Obama

/ / , / 0 comments

Say No To Jack Lew

Someone asked what I thought of Jack Lew as Treasury Secretary. The King is dead, long live the King. That about covers it.

Lew is a Wall Street guy.

Lew is a proponent of the failed banking deregulation.

Lew ran one part of Citigroup – a part loaded with toxic assets.

Lew wrote budget cutting proposals for the Obama administration that slashed the safety net, whilst preserving the Bush tax cuts.

Lew is not a progressive.

Lew is a continuation of the now decades long line of revolving door financiers who shuttle between government and high finance, blur the lines between the two, and who are utterly incapable of advocating a policy not redolent with elitist bias.

He reeks of establishment thought, and the closed mind of Washington group think. He sees only what the establishment sees. He hears only what it hears. He will do their bidding well.

And because of that he will be confirmed.

Another opportunity for true change goes wanting.

Am I clear?

/ / , , , , / 0 comments

Debt Ceiling Dodgeball

The Obama administration wants us to think it’s playing hardball. Maybe it is. Maybe.

This debt ceiling showdown is a farce much like the fiscal cliff. Both exist because the Republican party says so. Without the urging of the far right neither would have consumed so much of our time.

Because of the legislation passed through Congress over the years the US has issued debt. Because of other legislation passed through Congress we also have a ceiling on how much debt we can issue. In a sensible world Congress would act to reconcile these two aspects of its own activities. It orders the payments, it orders the revenue gathering, it orders the debt issuance, so it is responsible -end to end – of the entire process. It is responsible for the level of our debt.

So it is intensely odd to watch as Congress urges the president to suggest legislation to avoid hitting the debt ceiling. It is a Congressional responsibility. Why foist it on a different branch of government? It is a dereliction of duty.

The answer, of course, is that Congress doesn’t want to lead the way. It is caught in a cleft of its own device. The Republicans want to cut our social programs. This is wildly unpopular. So instead of saying want they want to do, they build the argument that we cannot afford those programs and thus are simply being ‘forced’ by our fiscal circumstances to cut them. That they created those very circumstances they all hope we don’t notice. They redirect our attention by making it look as if it is Obama’s job to suggest the cuts that the Republicans want to make. It isn’t. And he shouldn’t.

Thus far he hasn’t.

Which has produced the current stand off.

The Republicans threaten economic mayhem.Obama stands on principle.

It is the Republicans responsibility to come forward and suggest which cuts they would like. That would be both democratic and in compliance with due process. They’re just embarrassed with what they want to do. They know they would get whipped in an election were they to be honest- in fact they just did get whipped. So they persist with dishonesty. They are trying to take the economy hostage to force their minority and recently rejected views on us all.

The only way to disarm hostage takers is to face them down.

So Obama is playing hardball. For now.

It’s early yet.

/ / , , , , / 0 comments

Debt Ceiling Nonsense

When a very old matter of convenience becomes a contemporary pain in the butt strange things get said, people act peculiarly, and really stupid stuff happens.

Meet the debt ceiling.

Only in America.

The debt ceiling was introduced back in World War I as a convenience. The constitution, that fusty bedrock of American politics, gives Congress the right to tax and spend. So the debt represents the accumulated difference between those two things. We incur national debt because Congress, in its infinite wisdom, decided at some point in the past to spend money it wasn’t raising through taxes. Rather than have Congress run around and authorize borrowing regularly the debt ceiling was a way of handing the Treasury Department a kind of credit card. It could keep up with Congressional spending without having to seek authorization for new debt, and Congress could spend away happily without having to worry about actually raising the cash it needed for those programs.

There have been various technical changes to the way the debt ceiling works along the way, but things have been fairly settled since 1939 with no major tinkering by either political party. Since 1940 the limit has been raised fifty-six times Twenty-four times a Democratic administration, and thirty-two times under a Republican. The most number of changes per president? Well that’s a close call. Nixon, Reagan, and Bush jr. all compete for that title. All Republicans too.

Notice at the outset how this all started: during a war. The US Congress has never had much difficulty with rampant spending when it comes to wars. Looking back through history the need to finance wars has always been a source of tension between the central authority starting and fighting the war, and the folks paying for it. Indeed modern democracy largely came about because of the need for governments to have the broadest tax base possible to wage war. Without the need to raise funds many modern democracies would have taken a lot longer to extend voting rights than they did. It is a nice coincidence that widening the franchise also means widening the tax base. Or at least widening the tax base less controversially.

This is a major point to bear in mind: Americans have never had second thoughts about plunging into debt to wage war. The most indebted moments in American history, such as the late 1940’s, have always followed a war.

Sound familiar?

So giving the Treasury Department a great big credit card seemed sensible at the time. It saved time, effort, and allowed for the smooth operation of a crisis government.

Naturally the economy has grown a great deal since. There have ben many wars. There have been many other underfunded expenditures. There have also been the periodic outburst of fiscal folly. Add all that up and the debt ceiling has been bumped up against and thus raised many times. It may have rankled the fiscal conservatives, and it may have amused some of the more radical economists who don’t see the need for debt in the first place, but every time the need arose the debt ceiling was pushed up.

After all, this is America and a big war may be just around the corner.

Fast forward to 2011.

All of a sudden what was once a convenience became a major hurdle, hassle, and source of potential disaster.

The Republicans, as we all know, have become extreme. Their radicalism spills out especially when confronted with their continual failure to persuade voters to give up the safety of the New Deal and Great Society entitlement programs. It rankles radical right wingers no end that their fellow citizens seem to like the protection of government provided insurance against sickness and poverty in old age.

So the right has to get their way through the backdoor. First they worked to defund government by cutting taxes and then proclaiming the national coffers insufficient to pay for the safety net. This was a winner. Indeed Obama has just signed onto to this program by making the Bush era tax cuts permanent for 98% of voters. Both our major parties now agree that defunding government is a top priority.

The second tactic employed by the extreme right has been to refuse to pay the nation’s debts. This is despite the fact that the debt originates inside the very Congress doing the refusing.

This is akin to a scorched earth defense. Or perhaps it is more like threatening a hostage with an atomic bomb. By destroying the national budget the thought – if there is thinking going on – is that the threat of such drastic and catastrophic action will force the majority to comply with the extremists radical requests. The US constitution does a great job of protecting minority interests, but it does so by exposing the majority to being bullied by those minority interests. It protects the majority much less well.

The radical right is not large enough, nor strong enough, to get its way democratically. So it has to resort to hostage taking and outright bullying. They may think they are standing on principle, but they are assuredly ignoring democracy. Profoundly so.

The key point is simple: the debt reflects the will of Congress through time. It has nothing to do with the President. Using the debt limit as leverage to force action that the electorate just manifestly rejected, a few short weeks ago no less, does shocking violence to any sensible interpretation of popular constitutional government.

Further, the constitution explicitly calls for the national debt to be honored. So by threatening not to pay the debt the extreme right is trying to get what they cannot achieve through constitutional means unconstitutionally.

This is wicked and bizarre.

It also demonstrates how disjointed our political landscape has become since the rise of the radical right.

As ever, there are loopholes. Obama could declare the debt ceiling unconstitutional since it represents a clear limitation on the government’s ability to abide by the stricture to pay the national debt embodied in the constitution.

Or he could authorize the minting of platinum coins. Yes he could. It is one of those truly silly loopholes, but it exists. The Treasury has the authority, already, to mint platinum coins of whatever denomination – they are supposed to be collector’s items. But one such coin for, say, a trillion dollars safely deposited at the Federal Reserve Board would safely allow the government to fund all those Congressional spending programs. Congress could then tie itself up in knots discussing those programs and whether the extremists should be able to bully the rest of us.

Unfortunately our President is gutless and seems determined to allow the extremists to dictate the national agenda. So I doubt we will see either of these loopholes exploited. At least yet.

But we can hope.

 

/ / , , , , , , / 0 comments

Rolling Right Along

Take a deep breath and repeat after me: the cliff is dead, long live the cliff.

Do not dare to settle down, but brace yourself for what will be, no doubt, an even more bitter and intense argument. You see, the fiscal cliff deal – remember that? – was simply a minor precursor to the much bigger and emotion riven deal: what spending do we cut?

None if you ask me, but no one is.

Our clever leader has managed to accomplish two goals. Both Republican. He has made the vast majority of the Bush tax cuts permanent, thus handing the Republicans a triumph of the first order. And he has separated the discussion of the aforesaid tax cuts from the much more ideologically strained discussion about spending cuts. He has thus significantly reduced his own negotiating space.

Well done dear leader.

Those of us who now look forward to the upcoming spending arguments do so with more trepidation than before. After all if our leader managed to be cornered into a compromise just after having won a major electoral victory, what will he do a few months later when that victory is well past?

I fear the worst.

Our leader persists in making tough sounding statements and then abandoning his front lines without a shot having been fired. His enemies are now baying for blood. They are likely to get it, which could lead to America becoming a much more cruel and nasty place for millions of its citizens.

Here’s the major point to bear in mind: by agreeing to the fiscal cliff deal the Republican goal of starving the beast is now official Democratic policy as well. Both parties now agree that the tax revenues as they are under the deal are all we can squeeze from the economy. This puts a limit on what the government can do going forward. A very low limit.

If you disagree, just try this mind game: imagine a future Democratic candidate trying to advocate higher taxes in order to pay for some program.

Right. Now you see what our leader hath wrought.

Fat chance.

And if you think I am being silly look at what Mitch McConnell is already announcing. Yes, his op-ed at Yahoo News is only an opening shot, but it is a well aimed shot. No new taxes!

This means that the miserly $620 billion our leader rung from the last deal is all he gets. From here on out we are talking spending cuts.

Now, of course, things in Washington are far more nuanced than this. It is quite possible that McConnell means no new increases to tax rates. That leaves open the possibility for new revenues from backdoor stuff like getting rid of tax deductions and credits. Southern politicians in particular love taking aim at those deductions we get for property taxes. After all, if rich northerners or westerners want to pay high taxes to get good schools why should they get a tax deduction? Can’t we all just make do with rotten cheap schools like they have down south?

Then there’s the possibility that our leader will persuade everyone to reform the corporate tax code and wring revenues from the hands of our big corporations. Boeing gets an annual refund measured in the billions despite making massive profits. You and I can’t pull off that trick, but our fellow citizens-as-corporations can.

Yes, I know, go on and laugh. By the latest count there are 373 ex-members of Congress lined up as lobbyists to throw themselves in front of any attempt to get our big businesses to contribute to the society in which they flourish.

OK, now that we’ve finished with fantasy, we can see why our leader has a problem.

If, and it’s a big if, the goal is to reduce the annual deficit – the last deal did squat in that regard – then without sources of new revenue the entire onus falls on spending. And in the evil eyes of McConnell and his ilk spending means entitlement spending.

There you have it. The discussion we are about to have is how to undo our social programs.

So instead of having a post-Reagan debate about how to build and invest in a better America, we have conceded that the good days are gone, and that the Reagan agenda is still operative. Apparently we can no longer afford to look after our elderly, especially their health.

Look out Granny, our leader has promised to defend you.

 

/ / , , , , , / 0 comments

The Morning After

The details are common knowledge by now so I won’t bother reprising them. Instead let’s look ahead.

The problem with the deal is that it achieved next to nothing. The fiscal cliff was a completely artificial construct created within the bowels of our gridlocked political system by politicians so incapable of reaching middle ground that they had to enter into a joint suicide pact in order to guarantee even having a discussion about our national budget.

Think about this. It is truly remarkable. Our politics is so toxic, so divided, and so prone to being held up by a small minority of committed extremists, that we had to be threatened with catastrophe before any sort of agreement could be hammered out.

Even then we failed to make much progress.

So what happened?

The deal itself is full of bits and pieces. Both sides get something, both sides lose something. So I think it’s better to look at the broader landscape after the deal and ask whether the strategic positioning and tactical advantages have shifted.

Not really.

  • We are still stuck discussing a problem that doesn’t exist. The US does not have an immediate debt or deficit crisis. It has a growth crisis.
  • The Democrats have ceded – finally – and made permanent the majority of the Bush tax cuts. This is terrible. It means that from here on out the focus of debt and deficit discussions will be on spending cuts not revenue increases.
  • The Republicans simply retreated from a position they could not defend – the Bush tax cuts were an issue that the right could not wriggle around. The vast majority of voters think that raising taxes on the wealthy is a good idea. Holding the entire nation to ransom simply to defend the wealthy became untenable. So a tactical retreat was in order.  This is akin to shortening your frontline and logistical supply lines in war: a retreat that makes you stronger.
  • The really big fight was never going to be about the fiscal cliff anyway. It was going to be centered on the debt ceiling. The US is peculiar in that Congress has to be involved in allowing the debt ceiling to rise. The Constitution has ways around this, but to invoke them involves starting up a new front in the war and risks stirring up even more bitterness.
  • The government is still not properly funded. We have no budget worth a lick. Funding is being secured under the authority of a ‘continuing resolution’. This means that Congress is so broken that it cannot sign off on a budget. We are just muddling along.
  • And then there’s the two month punt on those sequestered spending cuts. This means that sometime over the next two months we will be mired once more in brinkmanship and heated debate over what spending to cut.

Add all this together and I think we are still stuck in ideological trench warfare. The radical right is still strong enough to drive Washington into gridlock and to force appeasement from the White House and the Democrats.

Let me amplify this last point.

What we are living through is the logical conclusion of the four decade long rise of radical conservatism. This is a movement, not a party. Its members co-opted the old Republican party and drove it far rightward. Their agenda is distant from traditional Republicanism and has the tenor of religious fervor. It is almost Lenin-like in that its more zealous members are willing to inflict great damage on us all in order to get their way. This is not, therefore, a normal political dialog. Mistaking it for one is a massive error – one that both the media and the White House make regularly. We are dealing with true extremists not simply a bunch of ardent but essentially centrist conservatives. The biggest point to remember with regard to this is that there is no common ground. The two sides have radically different visions of what America is. Indeed, there are, in effect, two America’s colliding and competing for hegemony.

This is why Obama’s negotiating approach is so wrong. When faced with relentless extremism that last thing we ought to do is to negotiate. The extremists see each and every concession as a sign of weakness. It is like throwing them red meat. They are encouraged to ask for more. They are never satisfied.

The way to fight extremists is to confront them in their own language. It requires the adoption of the same relentless and dogged method. It means taking risks that normal negotiation would rule out. It means being Churchill not Chamberlain. Unfortunately Obama is more the latter than the former.

This is why I do not trust his promise to stand firm on the debt ceiling. He has never stood firm yet. I cringe as I wait for him to concede more territory.

Meanwhile the Republicans now have reached a watershed themselves.

Those four long decades of policy triumph are reaching a denouement. The GOP allowed itself to be co-opted by the zealots because they provided energy and financing. The odd coalition between plutocrats, libertarians, and social conservatives was fraught with long term contradictions that sooner or later it had to unravel. Perhaps that unraveling is now taking place. Last night’s vote was extraordinary in that the fabled solidarity of the right crumbled. Even the party’s leadership was split. Eric Cantor and Kevin McCarthy, numbers two and three in the GOP hierarchy, voted against the deal, whilst Speaker Boehner voted for it. Boehner’s act of voting was defiant: the Speaker usually doesn’t vote. It appears that Cantor, the leader of the extremists, is setting up a challenge to Boehner’s leadership. The years of right wing domination of our political discourse was founded on a legendary discipline. That discipline looks to have fractured. The GOP pragmatic wing, about one third of its House membership, is now visibly different from the Tea Party wing. What this means going forward is anyone’s guess. But the split will make policy making difficult.

Finally: no, the deal didn’t do much for the economy. We avoided the awful impact of a broad income tax increase and have postponed austerity style spending cuts.We also managed to hang on to a few socially beneficial programs. But we lost the stimulus effect of the payroll tax cut and so most taxpayers will experience a tax increase despite the gaudy headlines.

So no one won much. No one lost much.

The war continues. And the economy festers.

Plus ca change.

«< 9 10 11 12 13 >»