Republicans

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Default Watch: Episode 2

I apologize for obsessing over the impasse in wWashington, but it is great theater and provides endless fun for those of us who watch. So, with that said, here’s a conundrum to play with as you argue with your right wing friends:

If hitting the debt ceiling is such a big deal that the Republicans think they can wring huge and spectacular concessions from the White House by avoiding it, why is it also a matter of no importance and all the fuss is merely a Democratic party effort to scare people?

Surely its one or the other.

Either its a big freaking deal sufficient to scare the White House into retreating from Obamacare in ignominious defeat.

Or.

It’s nothing to be concerned about and life will continue unaffected.

Odd isn’t it?

It’s odd to call your own latest supposed nuclear weapon a pop-gun when everyone starts to worry about the nuclear wasteland you’re threatening to create. It’s almost as if you’re suddenly aware of the catastrophe you’re causing, so you try to pretend it isn’t a problem after all.

How do we account for all those Republicans who littered the media last weekend trying to downplay the impact of default? Are they clueless? Are they lying? Are they scared? Are they waffling because they have no idea of what else to say? Are they secretly hoping to destroy the government? Are they playing mind games with us? Are they super dumb? Are they simply ill-informed about the budget? Are they lost in right wing think tank ideology? Are they just lost?

Yes.

Just another fun episode in the default saga.

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Who Cares About Default?

In this fast moving and ridiculously puerile crisis of ours we are being treated to an equally fast paced run-through of right wing fantasy. As each layer of their beliefs is peeled away and revealed as absurd, another is quickly located to defend, often for only a few hours, the destructive and profoundly anti-American path the Republicans are leading us down.

But: when is a fantasy not a fantasy, but a goal?

I am trying to think of an appropriate way to describe GOP policy at the moment, it clearly isn’t “policy” in any respectable sense of that word. I am not sure what to call the stream of ad hoc tactical adjustments spewing out from Republicans currently, but whatever they are they reveal basic truths we ought to consider carefully.

Today’s hot topic is that the default crisis is not a crisis at all. Apparently it is all made up to scare voters. It is, in other words, yet another in a long line of conspiracies cooked up by the Democrats to divert the honest folk of America from the imminent socialist/Islamist takeover being masterminded in the White House. The extremists are, naturally, our last line of defense against that ghastly prospect.

Really.

Well, no, but it sounds that way if you watch Fox News.

But there are now emerging a sizable number of more extreme Republicans arguing that potential US debt default is no big deal. Indeed some are arguing it will be healthy, not just here but worldwide. And, from what I can tell, they actually mean it. I call it the Republican “non-default” strategy.

Their thinking goes this way:

After the US hits the debt ceiling the only change is that it can no longer issue new debt. There will still be a steady stream of income flowing in from taxpayers, so the Federal government simply will have to trim its expenditure down to fit within that income stream. Plus, the Treasury Department can prioritize its payments, thus ensuring that its pays our creditors first. Thus, hey presto, there will be no default. The current debt gets paid on time, and the financial markets world wide can breath a sigh of relief.

This is all true. That could happen.

But, last we all looked, the stream of taxpayer income is insufficient to pay for all the things Congress has told the government to buy. Ummm. That’s why we have a deficit.

Now, if we prioritize paying creditors on the debt and we have to force federal expenditures to within the current revenues – i.e. we cannot issue more debt – the implication is that we have to cut a lot of government spending. Since this has been to goal of the extremists all along, you can see why many of them think hitting the debt ceiling is a good thing.

Let’s play with the numbers, using the 2013 budget as our yardstick.

  1. Federal revenues are $3,003 billion
  2. Federal spending is $3,771 billion
  3. That’s a deficit of $768 billion
  4. Our goal is to fit everything under that $3,003 revenue cap so we don’t issue more debt, but we have to avoid default. That implies paying the interest on the current debt, which is $321 billion
  5. Thus, to avoid default, our budget for everything else is $3,003 – $321 = $2,682 billion
  6. So, what can we afford? Well, the current spending is this: Defense, $676 billion; Social programs and unemployment, $2,502 billion; Energy/Environment/Transport, $169 billion; Other stuff (including Justice/Foreign Aid/Agriculture) $207 billion
  7. I doubt the Republicans are thinking of defense cuts, so that has to be paid next. This leaves $2,682 – $676 = $2,006 billion for everything else
  8. Let’s assume that the Republicans want to keep Social Security payments flowing, so they are paid next and amount to $808 billion. So, here we go: $2,006 – $808 = $1,198 billion. That’s not much left!
  9. Let’s assume that the Republicans also want to keep Medicare and pay Veterans benefits, they add up to $670 billion. So let’s pay them too: $1,198 – $670 = $528 billion
  10. Let’s also assume that they want to keep the Justice department running, pay Congressional wages, and keep the government buildings heated etc. That costs $86 billion. Let’s also say they keep transportation so they can build roads in their own states and bridges to nowhere (as in Alaska). That’s another $110 billion we need to spend. Oh, and we can get rid of all foreign aid (only $57 billion) except the $8 billion to Israel since they are our best friends ever anywhere. Do the math: $528 – $110 – $8 = $410 billion.
  11. So after all this prioritization we still have $410 billion to spend! That sounds like a lot. But Medicaid alone costs $386 billion; education costs $102 billion; unemployment aid costs $538 billion; the energy department costs $15 billion; we spend $39 billion on the environment; not to mention the $33 billion we spend on science research and space … oh dear

Basically to follow through on this “there is no default if we cut spending” strategy we have to eliminate whole swathes of government immediately. $768 billion’s worth. It is fanciful at best to imagine we could do that. It is laughable to imagine Congress could come up with a plan to accomplish such a set of cuts. They cannot even negotiate the current budget with far fewer cuts. Who is going to agree to these even greater cuts? There would simply be a new crisis as the extremists tried to force draconian cuts down everyone’s throats. No one would agree.

No one.

It’s a pipe dream. It is Republican fantasy as they try to avoid the consequences of their extreme talk.

Besides, if we managed to cut $768 billion immediately the economy would plunge into recession. That’s a 5% reduction in GDP overnight. Plus that doesn’t take into account to knock-on effect as all that money stops flowing through the pockets of the thousands of businesses that sell to the government. Those businesses will be forced to close or shrink. That will add to unemployment. The recession the cuts will cause will spiral downwards. This will reduce the economy’s total incomes, and hence reduce tax revenues to the government. Guess what? That reduction in revenues will force further cuts to government spending – don’t forget we are trying not to raise new debt – and so another round of GDP shrinkage will begin. The post “non-default” recession will be deep, long, and very nasty because the federal government will not be paying unemployment, and will be furiously cutting jobs to keep within its ever shrinking budget. The private sector will be slammed by the sudden cut-off in revenues. A depression will loom.

So. The “non-default” strategy is ridiculous. The outcome is scarcely better, if at all, than a default would be.

But, for today at least, it is keeping some Republicans focused away from the ludicrous nature of the path they have thrown us all down.

What fantasy they will come up with tomorrow?

One good thing emerges from pulling on the strands of GOP fantasy: it reveals their goal. They were never, ever, concerned about the budget deficit. They have always been focused on a total defunding of government, especially the roll-back of social programs. The exercise above is thus one they would actually like to set in motion for real. This is why some of them look at the “non-default” strategy with misty eyes. It’s what they want to happen. And they are so close to arriving at their preferred destination.

Which is why they have dug in and are driving the timid Republican leadership over the cliff.

Addendum:

Here’s a link to some quotes from Republicans who believe in the “non-default” strategy. It’s pretty clear from some of them that they have no idea of the enormity of the impact of the cuts needed to make “non-default” viable.

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First Debt Ceiling Rumbles

With the Republican shutdown now into its third day, and with last night’s attempt at reconciliation a total and bitter failure, the odds that the shutdown and the debt ceiling fight are rising sharply. Whilst the former is a huge nuisance and could lop about 1.0% of GDP this quarter if its doesn’t end soon, the latter is far, far more threatening. It could dwarf 2008. The problem – as ever – is that there are enough extremists in the Republican ranks to cause us to blunder over the cliff.

And I mean blunder.

So far the sane analysis seems to be that the Republican leadership, as opposed to the extremists, calculated that they would be able to extract concessions from the White House and thus keep the shutdown short, or, perhaps, avoid it all together. They saw this shutdown in the same light as the last one. If this was their calculation, and it appears it was, then it was a major error in judgement.

The point being that what they are seeking to extract this time is the total annihilation of the Obama presidency and the end of his signature legislation. To say the least this is an extraordinary expectation. To expect total capitulation by the White House to GOP extortion is both naive and stupid. It was never likely. It is an impossible request. Negotiations based on such asymmetric outcomes are called ransom demands, or hostage taking. They are not negotiations.

But the Republican leadership thought they could succeed. Worse, they sold their very excitable and extreme base on the notion that they could succeed.

Now that they have failed – so far – they are thus stuck. If they retract their extreme demands and negotiate more reasonably they appear to have crumbled and deserted their base. If they persist they run the risk of driving us all over the cliff.

Damned if they do. Damned if they don’t. Their approach is a terrible example of rotten decision making It was an epic blunder, from which there is no way back without humiliation of some sort.

In simple terms we are being held hostage to protect the egos, and political prestige, of a few men like Boehner, Ryan, and Cantor. They are placing themselves above the rest of us. This, by the way, is thus no longer an argument about the merits or demerits of health care reform – if it ever was – but is now about the political survival of a few hapless and dumb politicians.

Which is why the impasse could take a while to resolve. It may need a crisis to provide cover for a retreat “for the good of the country”. No matter that the crisis was artificially created by the very men who are in retreat.

If you follow this logic, then you arrive at the conclusion that the shutdown and the debt ceiling fight will meld and that we will default – technically – on our debt sometime two weeks from now. Then all hell breaks loose.

Thus far the stock and credit markets have been remarkably calm about the prospect. The thinking seems to be that recent history is full of Republican hostage taking and each has been resolved at the last minute with relatively little economic damage. The savagery of the sequester didn’t rock Wall Street types too much so they can ignore that instance, and focus on all the other spats instead.

But this one would be different. A debt default would slam Wall Street and any other place used to seeing the US as a safe investment haven. So Wall Street is beginning to worry that the Republicans have no way back and that the debt ceiling fight might reach crisis proportions.

The first inkling of real worry is showing up in the cost of four week Treasury bills: interest rates have started to rise as the risk of default gets more concrete. This is no panic. It is the kind of minor shift that sometimes presages a future panic.

We have had our first debt ceiling rumble.

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There They Go Again

Are you tired? I’m tired. Our national dysfunction is sucking the energy out of everything. And here they go again.

There have been a flurry of reports about the precise date when the Treasury department can no longer fudge paying the national bills. We will have hit the dreaded debt ceiling.  Presumably we’ll get a bump on our heads. Or something.

Anyway: I have ranted enough about the lunacy of having a debt ceiling. It is just dumb, the debt we are piling up is a consequence of past legislation, not current or new legislation. Besides the deficit is shrinking fast – too fast – and thus the pressure is off on the accumulation of debt. The immediate need to tinker with the budget is, therefore, far less of an issue than it was a couple of years ago.

But we knew that was going to happen didn’t we? After all even in an anemic recovery like ours the safety net costs start to go down as things pick up.

So why am I tired?

Because that self-imposed, and very foolish, debt ceiling is once more being used by the Republicans to blackmail us into accepting their extreme agenda. You know, the agenda rejected in last year’s election.

Today they submitted a laundry list of things they need done in order to support raising the debt limit. It’s an impressive list. It’s also very long. And absurd. Here’s part of the list as per the New York Times:

“They include a one-year delay of the president’s health care law, fast-track authority to overhaul the tax code, construction of the Keystone XL oil pipeline, offshore oil and gas production, more permitting of energy exploration on federal lands, a rollback of regulations on coal ash, blocking new Environmental Protection Agency regulations on greenhouse gas production, eliminating a $23 billion fund to ensure the orderly dissolution of failed major banks, eliminating mandatory contributions to the new Consumer Financial Protection Bureau, limits on medical malpractice lawsuits and an increase in means testing for Medicare, among other provisions.”

So they want to encourage pollution, slash into bank reform, neuter consumer protection, protect bad doctors, and make wealthy people pay for medicare. Well, that last one isn’t so bad. But the rest? A laundry list of sweetheart stuff for big business and other major players in the 1%. A bigger slap in the face for regular folks is hard to imagine.

This is tiresome. The Republicans have become so monotone. Not black and white. Just white. Pure white. And they’re not even shy about it.

No wonder we have no hope of dealing with inequality. They think it’s a good thing. I sometimes decry them as trying to send the country back into the 1800’s or into a type of Ayn Rand winner-take-all world. But I think I’m wrong. The truth is worse. This is overt class warfare on behalf of the privileged few.

And that story doesn’t end well.

When the wealthy disconnect from society, as our current plutocrats have, their commitment to any form of “common good” is eroded. They restrict their lens to their own issues and problems and ignore those of anyone else. They pretend they can survive without the rest. They demean them and resort to nasty tactics like defunding social programs in the name of “freedom from government”. Which they don’t actually mean because they are quick to mobilize big government when it suits them. As in bank bailouts.  This self centered approach to the deployment of government is why recent Republicans have tolerated big expenditures by Washington. In the last three to four decades the run up in the national debt has been bigger under Republicans than Democrats. They used the debt to do things they wanted. They see government expenditure as fine as long as the “right people” benefit. So Citibank is saved for the stability of the nation and is not labeled a “moocher”. Whereas the unemployed or the poor are seen as lazy and thus not worthy of help.

That is class warfare whether you want to see it or not. It is as clear as day. It is the story of the entire Reagan era. It was typified by Romney and his 47% comment that resonated so well on the right.

Can the nation reform itself to get rid of the plutocrats and their control before things get much worse?

I don’t know. But I am tired of these fights. These endless anti-democratic fights. The plutocrats lost the last election, but like spoiled brats everywhere, they are now stamping their feet and refusing to acknowledge that loss.

Until we break their power this will go on, and on, and …

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The End Of The World. Again.

Conservative people always predict the end of the world as we know it when confronted by reform. They are right. That’s the point of reform. In the last two to three hundred years, during the great progress we have made towards our modern freedoms, every single step has engendered an “end of the world” reaction. from those who have privileges under the old regime.

In the fifty years or so between the late 1700’s and the early 1800’s the world ended countless times. The great specter of the “mob” getting hold of political power so panicked conservatives with its dire world-ending consequences that they resisted any effort to extend voting rights, reform representation, or alter the constitutional privilege accorded property. Those with land – on both sides of the Atlantic – thought themselves the only suitable source of responsible government. After all, they had “skin in the game” because of their land, estates, and rental incomes. American independence did less to alter this establishment – indeed it sought to continue it – than the French revolution that sent shock waves of fear through aristocracies everywhere. And that nasty evolution, conservatives endlessly reminded themselves, led to Napoleon. Enough said. It took Waterloo to put an end to that nonsense, after which there was a determination to resist change with ever greater zeal.

All was for naught however as we know. Change was, and remains, inexorable. The rising middle class wanted representation. Then, so too, did workers. And women. And ex-slaves. And so on.

The dreaded curse of democracy engulfed the landed gentry, diverted legislation towards ameliorating injustices that those newly enfranchised people experienced, and otherwise upset the comfortable apple cart that conservatives treasured so much.

I am thinking about this for two reasons: one is that I just read Antonia Fraser’s book “Perilous Question” about the two tumultuous years ending with the passage of the Great Reform Act of 1832 in Britain. The second is the constant echo of the conservative lament we hear today in modern America.

In both cases the heart of the matter is that the conservatives benefit from the current set-up and thus imagine a zero-sum style game is being played out. If they concede to reform, they imagine they “lose” something. That loss may be simply power, it may be comfort, it may be having to admit that they had an unearned privilege, it may be any number of things. But they imagine a loss. And that loss will end the world. The world as they know it.

Between 1830 and 1832 the conservatives were led by people like the Duke of Wellington and Sir Robert Peel who were horrified at the prospect of sharing power with the under educated and certainly ungenteel regular folk clamoring for representation. The Parliamentary system was notably corrupt, deeply unrepresentative, and woefully in ned of updating. The new industrial cities had no representatives, whereas a few totally empty tracts of land were well represented. Great landowners appointed representatives for districts that they “owned”. Industrialization and rising levels of education had created a class of people for whom this antiquated system was nonsense. European disturbances added to the growing fever in favor of reform. Landowners took to hiring armed guards. Talk was of a choice between reform and revolution.

Ultimately reform passed and the world did end for the aristocrats. They persist to this day, but are nothing compared with what they were. And their leaders were correct: the Great Reform Act was not an end point, but a step along the way to greater democracy. Interestingly the very word democracy was so inflammatory that no reformer dared utter it for fear of bolstering the opposition. Earl Grey, the leader of the reformers, took care to refer to the “people” in order to draw a distinction with the ghastly “mob”. Even the reformers feared the mob. Less so the people.

Nowadays the mob appears as the 47% of Mitt Romney fame. They are the “moochers” who drain the vitality from our economy and harass the “job creators”. Giving the mob more will inevitably destroy our nation’s competitive strength – so the story goes – because it will undermine the toughness and entrepreneurial spirit that has served us so well in the past. Conservatives always conflate their well being with that of the nation. So any loss to them – higher taxes for instance – is, somehow, a loss to the nation. Things will go wrong for all, they argue, if the mob is allowed to get goodies for itself without “earning” those goodies. Usually through self-denial and hard work. Just like the conservatives, plutocrats, and aristocrats “earned” their wealth. Inheritance rarely gets mentioned. I wonder why.

Conservatives never see the right to be free of economic worry, through higher wages or social safety nets for instance, as a right. In contrast the rights of property are sacrosanct in their minds. Privilege will always define its state as somehow naturally ordained, and the desires of the mob as unnatural and even crass.

If only those people would work hard. Like I did.

Those people are poor because they are lazy.

Those people milk the social programs. They cheat. They are a burden on us. They ought to earn a decent living. Like I did.

And so on.

It is a tradition on the right, and amongst conservatives generally, to demean the motives of the poor. So the recent attack in Congress on food stamps by extremist Republicans is justified, by one religious leader, as being morally healthy. Starvation will bolster the moral fortitude of the starving. Poverty will induce hard work. The loss of social support will be offset by an upwelling of individualism. That’s all it takes.

It isn’t surprising to read such comments from conservatives. They are convinced that they, and their privileges, are a result of their own hard work. Luck, especially luck of being born in the right place and at the right time, never enters their minds.

So it was in 1832. So it is now. Plutocrats are plutocrats no matter what era they infest.

The paradox is that the world never actually ends. Despite the constant encroachment by the mob. Despite democracy, our economy has done quite well. Entrepreneurs still flourish. Indeed they still make fortunes. America still innovates quite a bit. It manages somehow. The mob’s rise to power hasn’t undermined everything. All those repeated dire warnings never actually match anything manifest. They are just vapor. They are the angry resentment of a few who are facing changes they don’t like.

On October 1st this year Obamacare kicks into gear. It goes live. After that, every day it survives a few more of the mob will get better, cheaper health care. Eventually enough of the mob will realize that they need to keep Obamacare alive. It’s good for them. Heck, they might even want to reform and improve it. Then what can the conservatives do? Take health care away? raise its cost back up? Defy the mob?

I don’t think so.

No wonder they’re hyperventilating over health care reform. It’s inevitable. Irreversible. And great for the mob.

No wonder they’re predicting the end of the world. Again.

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