for a while now. Stagnation has been the theme for most people since the late 1990’s. As the American dream fades into memory it is only natural that people look to assign blame and find scapegoats. This search for why things went wrong is what is fueling our war. The impasse reflects two interpretations of the recent past. One side sees excessive government as deadweight, the other sees it as our savior. These views are incompatible. They represent timeless arguments. They will not be resolved in our lifetime, nor in any other. Modern democracy relies upon an acceptance by both sides that there is a cordial if argumentative center somewhere that reflects a balance. Neither too much, or too little government. There is room for both a thriving private sector and a supportive, but not intrusive public sector.

Ideologues disagree of course. They see only a titanic clash of ideas. They seek purity. They believe in the certainty of their own vision and tolerate no alternative.

We are in a moment where the ideologues are ignoring us and are engaged in all out war.

So the economy festers. The suffering builds. The future grows more dim daily.

It’s hard to be optimistic under these circumstances. Confusion has become the normality we have to live with. We created this mess. Perhaps we can fix it.