Nor will the United States of America collapse, if it slips into an August of No Borrowing.
But first, let me reiterate a key starting point: despite chicken-little proclamations pouring from all sides, America won't tumble into hell if there's no budget deal by August 2.
==Jeopardy in the Short-Term?==
The cause of "carpocalypse" level panic in D.C. is fear that the U.S. credit rating will collapse, if the debt ceiling isn't raised in time. America is said to be the only major nation that's never defaulted on its obligations, resulting in easy access to cheap bonds. And indeed, a true default on interest and principle payments could do serious harm, raising risk assessments and borrowing costs for ourselves and for our children. But that won't happen.
Even if August 2 passes without a deal, and the U.S. government abruptly stops borrowing, there will be no reason for our national credit to be damaged, more than a scintilla.
And if all interest is being paid, exactly what will the credit markets have to complain about? Will their calculations of self-interest really change that much, because of an official state of insolvency - clearly very brief - that won't affect their bottom line a single bit? There is a word for market participants who let symbolism trump calculated self-interest.
Chumps. Sure, speculators will send bond yields on a roller coaster for a couple of days. Then, their place will be taken by calmer, more calculating heads. Winners.
Oh, don't get me wrong. The August 2 deadline is a serious matter! The President will be forced to shutter half of the government. Farm subsidy payments and student loans won't go out. Social Security checks may be cut in half, or they may not go out at all. That's bad! But that won't last very long, you can be sure. No more than days - a couple of weeks, at most. And the difference will be made up, within a month.
The short term victims of this idiocy will be politician-demagogues with careers cut short by self-inflicted wounds. We won't see a collapse of the United States of America.
My real worries extend over the longer term, to the underlying problem of which this is just a hiccup symptom. The same damned curse we've suffered for 20 years. Our grinding decline into phase three of the American Civil War.
==A Primer on the Impossible Politics of Debt Reduction==
Never mind history. For the GOP-controlled House to do this for Obama, after all their radical rhetoric, would be political suicide.
President Obama has made it even more difficult to back out. By seeking a Grand Deal on the deficit, he took on his own party's base to offer major cost-savings in entitlement obligations, such as Medicare and pensions. For the GOP to walk away from a table heaped with budget cuts, efficiencies and spending limits amounting to three trillion dollars over ten years - more than they ever asked for - would be public admission of hypocrisy.
(Secret factoid: the Democratic leadership sees this event as an opportunity to do some major fat-trimming that the country desperately needs, but that they could never justify to their base, under normal conditions. Each side could do this - enact some vital reforms while blaming the other side! That is, they might, if pragmatic adults filled the room.)
Why can't the GOP accept this offer? Because Obama demands one trillion dollars in revenue to compensate and help pay for it all. Every penny of new revenue would come from elimination of targeted pork or fatcat tax breaks - like subsidies for the corporate jets that helped the rich to escape the "TSA hell" the rest of us endure in public airports.
Polls show the public overwhelmingly supports this modest set of adjustments, especially since taxes on the rich are at their lowest rates in 50 years. But most of the radicals who recently came into the House of Representatives under the Tea Party banner have signed Grover Norquist's pledge to absolutely never, ever enhance revenue going to the federal government, under any circumstances. Even during times of war.(How did we go from budget surpluses under Bill Clinton, rapidly paying off the debt, to arterial gushers of red ink under Bush? Could one major factor have been going to war for the first time in the nation's history without a plan for shared sacrifice, or any provision to pay for it? Norquist doesn't try to soft-pedal his aim, which is to "strangle the U.S. federal government to death"... a literal quotation.)
Such a pledge leaves no wriggle room. No space for adjusting to circumstance, to negotiate or deliberate. or to be a delegate for all of your constituents. Even the narrowest exception, one that gets three dollars in budget cuts for every dollar of loophole closing - (which old-sane conservatives like Goldwater or Buckley would deem a huge victory - is absolutely anathema to today's GOP.
Whatever you think of the doctrinal details - wherever you stand along the dismal, lobotomizing "left-right axis" - you've got to admit they are impressive. Reciting exactly the same talking points within hours, sometimes even minutes. The most ideologically pure and stunningly well-disciplined party machine America has seen in two hundred years.
==The McConnell Two-Step==
Now, there are smart people on both sides of the current debt-ceiling mess... even some of those who are out of their freakin' minds... who know they've painted themselves into a corner. As we speak, they are desperately seeking a way out. And some of the imaginative escape plans are downright stunning.Take the proposal of Senate GOP leader Mitch McConnell to evade the political mine field by deliberately surrendering to the President the power to raise the national debt ceiling.
Say what? Your party disapproves of red-ink spending, right? (It never bothered you under GOP presidents, when the mantra was "deficits don't matter.) So... your solution is to throw away your Congressional power of say-so over borrowing and hand it over permanently to the wastrels in the Executive Branch?
How does the mind even wrap itself around that one?
Actually, the political legerdemain is pretty clever! Try to follow along.
First, you pass a bill that tosses all power to raise the debt ceiling over to your enemy President Obama. In the long term, this abrogates forever one of Congress's chief powers , to force the nation's focus on the budget (like right now!) But it gets you out of being responsible for a default.
You know Obama will raise the limit, for the sake of the country. And so, Social Security checks will flow. You won't be blamed for stopping them. Phew.
Next, you express outrage that Obama has done exactly what you tossed him the power to do! Great. And then, according to the new law, you pass a resolution through the House blocking the debt-ceiling increase!
But... won't that stop the Social Security checks?
Nope, because you feel safely certain it will fail in the Democratic-controlled Senate, or under the president's veto pen. Thus GOP Congressfolk get to have a win-win! They escape from the debt-limit crisis they triggered. No Grand Deal means the government keeps spending like mad, but without any tax adjustments on the rich. And, above all, you can tell your back-home radicals:
"I voted against any debt-limit raise! Our fingerprints aren't on it! HE did it!"
It's a fabulous tale, worthy of science fiction. But, um, here's a question for House majority leader Eric Cantor And Senate GOP leader Mitch McConnell: Sirs, do you actually think that will work?
Sure, 'he' (Obama) will have raised the debt ceiling. But only because you voted to give him that power... forever! Will your constituents really be too stupid to notice that? Sure, past history suggests you may be right about that. But can you count on stupidity saving you... forever?"
The President should reject this idiotic ploy, in savagely contemptuous terms, even if it means that the debt-raise deadline passes by on August 2. As I said (above) our credit rating will be fine. There will be no permanently credit-damaging "default." And the nation might do well to go without federal checks for one or two weeks. It'll make us think.
==What's The Worst That Can Happen?==
In fact, we've seen all this before. Back in the 1990s, Republicans in Congress shut down the government... and paid for it politically. But they felt a grand gesture was necessary for ironic reasons. Because, for a brief time, House Speaker Newt Gingrich and President Bill Clinton actually worked together!
Upon first taking over Congress, in 1995, Gingrich made a lot of bellicose statements. But he also wanted a track record of accomplishment. And so, he sat down with Clinton to negotiate Welfare Reform, a bill that took on many complaints about a system that both right and left found unworkable and destructive. The result was legislation that simply worked. So well that "welfare" has dropped from the lexicon of top political issues, even among polemical extremists.And that brief interlude of sane-discussion and compromise had other products. Gingrich and Clinton worked out budget control measures that resulted, soon thereafter, in the first balanced books and black ink in the federal treasury since Eisenhower. Black ink that Clinton diligently applied to debt reduction, even later when they GOP demanded that it all be given to their top 1% sponsors. Even when he was being sprayed by the opening salvoes of Culture War.
It was a remarkably productive year or so. And Republican radicals looked upon what had been wrought by Gingrich and Clinton. And they saw that it had been achieved by pragmatic negotiation and good old American, non-dogmatic problem solving. And they saw that citizens and the nation benefited and the public thought it good.
And they swore that nothing like it would ever happen again.
Whereupon the Great Federal Government Shut-down Crisis commenced, accomplishing nothing but noise and smoke and posturing and harm to conservatism. (Read-up about the eerie parallels to today's big posturing festival over the debt ceiling.)
When that venture flubbed, the GOP decided to try something even more radical, while expecting different results. They crossed another traditional barrier by impeaching a President over matters that had nothing to do with his performance of the job we hired him for... indeed, for doing far less than eight out of the fifteen "House Managers" (prosecutors) had done to earn their own messy divorces. Only one other president had ever been impeached, in the direct aftermath of Lincoln's assassination. But the turning of trivialities into mega drama seems to be a trait that we must live with, during this phase of our ongoing civil war.
What does this history lesson have to do with the current crisis? It shows what we could have, right now, if adults chose negotiation, yes, even across an ideological divide. And it shows the ultimate futility of partisan rage, when pragmatism is replaced by fevered dogmatism. It shows that Mr. Obama needs to study Clinton and learn to be tough.
He must call... their... bluff.
==Punishing Job Creators==
I want to conclude by getting specific. Some of the polemical nonsense being hurled about seems to come straight out of the corrupt ad agency in "Mad Men." Much of the claptrap is being answered well. But I wrote to a cousin of mine who works in the Executive Office to point out some major Murdochisms that are going unrefuted. Here is a big 'un.
Deficit-cutting helps the economy. But any revenue increase hurts "job creators."
Here are two points that someone ought to say in reply:
"Now, in spite of that fact, we're willing to do lots of cutting! Because we have to. We've spent a decade plunged into land wars of attrition in Asia without doing what all our ancestors did, in time of war - making sacrifices to pay for it. Well, the bill is due.
"But if several dozen middle class Americans must go jobless to save a million dollars... exactly how is it sacred 'job-creation' to give the same million dollars in special interest tax breaks to some billionaire corporate jet owner? Do you really believe he'll use that million to hire 30 people?
"Sure, it's happened, now and then. But if the Bush tax cuts had translated into 30 jobs per million given to the rich, we'd have almost no unemployment right now!
"So, why should we swallow that line, this time?"
"Now Republicans say we should be stingy to the working class, but generous to the rich, so they can make jobs. But if economists know one thing, it's that the rich don't spend the way middle class folks do. They don't have to!
"Sure a few of them build factories. We'll extend tax breaks for useful capitalist enterprise, for research and investment in job-making capital equipment.
"But this is no time to go into debt preserving huge tax gifts for those who simply hold onto it all, hardly spending. That's not velocity. It sure isn't job-creation. It's using your friends in Congress to just get richer while the middle class pays."
Okay. Yeah, I know that those concepts - like money velocity - may be dismissed by political operatives as hard for Joe Six Pack to grasp. Well, I don't agree. I think they'll nod, understand, and feel flattered at being explained stuff, like adults.
==What It Boils Down To==
I consider the "Tea Party Movement" to be one of the most brilliant sociological ploys. Perhaps unmatched since a million poor white southern farmers were talked into eagerly and courageously fighting to the death, in order to protect the feudal privileges of a tiny, slave-holding aristocracy. Yes, it is that impressive. Get them to think they are fighting for one thing, while dying for something else.
Likewise, by holding up and waving an obsolete and irrelevant old "left-right'political-axis," today's feudal lords have managed to stir Red America into a frenzy of unparalleled rancor toward every single group or profession that has both knowledge and professional skill -- from scientists to teachers, civil servants, academics, medical doctors, attorneys, diplomats, skilled labor... amounting to a "war on smartypants."
Why stir hatred for all of the folks in society who know a lot? Calling them "intellectual elites?" This program clearly has one aim.
To protect one set of elites from being counterbalanced by other elites. Pretty simple, actually.
...that is, until it was stirred by foreign-owned propaganda machines, with that one goal. To sic us at each others' throats.
==See more articles on The Economy: Past, Present and Future
243 comments:
«Oldest ‹Older 201 – 243 of 243Paul Krugman quotes Abraham Lincoln at the start of Civil War I:
Under all these circumstances, do you really feel yourselves justified to break up this Government unless such a court decision as yours is, shall be at once submitted to as a conclusive and final rule of political action? But you will not abide the election of a Republican president! In that supposed event, you say, you will destroy the Union; and then, you say, the great crime of having destroyed it will be upon us! That is cool. A highwayman holds a pistol to my ear, and mutters through his teeth, “Stand and deliver, or I shall kill you, and then you will be a murderer!”
And for all that I usually try to argue respectfully with Tacitus2, this is exactly what I think of when he repeatedly claims (despite the existence of "The People's Budget", despite also the constitutional requirement that budgets originate in the House of Representatives) that Democrats are at fault for not proposing their own budget.
Paraphrasing Lincoln: "A terrorist points a gun to my daughter's head and says 'Give me everything I want or I'll kill her', and when he does, it will be MY fault for not counter-offering my own terms for the negotiation?"
Robert:
Thank you, Dr. Brin. I rather enjoyed the water cycle metaphor as well. Unfortunately, it's lacking. I knew that when I wrote it up, and my friends mentioned it when I told them but I can't quite put my finger on where it founders.
I think your metaphor accurately describes how wealth naturally flows--from the poor to the rich. What it doesn't do is tell us why we care.
First, just in simple terms of "How much money do people have?", your model is a good indicator of which sort of interference works and which does not. Injecting water at the TOP of the system (which in your model is the POOR) "lifts all boats". Pouring water directly into the ocean ONLY lifts the ocean level, and does nothing to those bodies above it.
But more to the point, your model needs something to demonstrate UTILITY in the flow of water. Perhaps some hydroelectric dams or water wheels along the way. This is the part that would demonstrate that money all by itself doesn't DO anything, but that money (water) in MOTION does useful work as it flows along.
And again, this demonstrates the absolute folly of Supply-Side, which (in your model) would be arguing that since energy is produced (by those dams and wheels) as water flows from upstream into the ocean, the GREATEST utility would be produced by adding lots of water DIRECTLY into the ocean! A fourth-grader can see that if you bypass the dams and wheels where the water actually does work, you get no value.
And (Ayn) Rand Paul's arguments that the rich are the job-creators become "Without the ocean, there'd be no upstream water to begin with."
While I avow that the left isn't as bad, right now, it had its moments... like the entire span of the gruesomely hideous Soviet Empire. A genuinely "evil empire" that deserved to die.
Moreover, even now, the mad left does harm, though they are a marginalized, gelded force, compared to the mad right. NOT because they are less mad, but because moderate liberals control the Democratic Party, while the Republicans have been hijacked.
Look, I can find the harmful left easily. Defenders of $%$##! Ralph Nader squirm for excuses. But the SOB DIRECTLY helped to give us George W. Bush, inarguably one of the two worst presidents in US history. Thanks Ralph.
Moreover, as a sci fi guy, I must point out that the silly postmodernist crypto-Marxists who run most of the English and Lit depts on our universities share a deep loathing of SF that ensures they never ever ever vote tenure for the sci fi instructor, even tho it is the most American of all literary forms.
I could diagnose WHY they are like this. But suffice it to say that these festering little tyrannies show what the left would be like in the nation at large, if they ever did to the Democrats what the Murdochians did to the GOP.
Just a note: You don't even need to pick at festering little tyrannies to find what the "Left" would look like if the main "Left" party was run like the GOP. Just look at Australia with their Green and Liberal parties. Their "Left" is almost as insane as our "Right" here in the U.S.
(Typical Aussies getting everything upside-down and putting their insane party on the wrong hand... } ; = 8 P )
I am thickening up my epidermis a bit for the next 16 months. After what seems to have been an illusionary Progressive Springtime the basic tenets of the Liberal worldview are facing an existential crisis here and elsewhere. I recognize that this is not fun for you.
In a way though, it should not surprise. The underlying causes of our current crisis run deep. We find ourselves fiscally embarrassed due to, among other things, high unemployment and scarcity of resources.
The former is due to progress, to improving technology and sparing people the drudgery of monotonous and often dangerous jobs. The latter, scarcity, is a prevailing theme from the past...Peak Oil, Population Bomb, these are apocalypic visions as dire as any Hal Lindsey tripe, and they are coming to pass. Along with scarcity of many other things, clean water, rare earth elements, fish, etc.
It was mentioned quite a few invective cycles back that we needed to be working at the state level, as it seems the model of the Fed gov doing all is failing. And that is happening. Fitfully, imperfectly (both WI and MN have been ugly), but the system can work.
So, the House of Rep makes a proposal, the Senate concurs and the Pres signs or vetoes. Onward.
Hoping I do not see my retirement fund drop 20% next week.
Tacitus
Lincoln was describing 'projection': the favoured trick of the discerning bullying psychopath.
@ilithi:
Just look at Australia with their Green and Liberal parties. Their "Left" is almost as insane as our "Right" here in the U.S.
I'm not sure that John Howard or Tony Abbott would like to hear the Liberal party referred to, along with the Greens, as 'left'! In fact, Malcolm Fraser is no longer a member because it has drifted to the right and has become a conservative party. It would probably still be thought a hot bed of communism by the GOP.
The Greens are often referred to as 'watermelons' (red* on the inside, although I prefer to think of them as 'cool refreshment in a warming plotical (agh! political) climate'?) At the moment, they're probably the sanest of the lot! (Which isn't saying much!!)
*not sure what the GOP would make of that either!
punden: a hotbed of alternative meaning.
I don't believe that unemployment is due to progress. I believe its due to business practices. First let me note that I am a Robotic Engineer. I am, in part, responsible for automating existing jobs. So what follows may be a rationalization.
When a company takes the opportunity automate a process which replaces human labor, they are in effect setting up the conditions by which workers are often fired. This is an unfortunate practice because those in charge want to realize greater profits.
Alternatively, a company could choose to retrain their employee and train them in a new role. They could work to develop new products. You have to look at each field individually to really explore the possibilities. Companies would gain very loyal employees have a chance to get ahead in the market. That they were already knowledgeable about what they did makes them excellent candidates for this type of work.
In my job, the best resume is not the number of roles I've taken on. Its the number of jobs I've made obsolete by automated process.
-------------
As a political aside. What Progressive Springtime are you talking about? It must be somewhere other than the US, but Progressives have never been in power.
I meant because, not but. (Last Line) *Grumbles*
@Tony: I did say Liberal, didn't I? I apologize, I meant Labor.
See, regular politics are confusing enough, this is why they shouldn't be turned upside-down.
} ; = 8 P
@ilithi
But turning problems 'upside down' is often a very powerful way of finding a solution!
(We mongeese are kinda silly that way!*)
Other people's internal politics are never obvious. One reason why I'm keeping a low(ish) profile on the current discussions.
*Maybe the impasse would be solved if Obama's daughters made a batch of tuna sandwiches for the negotiators? Seems as good an idea as any!
Here's a graphic that was done recently, showing who is responsible for the National Debt.
http://www.newscorpse.com/ncWP/?p=4937
In short, Clinton AND Obama, added together, have a smaller percentage increase to the National Debt than George W. Bush, and only a little larger than that of George H.W. Bush. However, Ronald Reagan is responsible for nearly half of the debt, measuring from his Presidency on down the line.
Food for thought.
Rob H.
Jacob
I was careful to call it an illusionary Progressive Springtime. For all the rhetoric-minimal facts whipped into a fluffy merangue-the US remains a fairly conservative nation.
Our leadership has certainly proved to be flawed. As difficult choices loom, will the citizens prove more sensible than their elected leaders? We hopes.
Tacitus
Tacitus, our present president is flawed. Nu? So? That doesn't make it okay to do the modern conservative sigh "they're all screwed so I might as well dance with my old party, no matter how messed up they are."
Gee wiz, what is WITH conservative loyalty reflexes!? Given 1% of the same cause, democrats turn on their leaders like wildcats!
Dig it, there's a difference between imperfection and being stark jibbering always-wrong insane. There is a difference between fumbling a few items and not being able to cite a single unambiguous statistic of national health that did not plummet under your rule.
BTW... the deficit is entirely explained by just two things. The giant tax breaks for oligarchs and TWO voluntary wars of attrition in Asia. Going to war without making provisions to pay for it.
Period. That's not a formular concocted by adults. I secretly(*) contend that it is a formula concocted by traitors!
But even if I am wrong about that, such people should never again be trusted with a burnt match.
I reiterate this:
http://www.newscorpse.com/ncWP/?p=4937
also this:
http://www.newscorpse.com/ncWP/?p=3059
The last two items evade some valid conservative points. And #6 is an unproved assertion (my nod to Tacitus!)
On the other hand, Obama saved the entire US auto industry but we CHARGED them for it and wound up making so much money off stock that the whole industry "bailout" cost maybe $10B. Chicken feed.
In fact, except for Geithner's awful mistake letting Godlman NOT provide stock for us salvaging AEG (a terrible blunder) the difference between Obama and Bush is simple...
Obama's "bailouts" extorted stock and options that we then sold, making back a lot of the money!
Bush's bailouts were direct gifts to family friends. Like all those "emergency" war contracts.
Jeez, notice that all of my attacks on these SOBs are in "conservative" terms? I never attack them from the touchy-feely lefty perspective. I never ever have to!
David
Why on Earth would you assume that when I speak of flawed leadership I meant Obama? I was speaking more broadly of Congressional inertia. I bear Obama little to no animus, he is simply in way over his head. While an unenviable pickle to be in I can be sympathetic.
I have tried on two occasions to play your unambiguous metric game. You just arbitrarily rule my citations to be invalid. I think you grudgingly gave me a few partial credit points once. Soon we will have enough data points to compare recent admins to current, but I expect you will say that too is invalid because it is all GWBs fault. As you wish.
Nice of you to speak of "my rule". I suppose we could do worse. But alas, I run no secret cabal. And as you also know I favored letting the Bush tax cuts expire. Still do in fact, but it would be very nice to see some serious budget cutting measures first.
To be fair to your past positions you have always held Afghanistan out as a necessary war. Or are you lumping in Libya as one of the two unnecessary ones?
Tacitus
While I posted one of those links to Newscorpse, Dr. Brin, I would like to mention a caveat. While in terms of percentage increase Obama and Clinton raised the National Debt far less than Reagan and crew... in terms of dollar amounts, not adjusted for inflation, how much did they do?
In that regard, Obama may very well have spent nearly as much as the Shrub. And Clinton likely spent more than Reagan.
Rob H.
David_ Your criticisms of conservatives have two basic flaws......
1) They are based in the concept of an inviolate, objective reality. A reality that is common to all and is not changed by wishful thinking or political or religious affiliation. This is anathema to modern U.S. conservatives.
B) You use valid mathematics. (see 1.)
It simply does not matter to conservatives what the facts were last week. Today their truth is whatever matches with today's tribal storytelling. Look at how many want to negate the Civil War. Or Social Security or Medicare or any other good governance advance made in the last 150 years.
I know a conservative who listens to Rush Limbaugh every single day and rants about lazy government workers and evils social programs while he coasts on his early retirement pension, as a tax collector for the City of San Francisco.
The cognitive dissonance never bothers him.
wv: stand, Google AI is freaking modeling our minds I swear.
Hi Robert,
I don't recommend posting that first newscorpse link. Its not very useful except as a partisan tool. Rather find one that showed change in deficit spending in chained dollars relative to GDP during their term.
Clinton was negative. Obama is not responsible for a large deficit increase. He would be negative if any of his economic forecasts actually held. Bush Sr. is not a terrible deficit producer.
Reagan and Bush Jr are wear the mark of the beast to any actual fiscal responsibility advocate.
@pangolin:
'I know a conservative ...'
There you go again, using anecdotes to prove your liberal scientism nonsense!
Tacitus I never meant to tar you as a ruler! ;-)
Ilithi Dragon,
"Just look at Australia with their Green and Liberal parties. Their "Left" is almost as insane as our "Right" here in the U.S."
Tony pointed out that "Liberal" is the Conservative/Tory Party. Think economic liberal, or these days neo-Liberal. (They aren't, though. Spending increased substantially during the last Liberal government.)
OTOH, Labor is nominally Centre-Left, but with a strong Right faction. (The current PM was a member of the Left faction, but was boosted to leadership by the Right.) And just as incompetent against their insane opposition (and Murdoch media) as your Democrats. The Greens are... well, Greens.
As for the current ultra-conservative Liberal leader, Tony Abbott, he's as bonkers as the best of your lot.
http://www.abc.net.au/news/2011-07-22/crabb-freed-from-facts-abbott-goes-ballooning/2806640
Quote:"Once you've severed the guy ropes of obeisance to empirical evidence, many happy hours of ballooning lie ahead. [...] But Mr Abbott's one-man battle against demonstrable logic has entered a new and compelling phase."
Tacitus2:
And as you also know I favored letting the Bush tax cuts expire. Still do in fact, but it would be very nice to see some serious budget cutting measures first.
I also favored (and favor) letting them expire. ALL of them, even on my own tax bracket. In this case, I truly do believe in shared sacrifice.
The temporary tax cuts (had an expiry date from the very start) were implemented without any thought to their impact on the budget. Why should the act of letting them expire require any further budget consideration than "If we're serious about reducing the deficit, we can't afford these tax cuts right now"?
Because President Obama insists on keeping the tax cuts alive for all BUT the rich, he needs to horse-trade with congressional Republicans, whereas if he had just allowed the damn things to expire in 2010, we'd be on sounder fiscal footing by now.
Tacitus to Dr Brin:
To be fair to your past positions you have always held Afghanistan out as a necessary war. Or are you lumping in Libya as one of the two unnecessary ones?
I haven't read to the bottom yet, so I don't know if Dr Brin answered you, but my thought is that he didn't mean the 2001 invasion of Afghanistan was bad because it was unnecessary, but because it was "off the books" of the budget.
Robert:
While in terms of percentage increase Obama and Clinton raised the National Debt far less than Reagan and crew... in terms of dollar amounts, not adjusted for inflation, how much did they do?
In that regard, Obama may very well have spent nearly as much as the Shrub. And Clinton likely spent more than Reagan.
I don't know--didn't the Clinton years end with a budget SURPLUS? I know that doesn't mean there was no debt, but the debt was getting paid down so quickly that it scared Alan Greenspan into arguing for tax breaks (even though it was obvious even in 2000 that the stock bubble those projections were based on was already coming to an end).
Additionally, the current administration has to deal with the Great Recession, and spending is actually a GOOD thing. The austerity that the right-wing is insisting upon will only guarantee that the US and Europe are stuck in a Japan-like recession for decades to come. It's legitimate to finally discover that the debt is a problem (though a bit late, considering that no one cared when it was Republican debt), but it is disingenous to the extreme to pretend that the debt is the reason for recession and unemployment when in fact austerity will prolong both indefinitely.
Finally, much of what President Obama has to "spend" is service on the already-existing debt. So yeah, it's back on voodoo Reaganomics.
Tacitus2:
It was mentioned quite a few invective cycles back that we needed to be working at the state level, as it seems the model of the Fed gov doing all is failing. And that is happening. Fitfully, imperfectly (both WI and MN have been ugly), but the system can work.
The one thing the states can't do is print money. And while in normal times, I'd agree with you that that's a good thing, we are not in normal times. We need to increase DEMAND to get out of a recession, and states are tripping over each other to SLASH demand even as we speak.
So, the House of Rep makes a proposal, the Senate concurs and the Pres signs or vetoes. Onward.
The House's corporate sponsors, Wall Street, the "US Chamber", etc had better get those House members to realize that their source of campaign funding is about to take a hit. Otherwise, I see zero prospect of this happening.
Hoping I do not see my retirement fund drop 20% next week.
Mine dropped 20% after 9/11, and I was one of the lucky ones who invested conservatively. Point being, it came back. I'm not afraid of a short-term stock dip. As in Minnesota, a shut-down will only last a short time before everyone realizes it DOES affect them.
But a default will probably raise interest rates for a long time to come, which means we'll be even MORE in the red. The problem that congressional intransigence is supposed to address--the deficit--will be made WORSE, not better.
I can deal with people having a different priorities than I do. If more people think the debt is a bigger problem than the recession, well, maybe I'm wrong, and that's how democracy works. But I go CRAZY when people insist that a problem (the debt) is so drastic that we MUST take an action that makes that very problem WORSE.
Paul Krugman:
At this point, we just have to accept it as a fact of life: Obama doesn’t, and maybe can’t, do outrage — no matter how much the situation calls for it. The purpose of last night’s speech, if there was one, was to rally the nation against crazy Republicans. But there were no memorable lines, no forceful statements of the very stark reality. “Now, now, that’s not reasonable” isn’t going to move multitudes.
It turns out, I’m sorry to say, that he wasn’t the one we were waiting for.
Meanwhile, Boehner’s reply was as vile and dishonest as you might have expected.
I really don’t see how this ends without either default or the belated discovery by Treasury that the constitutional option is viable after all.
That "constitutional option" is the idea that the 14th amendment guarantees that the US pay its debts, and that this trumps the debt ceiling. Krugman doesn't say this next part, but I'm guessing the corporatist Supreme Court would UPHOLD such a move rather than force a default.
While the 14th amendment guarantees that the government pay its existing debts, I'm not sure it requires the government to take on *new* debt in order to meet the desired of what congress wants to spend.
@David - the question is not whether the 14th Amendment *requires* the executive to do anything. The question is whether ... (Am14 Section 4)
"The validity of the public debt of the United States, authorized by law ... shall not be questioned..."
...means that once Congress has authorized thus-and-so (wars, interest payments, the air traffic controllers that let John Boehner fly home on weekends ...) whether the "debt" accrues with Congress' commitment and direction to the Executive to provide the thus-and-so, or with the Executive's sale of bonds etcetera to cover the difference between tax collections and outlays.
Fair argument may be made either way, English being an imprecise language and the drafters of the 14th Amendment most likely not thinking any Congress would be so irresponsible. But if we had the drafters before us today, they would remind us that they wrote the 14th Amendment as part of finishing off the results of the traitorous Confederacy, and they would take an equally strong line against today's Confederates.
Taking the Teahardists' argument seriously for a second - let us assume Congress has ordered too much thus-and-so; perhaps we really can't afford all that stuff. In that case, Congress' Constitutional duty is to change the law - not to refuse to honor the debts that are the natural and expected results of its actions.
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That said, I find it highly amusing that should our great nation find itself short on cash to cover expenses, and Congress refuse to find the revenue, who decides in what order the bills are paid?
The Executive.
I would suggest the Executive start with a Friday evening shutdown of the airport that John Boehner usings to get home. A cut in air traffic controller hours proportionate to the budget cuts Boehner chooses would be fair; after all, John can always take the bus same as his constituents.
Oh look, more dire warning science fiction
http://www.youtube.com/watch?v=hFlsGjIHzb8
About some augmented reality program called H+. I'm sure the magaizine is annoyed at having its name used so.
Our host should be interested in this New Scientist article about Anti-addiction drugs. Still no word of anyone studying indignation addiction.
Anti-addiction drugs face more than medical issues
So the GOP has just decided to launch another fiscally unrelated attack on America in our budget debate. I guess they got sick of going after abortion and public broadcasting?
Under HR2584, NO new species is allowed to be listed under the Endangered Species Act (as specified in the ESA, Section 4, parts a,b,c and e). That's among many other things, like forbidding mandates for fuel efficiency, forbidding the EPA from regulating air or water pollution, and deeply cutting the budgets of environmental agencies (which is not a fiscal issue; these agencies consume peanuts at worst).
Aside from the fact that it's just mind-numbingly stupid, and the kind of thing you'd only even consider out of a complete reflexive ideological hatred of environmental protection...
it has all of zero to do with the US fiscal situation.
I guess I can kiss any public sector job as a biologist goodbye so long as the Tea Party is around :(
Corey:
Aside from the fact that it's just mind-numbingly stupid, and the kind of thing you'd only even consider out of a complete reflexive ideological hatred of environmental protection...
it has all of zero to do with the US fiscal situation.
The Republicans aren't even pretending that the demands they insist upon in exchange for a debt ceiling deal have anything to DO with reducing the debt. Rather, they are using their ability to cause a default in order to wring ideological concessions out of the congressional Democrats and the president.
Hostage-taking is a very appropriate metaphor.
I guess I can kiss any public sector job as a biologist goodbye so long as the Tea Party is around :(
Taking a page from Dr Brin's characters in "The Postman", I've gone to mentally appending "may they rot in Hell" to any mention of the Tea Party.
It's true Larryhart; you're absolutely right
and yet, it strikes me as amazing that it's just an accepted part of politics that the GOP will use the budget debate for any excuse they can possible get hold of to attack American in any way they can.
It's not even surprising anymore! That, or we really have reached a stage of "outrage fatigue".
Dave Smelsser has it right.
The 14th amendment requires Obama to pay the debts. It does not allow him to borrow, at will, without Congress's Okay.
It means this. He must use whatever money we have to pay the interest on our existing loans. And he must NOT issue checks to entitlement recipients beyond the cash that remains.
SSI recipients who get HALF of the normal amount after August 2 will solve the problem within a week.
It was interesting to Read Boehners remarks. He presented the situation as if he was the one attempting to negotiate and Obama was obstructing.
http://www.nationaljournal.com/the-complete-text-of-president-obama-s-and-speaker-boehner-s-national-addresses-20110725
From robertreich.org/post/7940507194
"Until last year Social Security took in more payroll taxes than it paid out in benefits. It lent the surpluses to the rest of the government.
Now that Social Security has started to pay out more than it takes in, Social Security can simply collect what the rest of the government owes it. This will keep it fully solvent for the next 26 years."
If this is true, and borrowing from the SS trust fund is "debt", and the 14th ammendment makes paying back debt a priority, then I think my parents SS checks should be ok.
When factual circumstances occur that render one construction of a law to be a physical impossibility, any other construction is preferable.
"...The 14th amendment requires Obama to pay the debts.
... will, under a foreseeable set of facts, conflict with ...
It does not allow him to borrow, at will, without Congress's Okay."
Congress passed a statute (A) authorizing the executive to sell bonds and (B) limiting that amount of bonds. When (B) results in a conflict with the plain language of the Constitution, which one wins?
...why, the one that gets 5 votes in the Supreme Court, of course!
@Sociotard - don't you agree that it's Obama's fault for not surrendering completely?
If O.J. had thought to use the Boehner Defense, he'd be a free man today!
My apologies for the triple post, but has anyone noticed that the FAA is shut down?
Seriously. This Confederate attack on Union forces has claimed 4,000 jobs (and incidentally increased corporate coffers, as most airlines raised ticket prices when they no longer had to collect FAA ticket fees) and added to the crumbling of Union infrastructure. Critical services appear to be subsisting on supplies taken from other funds although I don't know what *that* is weakening.
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About the 14th Amendment - I doubt Obama will actually invoke it, because it would give the GOP a plausible reason to impeach him. I don't say it's a legally correct reason, but it is much more plausible as the Lewinsky deposition set-up. A plausible impeachment would require trial by the Senate, which Obama would swiftly win but at heavy political cost. Just sayin')
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OK, I'm done. On to Gettysburg!
wow what a thread!
Onward to next posting.
Left/right axis: obsolete yes, irrelevant no.
One party has unity & the other lacks it - which way their conflicts will be resolved in this situation is no mystery.
If the author seriously thinks that an epic job-loss in the high-paying public sector, combined with a major run on banks, combined with ongoing reduction/elimination of vital services that will produce its own severe (& likely long-term structural) damage to the economy, will be just a "blip" ... or that this is will be a clone of Gingrich's stunt in the 1990s ... or that it will all somehow magically evaporate after a few days or a week, because the intransigent GOP that has been eager to shut down the USG will see the error of their ways, even while the public blames a weak POTUS for letting this crisis develop ... I think he is sadly mistaken.
A default will have a devastating ripple effect around the world, in a very weak economy. What this would do to inflation & interest rates (that have been mercifully low up to now) would be ugly, to put it mildly - & no doubt America's creditors would make any further lending contingent upon much harsher terms, at a time when the US could least afford them. Another recession is a best-case scenario - an actual depression is a real possibility.
Now picture FOX running "The Obama Depression" 24/7 as a meme, until the rest of the MSM picks it up ... suddenly the slate of GOP candidates doesn't look like a doomed clown-car going over a cliff any more: it looks like a contest over who gets a free cakewalk into the White House.
@Jim
I think you're right here.
Now, it's really a small quibble given that the article is focused, not on the economic impact, but on the broader picture of politics painted by the GOP's actions here.
Still, a shut down on 8/2 is NOT a small issue. In fact, I just listened to Ezra Klein, an economics columnist for Bloomberg and the Washington Post, talk about how such an event could potentially suck well over $100 billion out of the US economy for the month of August alone. Basically, he described it as "instant recession". In addition, the US is already looking at a downgrade in credit rating. S&P may do that even if we DON'T shut down on 8/2. Even averting a shut down, but doing it with the Boehner plan, is not enough to avoid a credit rating downgrade. In short, the state of our extremely fragile economy and presently delicate credit rating score are both at serious risk here.
David,
I love Warren Buffett and Bill Gates. I became a securities analyst and hedge fund investor because I wish to replicate what Buffett has done in some small way. Accumulate a small fortune using a Graham/Buffett investment approach and then use the fortune to help make the world a better place.
Buffett is certainly being extremely generous. He is giving away something like $50 billion that he earned through sheer intelligence. This is very laudable when most billionaires just pass on their wealth.
But your estimate of his son’s wealth is off by a bit. According to the most recent Berkshire Hathaway proxy statement Howard Buffett owns 1,406 Class A Shares worth $156 million and 300,011 Class B shares worth $22 million totaling just under $180 million at today’s stock prices. This is a very large fortune that is in effect dynastic wealth. Not Buffett/Gates wealth but fantastically wealthy.
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