Obama

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Aftermath

The Republicans achieved nothing, but they did a lot of damage. That seems to be the emerging consensus this morning as Americans put their heads up over the trench parapets, and as government workers trudge back to work.

There are a few things to remind ourselves of in the aftermath of the crisis.

  1. It is not over. We have a few weeks of relative quiet and the battle begins anew in January. The optimists hope that the Republicans have learned and will not repeat their shutdown threat. That seems to be the idea many Senate Democrats are circulating. They feel that this week’s defeat will force the Republicans back towards a more moderate policy stance and thus make budget negotiations slightly more easy. The pessimists argue that there are just as many Ultras in the House as before and that, given their history, they will have learned nothing. Their policy stance remains the same, they still want to reduce or eliminate entitlements in the name of deficit reduction. And, given their minority status, their negotiation weapons are limited to the same hostage taking threats as before. I am somewhere between these two poles. I think that part of the Republican party would like not to repeat a shutdown, but they are not the majority within the GOP House caucus. That means things are still volatile and the Ultras still have great power to disrupt. Indeed much of today’s press is about how the Ultras think they caved too soon: their goals remain the same, so expect them to be obdurate once more.
  2. We all ought to be clear: the Republicans have won a great victory. Our economic and budget policy conversation is still being conducted on their turf. The topics are all theirs. Nowhere is more stimulus on the agenda; nowhere do we hear talk of tax cuts for workers – don’t forget the GOP won the reversal of the payroll reduction which was a big tax increase on workers; nowhere do we hear of talk about the minimum wage; nowhere do we hear talk about tax increases on the wealthy; nowhere do we hear talk about raising the limit on incomes for payroll taxes. And so on. Instead the chatter is all about controlling costs, which inevitably means lower entitlement spending.
  3. The US government has not had an agreed budget since 2009, it has been funded by a series of ‘continuing resolutions’. This is the salient fact of the crisis. It demonstrates that there remains a gulf between the two major parties about the nature, and purpose, of government. Every debt default or shutdown threat we have had since 2009 has ben motivated by that difference. There is no common ground. Or, at least, there is little common ground. This is why the so-called moderate Republicans have been so willing to abet the Ultras. Their tenuous coalition has few threads holding it together, but opposition to entitlement spending is one. A very strong one. This is in sharp contrast to the older, more moderate, Republican post-war position, before Reagan shifted the entire debate out to the right.
  4. Given this, we ought not to imagine a more benign negotiation over the budget to take place just because the Republicans lost this last battle. There remains very little space for consensus. This implies another round of bitter exchanges, or, perhaps, yet another failure and thus more use of continuing resolutions.
  5. Then there is the state of the GOP. Last night’s voting still included 144 Republican naysayers in the House and 18 in the Senate. Those are not insubstantial numbers. Even when faced with the dire prospect of debt default over a hundred GOP House members voted – in essence -for that default. Only 87 Republicans crossed the aisle to support the resolution and avert disaster. This is a clear reminder of the depth of feeling, and the continuing power of the Ultras. The House GOP caucus is in disarray. It is the epicenter of our dysfunction. To rebuild more cohesion its leadership will still have to bend to the Ultra’s will – they appear to be the slightly larger portion of the caucus. The alternative is a more formal split into two right of center parties. This would be healthy for the country but spell doom for both and so is unlikely without at least one, if not many, more tactical defeats like this week.

And, let us be clear on that: this was a major, but tactical, defeat. It does not mark a strategic shift.

This is what I want to keep drumming away at.

Our policy debate has been held on firmly Reaganite ground for decades. The meta-argument has not altered. The prevailing intellectual framework is still free market, anti-worker, and anti-government. Our media elite sees it that way. Our business elite sees it that way. And, to their shame, many erstwhile progressives in those elites also see it that way.

The upshot of this is that the center of gravity in our politics remains further to the right than it used to be. The current Republican party sits well to the right of Reagan, and the Democrats have shifted accordingly. Hence the depressing record of recent Democratic presidents seeking to achieve minor victories for progress, and being unable, or unwilling, to shift the nation back to its post-war position. Corporate money influence has a lot to do with this, and Wall Street’s power is a particular bane.

The post-war balance of power produced great things for our middle and working classes. Indeed the extraordinary surge in the middle class of those decades was based upon that balance including and protecting the entitlements that reduced risk, and thus releasing wages for spending, thus fueling growth. In other words the balance had a demand side bias. Ever since Reagan our policies have had a supply side bias. This has eroded wages, increased risk for workers, slowed the middle class to a halt, and only truly benefitted profits and those who excel in a supply side economy – management, and well educated workers. The result has been a series of bubble economies, bank crises, an unsustainable accumulation of private sector debt, and the perception that social spending is also unsustainable. This shift from demand side to supply side bias, along with the political shift that enables it, is what I refer to as Reaganism. It has been the prevailing wisdom of our era. It is wrongheaded. But the next budget negotiation will still take place using it as a context.

Which is why I see the strategic advantage still laying with the GOP.

Yet, as I have said often, there is a time limit pressing on the Republicans. The huge demographic shifts bringing more diversity to America, and the failure of Reaganism to lift the middle class, have produced the extremism we now suffer through. A well-off elderly white middle class would not be as susceptible to Ultra agitation, nor would it be so virulently racist. It would be complacent. The massive inequality caused by the supply side bias has undone the social contract and opened the door to extremists whose narrative is of an older better time – before “they” undermined everything. With the “they” being minorities living off of government hand-outs.

Because the demographic surge continues, and because no one is reversing Reaganist economic policy sufficiently to reflate wages, we cannot expect extremist sentiment to fritter away. Indeed we can expect it to sharpen more. Thus this week’s Republican fiasco does not imply an end. It is just one more battle in an ongoing war that will no be won any time soon.

It is a war of attrition, but time is on the progressive side. So our goal is not to give ground.

We will see if Obama understands this when the budget talks get underway.

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Civil War – The Rise of The South

I mean seriously.

The details of a deal being brokered in the Senate to end both the debt ceiling hostage taking and the government shut down by the Republicans are, to say the least, pitiful.

The “deal” would re-open the government until January 15th next year, and would lift the debt ceiling until next February. In any normal nation this would be a shambolic nonsense. Were this some third world country indulging in such shenanigans we would laugh at the amateurish prospect of yet another round of hostage taking in just a few months. We would decry their puerile and, presumably, corrupt politics. We would point to our long history of solid democracy and the great virtue of representative government with its growth inducing stability.

No more.

No, not any more.

We are diminished. So much so that a mere extension in the grace period before the extremists shoot the hostage is greeted as a great breakthrough.

This is pathetic. It is a stain on our reputation that will take a while to remove. Yet it seems inevitable, and many of us are almost relieved that we could get this much progress. That we were expecting so much less, and that this deal, awful though it is, might still fail to clear the House, is all we need to know about our crisis.

It persists. It festers unabated.

We are in the midst of a non-violent civil war. Our nation is being torn apart by deep fissures that may never be closed up.

I have held for a long time that the United States is an unstable coalition of disparate states. This is undeniable given history. The Civil War was never ended, it was merely papered over. The attempt to break the US apart by the Confederacy has lingered ever since as a dormant threat. The old south was mollified by its disproportionate power and by its appalling anti-democratic – meaning racist – voting laws. Those voting laws meant that its representation in Washington was based on an extraordinarily exclusive electorate. Delegations of representatives were often elected by less than 20% of the adults in those states. So the embrace of post-Civil War morality was never real. The old sentiments lingered on behind a thin veil that deluded the rest of the nation into thinking the south had changed. It hadn’t. It still hasn’t.

What other explanation is there for the radical flip from supporting the Democrats to being the bastion of the Republicans? This is hardly news. Yet it is never confronted. Why did Ronald Reagan, a Californian through and through by the time he ran for the presidency, travel to the deep south to announce his run for that office? To stir up those old racist sentiments and to remind voters there of the affront to their traditions of the Civil Rights Act. It was a tribal and visceral appeal to rally the south behind the Republican banner and to reject the move of the Democrats into progressive and more diverse territory.

We, those of us on the coasts and up north, wanted to leave the squalor of that argument behind. We wanted to progress. We wanted to ignore the past and move, often very awkwardly, into the future. The south didn’t. It wanted to stay put, entrenched in its own very unique blend of religious conservatism, racism, and polite hypocrisy that echoes the mid 1800’s of everywhere else.

To this day its modernized veneer hides terrible inequality, great pockets of poverty, social divisions, and disregard for education. Much of the south’s modern economic rise has been a form of internal globalization. It attracted business by providing a low wage, non-union, and low benefit workforce. This approach forced the old north to go the same route. The south led the race to the bottom that the nation as a whole was forced into by corporate profit seeking policies. This shows up in many statistics: for all its so-called economic progress the south still dominates national poverty, illiteracy, and other impediments to progress.

At the same time much of the great national progress of the last seventy five years is seen by many in the old south – and not a few hangers on up north – as somehow un-American. That is in their definition of what it means to be American. They resist the notion that social programs are helpful or morally sound. To them they are an affront to long held ideals. They use the phrase “state’s rights” to indicate their rejection of the ideas that permeate everywhere else. They deny that diversity is beneficial and prefer to see it as a threat to their age-old way of life. They are deeply suspicious of science and its presumed contradiction of their religious beliefs. Recent history is redolent of all these things.

Yet it is the hypocrisy that chokes me the most.

The decry federal spending and the huge central budget, and yet accept a flood of incoming federal money far in excess of the contribution they make.

This is the division that they least want us to know about. Apart from Texas, the old southern states, that bastion of “small government” politics is the most reliant on government largesse. The much hated liberal north and west coast subsidize the southern way of life, which could not survive without that subsidy. Yet, petulantly, they repeatedly argue for its destruction. It is as if they recognize their dependency and, realizing their own failure, want to doom everyone else to a similar fate. Or that, since they are unable to move forward, that they want to prevent everyone else from moving also.

In the recent crisis states like Florida benefitted from huge, yet anonymous, inflows of aid from elsewhere. As the local economy crashed under the weight of the real estate bubble implosion, its tax base crumbled and the state would have been unable to meet its obligations to retirees had those obligations been on its books. But they weren’t. Those payments come from Washington and were maintained. This represented a massive subsidy of the local economy. One that allowed a quick recovery. Contrast that with many European nations who are facing huge cuts to pensions or other obligations and the consequent destruction of wealth and delay in recovery. Washington’s ability, and the rest of the nation’s willingness, to go into debt staved off a disaster in Florida. The union worked. The debt was, in effect, taken on as a joint responsibility, rather than being left as a purely local one.

Yet this fact is left obscured by the subsequent outrage at the size of that debt. The fact of the source of the debt has been hidden by the newer fact of the burden that it represents.

Such denial of fact, or the creation of convenient fact, has a long tradition amongst those who constitute the rump of the modern extremists they elect and send to Washington. Denial has also induced an isolated, and separate, interpretation of American history and society, one that accommodates the old southern narrative more easily. This parallel history sits aside ours uncomfortably and often in contradiction to it. The tension between the two visions of America only breaks into the open at moments of great change. And we are in the midst of such change now.

That change is demographic and is threatening, once and for all, the predominantly racist view held by many of a white Christian America. That old America is destined to disappear sometime in the next decade or two. Which means the height of resistance to it is only now reaching a crescendo.

The risk we run during this re-engagement of the old civil war is that we lose. Then the outcome could take two forms. One is that the entire nation is forced to accept the traditional norms of the old south and adopt its resistance to change. The other is to break apart and allow the old south to follow its long desired separatist path.

The third possibility, of course, is that we face down this threat to our union once more.

I remain skeptical yet strangely optimistic.

That this civil war erupts every so often tells me that the underlying fracture is permanent and that it can only ever be papered over.

America is a continent full of highly diverse states. The common bonds are strong, but they are not so strong that they are everlasting. That is a presumptuous thought that defies world history. Unless America can locate a common set of facts, a common history, and a common view of the future, then this current diminution, this temporary up-swelling of destructive sentiment, will do lasting damage. It could remain.

The events of the last few years – the great cycle of demographic changing alters the nation’s character and  the ideological failure of Reaganism – represent an existential challenge to a very vocal and sizable minority. They, in turn, have made that challenge ours. They have forced their rejection of the future onto us. They have made their upset ours. And they have shown that they view the union and its governance as a convenience for their benefit rather than as a symbol of something more grand. It is up to us to defend the larger future we see and desire.

The tussle is epic. The challenge is to recognize it for what it is, and to react accordingly. This is not s a struggle over the federal budget, or the national debt. Those are minor by comparison and, in any case, are on the road to health. No. This struggle is about the nature of America and what we, collectively, believe it to represent to us all. We had better figure all that out.

Else we will remain diminished.

 

 

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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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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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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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