Friday, July 29, 2011 11:16:53 AM
Five Reasons the House GOP Is to Blame
James Fallows
Jul 28 2011, 2:56 PM ET
Many Republican readers have written to ask why I have posted "partisan" charts [ http://www.theatlantic.com/politics/archive/2011/07/the-chart-that-should-accompany-all-discussions-of-the-debt-ceiling/242484/ ], like the one after the jump, that use data from the Congressional Budget Office and elsewhere to show that tax cuts over the past decade have played a huge role in creating mammoth federal debt.
In my view, these have been "charts," rather than "partisan charts." And to me their significance is less in allocating responsibility for creating the problem than in clarifying the real options for dealing with it.
Still, anyone who thinks I am mainly blaming the Republicans for the needless debt-ceiling fracas, especially the Tea Party-era House Republicans arrayed behind Rep. Eric Cantor [ http://www.theatlantic.com/politics/archive/2011/06/least-valuable-player-rep-eric-cantor/240931/ ] (and Rep. Jim Jordan [ http://www.dispatch.com/live/content/local_news/stories/2011/07/28/payback-coming.html ]), is correct. To put the reasons in one place, as things go down to the wire, here they are:
1) The debt-ceiling showdown represents hostage-taking, plain and simple. This is a "crisis" that need never have happened, regardless of which party controlled the White House.
You wouldn't know it from most news coverage, but there is no logical or legislative connection between the House Republicans' stated object of concern, the future budgetary path toward national solvency, and the bonds and notes the Treasury must keep issuing for programs this and previous Congresses have already voted into law. (Ie, additional debt.) It is a quirk of legislative history, not a principle of sound budgeting, that we calculate a "debt ceiling" at all, those debts being a predictable consequence of the programs Congress enacts. That's why increases in the ceiling in the past have been routine measures, or occasions for minor grandstanding. These minor episodes include then-Senator Obama's vote against an increase in 2006. That one passed, as of course did six other increases under George W. Bush (along with the 17 under Ronald Reagan). You can read historical details from the Congressional Research Service in PDF form [ http://www.fas.org/sgp/crs/misc/RL31967.pdf ].
Here's a comparison: Suppose, by similar quirk, there was an arbitrary ceiling on the amount of ammunition the U.S. military could buy each year. Or the amount of fuel for drones, bombers, and Humvees. Like overall national debt, these purchases are foreseeable consequences of previous political decisions -- in this case, about the wars the country decides to fight. But suppose that when the "ammo ceiling" came due for its routine extension, a group of legislators said they would refuse. No more bullets or jet fuel after August 2, and for good measure no more food for the troops, unless demands for radical change in future foreign policy were met in full. That would rightly be seen as blackmail, and as a reckless willingness to damage the nation for partisan ends. A similar reckless exercise in blackmail is underway now, with the difference that the consequences can be longer-lasting and worse.
2) The House GOP position fails the test of basic knowledge. Last night I listened to a Tea Party member from the House explain why there could be no tax increases as part of the deal -- raising taxes is the last thing you need in a recession. In the next sentence, he said that the main virtue of a proposed GOP plan, versus Harry Reid's, is that it made deeper budget cuts right away, though even deeper short-term cuts were essential.
No one had pointed out to him, or he had forgotten, or he didn't realize, that during a recession, raising taxes and cutting budgets are bad for the same reason. They both reduce demand and make a recession worse. You can argue that taxes shouldn't go up in a recession. But if you make that case, as the Republicans (and most Democrats) do, you look like a hack or ignoramus if you insist on short-term budget cuts during the same economic hard times. Most House Republicans argue both sides of this case.
3) It fails the test of basic logic. Or perhaps basic knowledge part #2. If you look at the numbers, like the chart after the jump, you can see that budget-balancing involves a theshold choice. You can be for preserving tax cuts in toto, or you can be for cutting the deficit. But because the tax cuts have played such a major role in creating the deficit, if you have any regard for math or logic you really can't be for both. But most House Republicans are.
4) It displays a lack of tragic imagination. Many on the right have talked themselves into the view that it would be no big deal for the U.S. to go into technical default for a while. And I am sure that the "disaster strikes at midnight!" scenarios about what would happen on August 2 are way overblown. But anyone who thinks this controversy has had no effect on America's standing and assumed credit-worthiness, or that an actual default, whenever it occurred -- in late August, in September -- would not hurt us in the short and long run, needs to get out more. Out into the world, where assessments of basic American steadiness are now being recalibrated.
5) It has turned into zealotry, by which I mean utter disregard for the practical consequences of acts. A Republican demand for $16 million in cuts from the FAA budget (plus some anti-union provisions) has led to an FAA shutdown that has in turn, as the NY Times reports, led to a $25 million per day loss in fees the airlines paid to the FAA. That is, zealotry on this point has already cost the government more than ten times as much as the cuts would have saved. The most predictable consequence of a federal default, in the name of "reducing the deficit," would be a huge increase in the deficit -- through higher interest costs and lower revenues because of the resulting disruption to the economy. It doesn't matter.
The Democrats have too many problems to mention. At other times, their blind spots or special interests have been the bigger impediment to sensible policies. For what it's worth, I am in the camp that feels that President Obama's instinct for conciliation [ http://www.theatlantic.com/politics/archive/2011/07/get-over-it-this-is-who-obama-is/242600/ ] has ill-served him [ http://www.thedailybeast.com/articles/2011/07/27/obama-s-reason-fetish-leaving-him-defenseless-on-the-debt.html ], his party, and the country in this instance. I wish he had made a stronger case [ http://www.theatlantic.com/politics/archive/2011/07/time-for-a-this-is-bullshit-speech/242404/ ] and taken a harder line -- and that he would even now be contemplating the "14th Amendment [ http://www.politico.com/news/stories/0711/60036.html ]" alternative in the national interest.
Still: When we look back on the destructive folly of this summer, none of us will be seen at our best. But the people threatening to bring out the worst are mostly in the House GOP. As David Brooks put it in his column [ http://www.nytimes.com/2011/07/05/opinion/05brooks.html ] three weeks ago:
>>If the debt ceiling talks fail, independent voters will see that Democrats were willing to compromise but Republicans were not. If responsible Republicans don't take control, independents will conclude that Republican fanaticism caused this default. They will conclude that Republicans are not fit to govern.
And they will be right.<<
One of the deficit charts, via the New York Times [ http://www.nytimes.com/2011/07/24/opinion/sunday/24sun4.html (two posts back at http://investorshub.advfn.com/boards/read_msg.aspx?message_id=65593499 )]:
Copyright © 2011 by The Atlantic Monthly Group (emphasis in original)
http://www.theatlantic.com/politics/archive/2011/07/five-reasons-the-house-gop-is-to-blame/242673/
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John Boehner: Downgrade Of U.S. Credit Rating 'Beyond My Control'
7/28/11
http://www.huffingtonpost.com/2011/07/28/boehner-debt-credit-rating-downgrade_n_912367.html [with comments]
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3 ways Obama could bypass Congress
By Jack M. Balkin, Special to CNN
July 28, 2011 -- Updated 1448 GMT (2248 HKT)
Editor's note: Jack M. Balkin [ http://balkin.blogspot.com/ ] is Knight Professor of Constitutional Law at Yale Law School. His latest book is "Constitutional Redemption: Political Faith in an Unjust World" (Harvard University Press 2011).
New Haven, Connecticut (CNN) -- Very soon, Congress will raise the debt ceiling. If it does not, it would be the greatest unforced error in American history, a self-inflicted wound that is as disastrous as it was avoidable.
Suppose, however, that the tea party gets its way, and the debt ceiling is not increased. What are President Barack Obama's options?
We are having a debt-ceiling crisis because Congress has given the president contradictory commands; it has ordered the president to spend money, and it has forbidden him to borrow enough money to obey its orders.
Are there other ways for the president to raise money besides borrowing?
Sovereign governments such as the United States can print new money. However, there's a statutory limit to the amount of paper currency that can be in circulation at any one time.
Ironically, there's no similar limit on the amount of coinage. A little-known statute gives the secretary of the Treasury the authority to issue platinum coins in any denomination. So some commentators have suggested that the Treasury create two $1 trillion coins, deposit them in its account in the Federal Reserve and write checks on the proceeds.
Opinion: Both parties are wrong on debt talks
The government can also raise money through sales: For example, it could sell the Federal Reserve an option to purchase government property for $2 trillion. The Fed would then credit the proceeds to the government's checking account. Once Congress lifts the debt ceiling, the president could buy back the option for a dollar, or the option could simply expire in 90 days. And there are probably other ways that the Fed could achieve a similar result, by analogy to its actions during the 2008 financial crisis, when it made huge loans and purchases to bail out the financial sector.
The "jumbo coin" and "exploding option" strategies work because modern central banks don't have to print bills or float debt to create new money; they just add money to their customers' checking accounts.
The government has not discussed either option publicly. There are three reasons for this. First, there may be other legal obstacles to using these options that we don't know about. Second, because these devices could be used over and over again, they might scare investors and be politically unacceptable. Third, the president's political strategy has been to obtain a congressional deal lowering the deficit, and these solutions would take all the pressure off Congress.
However, that calculation could change if the president believes that Congress is simply unable to pass anything, a conclusion he has not yet reached.
Assume that the platinum coin and exploding option strategies are not available. What else can the president do?
Like Congress, the president is bound by Section 4 of the 14th Amendment, which states that "(t)he validity of the public debt of the United States, authorized by law . . . shall not be questioned." Section 4 was passed after the Civil War because the framers worried that former Southern rebels returning to Congress would hold the federal debt hostage to extract political concessions on Reconstruction. Section 5 gives Congress the power to enforce the 14th Amendment's provisions. This does not mean, however, that these provisions do not apply to the president; otherwise, he could violate the 14th Amendment at will.
Section 4 requires the president not to put the validity of the public debt into question. If the debt ceiling is not raised in time, there will not be enough incoming revenues to pay for all of the government's bills as they come due. Therefore he has a constitutional obligation to prioritize incoming revenues to pay the public debt: interest on government bonds and any other "vested" obligations.
What falls into the latter category is not entirely clear, but a large number of other government obligations -- and certainly payments for future services -- would not count and would have to be sacrificed. This might include, for example, Social Security payments.
To be sure, the president could keep paying Social Security if he could keep the total amount of debt constant by redeeming bonds in the Social Security trust fund for cash and immediately selling new bonds to replace them. But the money coming in may not be able to keep pace with the money going out. Even if he tries his best, the president may not be able to pay every Social Security check in full on time.
If the president stopped paying parts of Social Security or other government programs that the public relies on, we would have a partial government shutdown. This would quickly put enormous pressure on Congress to raise the debt ceiling to make it possible to resume normal government operations.
Thus, even if Social Security and other social safety net programs are not part of "the public debt," under Section 4, failure to pay them promptly and in full will probably lead to a political solution to the debt crisis within a week or so. The closest precedent is the 1995 government shutdown precipitated by the Republican-controlled Congress' battle with President Bill Clinton.
Assume, however, that even a prolonged government shutdown does not move Congress to act. Eventually paying only interest and vested obligations will prove unsustainable -- first because tax revenues will decrease as the economy sours, and second, because holders of government debt will conclude that a government that cannot act in a crisis is not trustworthy.
If the president reasonably believes that the public debt will be put in question for either reason, Section 4 comes into play once again. His predicament is caused by the combination of statutes that authorize and limit what he can do: He must pay appropriated monies, but he may not print new currency and he may not float new debt. If this combination of contradictory commands would cause him to violate Section 4, then he has a constitutional duty to treat at least one of the laws as unconstitutional as applied to the current circumstances.
This would be like a statute that ordered the president to hire 50 new employees provided that none of them is a woman. The second requirement violates the Constitution, so the president can hire the 50 employees and ignore the discriminatory provision.
Here the president would argue that existing appropriations plus the debt ceiling create an unconstitutional combination of commands. Therefore he chooses to obey the appropriations bill -- which was passed later in time anyway -- and ignores the debt ceiling. He orders the secretary of the Treasury to issue new debt sufficient to pay the government's bills as they come due.
The big test would be whether the markets treat these new bonds just like older bonds. If they do, or if they demand only a slightly higher interest rate, the president will have avoided economic Armageddon and saved the country's economy -- and the world's. The president and Congress can then move on to the real issue: fighting about future appropriations and revenues.
At this point, the president should ask Congress to ratify his actions by raising the debt ceiling. If they do not, he can continue the process until they do. His actions might set a precedent: Knowing that the president will invoke Section 4, congressional threats of using the debt ceiling to extract political concessions will become a defunct strategy in the future.
In fact, this was one reason why Section 4 was put into the Constitution in the first place.
An angry Congress may respond by impeaching the president. However, if the president's actions end the government shutdown, stabilize the markets and prevent an economic catastrophe, this reduces the chances that he will be impeached by the House. (After all, he saved the country.) Perhaps more important, the chances that he will be convicted by a two-thirds vote of the Senate, which has a Democratic majority, are virtually zero.
The public may regard an impeachment trial as a waste of time, since the ultimate result is clear. In addition, the president will point to the shutdown and the impeachment when he runs against his political opponents in the 2012 election, arguing that they did nothing to save the country from calamity while he has risked impeachment to protect the republic.
The final possibility is that members of Congress will sue the president for ignoring the debt ceiling. Under existing Supreme Court precedents, groups of individual congressmen would not probably have standing to sue. It is possible that a contrived suit could be created by bond holders, but courts will probably see through it. Moreover, even if the bond holders have standing, the courts will likely treat the constitutional issues as nonjusticiable under the "political question" doctrine, as they do in the case of war powers.
In fact, the struggle between the president and Congress is similar to recent disputes over the president's power to use military force to protect national interests or in emergency situations. If the courts won't intervene in the Libya affair, they probably won't intervene here.
It is still unlikely that things will get this far. Our Constitution, however, was designed to deal with extreme situations when ordinary politics fails. Let us hope that our institutions do not fail us now.
The opinions expressed in this commentary are solely those of Jack M. Balkin.
© 2011 Cable News Network. Turner Broadcasting System, Inc.
http://edition.cnn.com/2011/OPINION/07/28/balkin.obama.options/ [with comments]
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Why The GOP Aims To Sink The Economy
By Terrance Heath
July 28, 2011 - 9:00am ET
"Suppose you were an idiot, and suppose you were a member of Congress; but I repeat myself."
~ Mark Twain ~
If our economy was the RMS Titanic [ http://www.rmstitanic.net ], Republicans would be like an ambitious first mate, so eager to seize power from the captain that he steers the ship of state into an iceberg, thinking he'll take over when the captain goes down with the ship [ http://www.dailykos.com/story/2011/07/24/996976/-A-Brilliant-Strategy ]. Republicans have forgotten — or no longer care — they're on the boat too, and they're working very hard to ensure that the country will be nearly ungovernable should they succeed in seizing the reins of government.
If it seems like the White House is arranging deck chairs on the Titanic, the GOP is busy measuring the the captain's quarters for drapes, even as the ocean pours in. And the tea party orchestra plays on, with just one song on the playlist — "Under the Sea [ http://www.youtube.com/watch?v=jgA2xo0HYrE ]."
You can take your pick for the moment the GOP noticably went off the rails. I have two favorites: when it fell to Peggy Noonan to be the Republicans' voice of reason following Sarah Palin's VP nomination [ http://www.republicoft.com/2008/09/03/pundits-on-palin/ ], and when David Brooks warned the GOP that it "may no longer be a normal party [ http://www.huffingtonpost.com/2011/07/05/david-brooks-republican-party-debt-ceiling_n_890738.html ]". Together, they're the political equivalent of Courtney Love showing up at your intervention and Charlie Sheen offering you a ride to rehab. But this Republican party isn't likely to heed such sane voices as Noonan and Brooks, and would just as soon throw them overboard.
The defining moment [ http://www.huffingtonpost.com/carl-pope/the-party-of-crazy_b_902116.html ], as Carl Pope points out, is one that shows how disturbingly deep the GOP's current brand of crazy (that Noonan, Books and others are just noticing) runs, and how far back it goes.
Paul Krugman last week argued that commentators who are suddenly lamenting the "insanity" of the Republican Party are culpable, because they didn't call the craziness out when it began to surface. He's right, in the sense that the American Right began to unmoor itself from reality long before the Tea Party, or even Barack Obama's nomination. One of the lamentably ignored alarm bells came with an "undisclosed" Bush administration official who dismissed his opponents in 2002 on the grounds they were "reality based."
By that he meant "people who believe solutions emerge from study of discernible reality." The aide went on that "that's not the way the world works anymore. We're an empire, and when we act, we create our own reality."
While these comments generated a certain amount of mockery in the blogosphere, most political, economic, and media leaders shrugged it off. The obvious resonance with Fascist theories -- that "will" creates truth, rather than truth being an external reality to be determined -- alarmed far too few.
While GOP confidence in the ability of imperial "will" to reshape the politics and cultures of Iraq and Afghanistan has dimmed over the past nine years, the scope of their ambition has merely grown. Most recently the Right appears to believe that its desires can reshape the global bond markets, so that a U.S. default would become simply "short term volatility [ http://sierraclub.typepad.com/carlpope/2011/07/can-the-center-hold.html ]."
There have been other moments, and debt deal debacle has spawned some real jaw-droppers — like Sen. John McCain [ http://www.huffingtonpost.com/2011/07/27/john-mccain-tea-party-_n_911189.html ], fresh from blaming Arizona's forest fires on illegal immigrants [ http://abcnews.go.com/US/john-mccain-claims-illegal-immigrants-started-arizona-wildfires/story?id=13879568 ] — calling the GOP's game of chicken on the debt limit [ http://www.huffingtonpost.com/robert-creamer/reckless-republicans-risk_b_907852.html ] "foolish" and "bizarre." One that was brought to my attention this morning, was former Club For Growth [ http://www.rightwingwatch.org/content/club-growth ] vice president, Sen. Pete Toomey's interview with CNN's Ali Velshi [ http://www.youtube.com/watch?v=fKcFcG8ly8E ].
Just to prove he's a reasonable man, Toomey proposed a partial shutdown [ http://dyn.politico.com/printstory.cfm?uuid=DD6C9BD6-722C-4F5E-B5D4-69671414D9A6 ] that would keep Social Security checks and military paychecks flowing while everything else gets zeroed out. (I'm guessing this is the Michelle Bachmann legislation [ http://www.washingtonpost.com/opinions/michele-bachmanns-defaulty-logic/2011/07/13/gIQAKtxADI_story.html ], which basically empowers the federal government to squeeze blood from turnips [ http://www.usingenglish.com/reference/idioms/squeeze+blood+out+of+a+turnip.html ].) But it's not until you look at a list of what Toomey and the rest of his caucus are would rather see come to pass that you get a look at how deep this goes. Kevin Drum posted just such a list [ http://motherjones.com/kevin-drum/2011/07/40-less-government-will-be-fun ] (borrowed from Megan McArdle) at Mother Jones.
• You just cut the IRS and all the accountants at Treasury, which means that the actual revenue you have to spend is $0.
• The nation's nuclear arsenal is no longer being watched or maintained.
• The doors of federal prisons have been thrown open, because none of the guards will work without being paid, and the vendors will not deliver food, medical supplies, electricity, etc.
• The border control stations are entirely unmanned, so anyone who can buy a plane ticket, or stroll across the Mexican border, is entering the country. All the illegal immigrants currently in detention are released, since we don't have the money to put them on a plane, and we cannot actually simply leave them in a cell without electricity, sanitation, or food to see what happens.
• All of our troops stationed abroad quickly run out of electricity or fuel. Many of them are sitting in a desert with billions worth of equipment, and no way to get themselves or their equipment back to the US.
• Our embassies are no longer operating, which will make things difficult for foreign travellers.
• No federal emergency assistance, or help fighting things like wildfires or floods. Sorry, tornado people! Sorry, wildfire victims! Try to live in the northeast next time!
• Housing projects shut down, and Section 8 vouchers are not paid. Families hit the streets.
• The money your local school district was expecting at the October 1 commencement of the 2012 fiscal year does not materialize, making it unclear who's going to be teaching your kids without a special property tax assessment.
• The market for guaranteed student loans plunges into chaos. Hope your kid wasn't going to college this year!
• The mortgage market evaporates. Hope you didn't need to buy or sell a house!
• The FDIC and the PBGC suddenly don't have a government backstop for their funds, which has all sorts of interesting implications for your bank account.
• The TSA shuts down. Yay! But don't worry about terrorist attacks, you TSA-lovers, because air traffic control shut down too. Hope you don't have a vacation planned in August, much less any work travel.
• Unemployment money is no longer going to the states, which means that pretty soon, it won't be going to the unemployed people.
Kind of makes "Cut, Cap and Balance [ http://www.ourfuture.org/blog-entry/2011072919/gops-slash-shred-and-punish-agenda ]" look like a walk in the park doesn't it? Yet, this is what the GOP is willing to do to the American economy and the American people in order to get its way. In fact, it's just a taste. It's a sampling of what Americans are going to get if the tea party doesn't get what it wants when it wants it [ http://www.ourfuture.org/blog-entry/2011072815/tea-party-wants-what-it-wants-when-it-wants-it-or-else ]. And even a "Jane Galt"-ish type like McArdle doesn't find it appealing
These are just the very immediate, very theatrical outcomes. Obviously, over any longer term, you'd have issues from bankrupt vendors stopping work funded with federal highway money, forgone maintenance on things like levees and government buildings, and so forth. Averting any of these things would require at least small cuts in Social Security, Medicare/Medicaid spending, or military payrolls.
Now, maybe you look forward to these outcomes. There are certainly some on this list that I would be okay with. But because I am not delusional, and I did not fall off of a turnip truck last night, I recognize that the American public does not agree with me, and that if any of these things happen, they will freak out and besiege their local representatives.
McArdle's certainly right about the American public not agreeing with her. The ground of public opinion on the debt ceiling has shifted away from congressional Republicans [ http://prospect.org/csnc/blogs/tapped_archive?month=07&year=2011&base_name=new_polls_on_debt_ceiling_show ]. Republican and independent voters want a debt ceiling compromise [ http://www.dailykos.com/story/2011/07/19/996138/-Gallup:-Republicans-and-independents-want-debt-compromise ]. Eight in ten Americans believe default would do serious harm to the economy [ http://www.washingtonmonthly.com/political-animal/2011_07/the_tide_of_public_opinion_kee030981.php ]. Sixty-two percent of Americans want a balanced approach to the deficit [ http://www.huffingtonpost.com/jared-bernstein/the-people-want-balance_b_904272.html ] — consisting of both spending cuts and tax increases. That includes 54% of Republicans [ http://www.dailykos.com/story/2011/07/20/996631/-Republican-House-out-of-touch-with-Republican-voters-who-want-to-raisetaxes ].
Of course, no one really knows what will happen. There are any number of different ways it could all come crashing down. Even if the Treasury needs to issue bonds to keep getting checks out to senior, creditors, federal employees (what's left of them, anyway), etc. But it's going to have to skip out on 40% to 45% of the rest of its bills [ http://www.slate.com/id/2300207/ ], and there's just no precedent for the chaos that could ensue. If government stops spending at the same time that consumer spending appears down for the count, we're looking at an economy like we haven't seen since Hoover [ http://www.nytimes.com/2011/07/17/sunday-review/17economic.html ]. The right's beloved "private sector" might be part of the collateral damage.
The Republicans are right about one thing: A default would cause government spending to contract in real terms. But which would fall more, government spending or the size of the private sector? The answer is almost certainly the private sector, given its dependence on credit to purchase inputs. How much could it fall? Take the contraction that followed the near-collapse of the financial system in 2008 and multiply it by 10.
The government, on the other hand, has access to the Fed, and could therefore get its hands on cash to pay wages. With the debt ceiling unchanged, this would require some legal sleight of hand. But the alternative would clearly be a collapse of U.S. national security—soldiers and border guards have to be paid, the transportation system must operate, and so on. Issuing money in this situation would almost certainly be inflationary, but the Fed might conclude otherwise, because the United States has never been in this situation before, credit is now imploding, and the desperate credit-expansion measures implemented in 2008 proved not to be as bad as the critics feared.
So this is what a U.S. debt default would look like. The private sector would collapse. Unemployment would quickly surpass 20 percent. The government would shrink, but it would remain the employer of last resort.
Even though the debt deal proposals currently on the table call for trillions in painful cuts to programs for the poor, working- and middle-classes, the damage they would do to important programs in education, transportation, infrastructure and health care pale in comparison to what even a "partial default" or "selective default" would do to those millions of Americans, and the consumer economy itself.
Maybe that's why Wall Street is nervous about a short term deal [ http://www.washingtonmonthly.com/political-animal/2011_07/wall_street_fears_shortterm_de031139.php ] that would mean another round of economic Russian Roulette, and the Chamber of Commerce is pressing for a debt ceiling increase [ http://www.nytimes.com/2011/07/27/us/politics/27chamber.html ].
Ah, and that's the difference between McArdle and today's conservatives. She's not delusional enough to believe the majority of Americans agree with her that even some of the above might be acceptable. Congressional Republicans are either: (a) delusional enough to think that a majority of Americans agrees with them, or (b) just too far gone to give a damn.
Before you hazard a guess as to which is the case, listen to Sen. Mike Lee articulate the GOPs basic demand [ http://www.truth-out.org/mike-lee-i-want-americas-house-come-down-unless-congress-votes-rewrite-constitution/1311700688 ]: Give us what we want, or we blow the damn thing up [ http://www.youtube.com/watch?v=It3bOySjTjM ].
CHRIS MATTHEWS: How many days do you think we have, on the outside, to get this debt ceiling through before we have a problem? How many days?
LEE: I don’t know, maybe ten days.
MATTHEWS: Okay, in ten days you want to change the United States Constitution by two-thirds vote in both houses? That’s what you’re demanding.
LEE: Yes. If possible we can’t change the Constitution just in Congress but we can submit it to the states. Let the states fight it out.
MATTHEWS: And you think you’re being reasonable by saying you want a two-thirds vote in the House, which is Republican, and in the Senate which is Democrat. You want the Democratic Senate, by a two-thirds vote, to pass a constitutional amendment or you want the house to come down?
LEE: Yes. That’s exactly what I’m saying and I’ve been saying this for six months.
It may be that "blowing the damn thing up" and sinking the ship is what they really want, if that's what has to be, as Eric Cantor put it, "if we want America to be what we want America to be [ http://ourfuture.org/blog-entry/2011031329/cantor-social-security-cannot-exist-america-we-want ]." As Carl Pope points out, maybe that their ultimate goal.
...Most Americans, regardless of their politics, do not really have enough information to evaluate either the impacts of failing to raise the debt ceiling or failing to take action on carbon pollution. Almost all of us end up being primed by leaders whom we have decided to trust. It is a weakness of the populist Right that science (party for religious reasons) is in disrepute as a reliable guidepost. But that doesn't mean that the average member of the Tea Party is in love with Exxon-Mobil -- they're not.
But the Grover Norquists and the Newt Gingrichs and the Charlie Kochs and the Eric Cantors -- they all probably have a pretty good sense of what economics and science tell us will happen if we take their advice. They think it is good for the world, even though they understand that the world will become a less safe place. Those who will suffer are, quite simply, not worth worrying about. Risk is good. Failure and suffering are appropriate. Only the tough deserve to thrive.
Welcome to the latest version of the politics of spite [ http://www.washingtonmonthly.com/political-animal/2011_07/never_underestimate_the_power031057.php ] and mendacity [ http://www.huffingtonpost.com/andrew-reinbach/mendacity-and-the-gop_b_907621.html ], in which the Republican party would rather bring the U.S. economy to a crashing halt than risk giving president Obama a "win," and will threaten to tip America into default and force a global depression in a last ditch effort to lock in policy changes [ http://prospect.org/cs/articles?article=the_ultimate_republican_threat ] they admit they've failed to accomplish through persuasion and the political process [ http://thinkprogress.org/justice/2011/07/13/267791/mcconnell-hates-democracy/ ].
It is one of the anomalies of today’s politics: The party that professes absolute fealty to the Constitution in its original form is also the most eager to change it. Exhibit A is the amendment pushed by Republicans to require a balanced budget every year, cap federal spending at 18 percent of gross domestic product, and bar any increase in taxes without a supermajority of two-thirds of Congress or any increase in the national debt without a supermajority of three-fifths.
The immediate explanation for the amendment may seem obvious. Republicans in Congress want to please their party’s base. But why is the base so interested in putting government in a straitjacket? A party that sees itself as likely to win future elections is generally not interested in limiting its own powers. But according to Ran Hirschl, a legal scholar in the field of comparative law, parties expecting their fortunes to decline often attempt to entrench their views in constitutional provisions while they have the power to do so. Hirschl calls this pattern “hegemonic preservation,” and the Republican Party’s eagerness to amend the Constitution is a perfect example.
Republicans know in their gut that theirs is a demographically declining party. The GOP does poorly among younger voters, and it has little appeal to ethnic minorities who represent a rising share of the population. The native-born whites at the party’s base worry that they are losing control of American society, and they see themselves as the source of the nation’s wealth and values, besieged by claimants on the public treasury who steal their money through taxes. Locking in low taxes through the Constitution would offer them protection even after they can no longer dominate elections.
Maybe the Republicans' "Titanic Politics" isn't about steering the ship of state into an economic iceberg, in hopes of taking over when the captain goes down with the ship. Maybe it's not that they've forgotten they're on the boat, too. Maybe they know they're never really going to take the helm any other way, and are willing to send it to ocean floor if they don't. Either way, they'll go down with the ship too, and take the rest of us with them.
Copyright 2011 Campaign for America's Future (emphasis in original)
http://www.ourfuture.org/blog-entry/2011073027/why-gop-aims-sink-economy [with comments]
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James Fallows
Jul 28 2011, 2:56 PM ET
Many Republican readers have written to ask why I have posted "partisan" charts [ http://www.theatlantic.com/politics/archive/2011/07/the-chart-that-should-accompany-all-discussions-of-the-debt-ceiling/242484/ ], like the one after the jump, that use data from the Congressional Budget Office and elsewhere to show that tax cuts over the past decade have played a huge role in creating mammoth federal debt.
In my view, these have been "charts," rather than "partisan charts." And to me their significance is less in allocating responsibility for creating the problem than in clarifying the real options for dealing with it.
Still, anyone who thinks I am mainly blaming the Republicans for the needless debt-ceiling fracas, especially the Tea Party-era House Republicans arrayed behind Rep. Eric Cantor [ http://www.theatlantic.com/politics/archive/2011/06/least-valuable-player-rep-eric-cantor/240931/ ] (and Rep. Jim Jordan [ http://www.dispatch.com/live/content/local_news/stories/2011/07/28/payback-coming.html ]), is correct. To put the reasons in one place, as things go down to the wire, here they are:
1) The debt-ceiling showdown represents hostage-taking, plain and simple. This is a "crisis" that need never have happened, regardless of which party controlled the White House.
You wouldn't know it from most news coverage, but there is no logical or legislative connection between the House Republicans' stated object of concern, the future budgetary path toward national solvency, and the bonds and notes the Treasury must keep issuing for programs this and previous Congresses have already voted into law. (Ie, additional debt.) It is a quirk of legislative history, not a principle of sound budgeting, that we calculate a "debt ceiling" at all, those debts being a predictable consequence of the programs Congress enacts. That's why increases in the ceiling in the past have been routine measures, or occasions for minor grandstanding. These minor episodes include then-Senator Obama's vote against an increase in 2006. That one passed, as of course did six other increases under George W. Bush (along with the 17 under Ronald Reagan). You can read historical details from the Congressional Research Service in PDF form [ http://www.fas.org/sgp/crs/misc/RL31967.pdf ].
Here's a comparison: Suppose, by similar quirk, there was an arbitrary ceiling on the amount of ammunition the U.S. military could buy each year. Or the amount of fuel for drones, bombers, and Humvees. Like overall national debt, these purchases are foreseeable consequences of previous political decisions -- in this case, about the wars the country decides to fight. But suppose that when the "ammo ceiling" came due for its routine extension, a group of legislators said they would refuse. No more bullets or jet fuel after August 2, and for good measure no more food for the troops, unless demands for radical change in future foreign policy were met in full. That would rightly be seen as blackmail, and as a reckless willingness to damage the nation for partisan ends. A similar reckless exercise in blackmail is underway now, with the difference that the consequences can be longer-lasting and worse.
2) The House GOP position fails the test of basic knowledge. Last night I listened to a Tea Party member from the House explain why there could be no tax increases as part of the deal -- raising taxes is the last thing you need in a recession. In the next sentence, he said that the main virtue of a proposed GOP plan, versus Harry Reid's, is that it made deeper budget cuts right away, though even deeper short-term cuts were essential.
No one had pointed out to him, or he had forgotten, or he didn't realize, that during a recession, raising taxes and cutting budgets are bad for the same reason. They both reduce demand and make a recession worse. You can argue that taxes shouldn't go up in a recession. But if you make that case, as the Republicans (and most Democrats) do, you look like a hack or ignoramus if you insist on short-term budget cuts during the same economic hard times. Most House Republicans argue both sides of this case.
3) It fails the test of basic logic. Or perhaps basic knowledge part #2. If you look at the numbers, like the chart after the jump, you can see that budget-balancing involves a theshold choice. You can be for preserving tax cuts in toto, or you can be for cutting the deficit. But because the tax cuts have played such a major role in creating the deficit, if you have any regard for math or logic you really can't be for both. But most House Republicans are.
4) It displays a lack of tragic imagination. Many on the right have talked themselves into the view that it would be no big deal for the U.S. to go into technical default for a while. And I am sure that the "disaster strikes at midnight!" scenarios about what would happen on August 2 are way overblown. But anyone who thinks this controversy has had no effect on America's standing and assumed credit-worthiness, or that an actual default, whenever it occurred -- in late August, in September -- would not hurt us in the short and long run, needs to get out more. Out into the world, where assessments of basic American steadiness are now being recalibrated.
5) It has turned into zealotry, by which I mean utter disregard for the practical consequences of acts. A Republican demand for $16 million in cuts from the FAA budget (plus some anti-union provisions) has led to an FAA shutdown that has in turn, as the NY Times reports, led to a $25 million per day loss in fees the airlines paid to the FAA. That is, zealotry on this point has already cost the government more than ten times as much as the cuts would have saved. The most predictable consequence of a federal default, in the name of "reducing the deficit," would be a huge increase in the deficit -- through higher interest costs and lower revenues because of the resulting disruption to the economy. It doesn't matter.
The Democrats have too many problems to mention. At other times, their blind spots or special interests have been the bigger impediment to sensible policies. For what it's worth, I am in the camp that feels that President Obama's instinct for conciliation [ http://www.theatlantic.com/politics/archive/2011/07/get-over-it-this-is-who-obama-is/242600/ ] has ill-served him [ http://www.thedailybeast.com/articles/2011/07/27/obama-s-reason-fetish-leaving-him-defenseless-on-the-debt.html ], his party, and the country in this instance. I wish he had made a stronger case [ http://www.theatlantic.com/politics/archive/2011/07/time-for-a-this-is-bullshit-speech/242404/ ] and taken a harder line -- and that he would even now be contemplating the "14th Amendment [ http://www.politico.com/news/stories/0711/60036.html ]" alternative in the national interest.
Still: When we look back on the destructive folly of this summer, none of us will be seen at our best. But the people threatening to bring out the worst are mostly in the House GOP. As David Brooks put it in his column [ http://www.nytimes.com/2011/07/05/opinion/05brooks.html ] three weeks ago:
>>If the debt ceiling talks fail, independent voters will see that Democrats were willing to compromise but Republicans were not. If responsible Republicans don't take control, independents will conclude that Republican fanaticism caused this default. They will conclude that Republicans are not fit to govern.
And they will be right.<<
One of the deficit charts, via the New York Times [ http://www.nytimes.com/2011/07/24/opinion/sunday/24sun4.html (two posts back at http://investorshub.advfn.com/boards/read_msg.aspx?message_id=65593499 )]:
Copyright © 2011 by The Atlantic Monthly Group (emphasis in original)
http://www.theatlantic.com/politics/archive/2011/07/five-reasons-the-house-gop-is-to-blame/242673/
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John Boehner: Downgrade Of U.S. Credit Rating 'Beyond My Control'
7/28/11
http://www.huffingtonpost.com/2011/07/28/boehner-debt-credit-rating-downgrade_n_912367.html [with comments]
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3 ways Obama could bypass Congress
By Jack M. Balkin, Special to CNN
July 28, 2011 -- Updated 1448 GMT (2248 HKT)
Editor's note: Jack M. Balkin [ http://balkin.blogspot.com/ ] is Knight Professor of Constitutional Law at Yale Law School. His latest book is "Constitutional Redemption: Political Faith in an Unjust World" (Harvard University Press 2011).
New Haven, Connecticut (CNN) -- Very soon, Congress will raise the debt ceiling. If it does not, it would be the greatest unforced error in American history, a self-inflicted wound that is as disastrous as it was avoidable.
Suppose, however, that the tea party gets its way, and the debt ceiling is not increased. What are President Barack Obama's options?
We are having a debt-ceiling crisis because Congress has given the president contradictory commands; it has ordered the president to spend money, and it has forbidden him to borrow enough money to obey its orders.
Are there other ways for the president to raise money besides borrowing?
Sovereign governments such as the United States can print new money. However, there's a statutory limit to the amount of paper currency that can be in circulation at any one time.
Ironically, there's no similar limit on the amount of coinage. A little-known statute gives the secretary of the Treasury the authority to issue platinum coins in any denomination. So some commentators have suggested that the Treasury create two $1 trillion coins, deposit them in its account in the Federal Reserve and write checks on the proceeds.
Opinion: Both parties are wrong on debt talks
The government can also raise money through sales: For example, it could sell the Federal Reserve an option to purchase government property for $2 trillion. The Fed would then credit the proceeds to the government's checking account. Once Congress lifts the debt ceiling, the president could buy back the option for a dollar, or the option could simply expire in 90 days. And there are probably other ways that the Fed could achieve a similar result, by analogy to its actions during the 2008 financial crisis, when it made huge loans and purchases to bail out the financial sector.
The "jumbo coin" and "exploding option" strategies work because modern central banks don't have to print bills or float debt to create new money; they just add money to their customers' checking accounts.
The government has not discussed either option publicly. There are three reasons for this. First, there may be other legal obstacles to using these options that we don't know about. Second, because these devices could be used over and over again, they might scare investors and be politically unacceptable. Third, the president's political strategy has been to obtain a congressional deal lowering the deficit, and these solutions would take all the pressure off Congress.
However, that calculation could change if the president believes that Congress is simply unable to pass anything, a conclusion he has not yet reached.
Assume that the platinum coin and exploding option strategies are not available. What else can the president do?
Like Congress, the president is bound by Section 4 of the 14th Amendment, which states that "(t)he validity of the public debt of the United States, authorized by law . . . shall not be questioned." Section 4 was passed after the Civil War because the framers worried that former Southern rebels returning to Congress would hold the federal debt hostage to extract political concessions on Reconstruction. Section 5 gives Congress the power to enforce the 14th Amendment's provisions. This does not mean, however, that these provisions do not apply to the president; otherwise, he could violate the 14th Amendment at will.
Section 4 requires the president not to put the validity of the public debt into question. If the debt ceiling is not raised in time, there will not be enough incoming revenues to pay for all of the government's bills as they come due. Therefore he has a constitutional obligation to prioritize incoming revenues to pay the public debt: interest on government bonds and any other "vested" obligations.
What falls into the latter category is not entirely clear, but a large number of other government obligations -- and certainly payments for future services -- would not count and would have to be sacrificed. This might include, for example, Social Security payments.
To be sure, the president could keep paying Social Security if he could keep the total amount of debt constant by redeeming bonds in the Social Security trust fund for cash and immediately selling new bonds to replace them. But the money coming in may not be able to keep pace with the money going out. Even if he tries his best, the president may not be able to pay every Social Security check in full on time.
If the president stopped paying parts of Social Security or other government programs that the public relies on, we would have a partial government shutdown. This would quickly put enormous pressure on Congress to raise the debt ceiling to make it possible to resume normal government operations.
Thus, even if Social Security and other social safety net programs are not part of "the public debt," under Section 4, failure to pay them promptly and in full will probably lead to a political solution to the debt crisis within a week or so. The closest precedent is the 1995 government shutdown precipitated by the Republican-controlled Congress' battle with President Bill Clinton.
Assume, however, that even a prolonged government shutdown does not move Congress to act. Eventually paying only interest and vested obligations will prove unsustainable -- first because tax revenues will decrease as the economy sours, and second, because holders of government debt will conclude that a government that cannot act in a crisis is not trustworthy.
If the president reasonably believes that the public debt will be put in question for either reason, Section 4 comes into play once again. His predicament is caused by the combination of statutes that authorize and limit what he can do: He must pay appropriated monies, but he may not print new currency and he may not float new debt. If this combination of contradictory commands would cause him to violate Section 4, then he has a constitutional duty to treat at least one of the laws as unconstitutional as applied to the current circumstances.
This would be like a statute that ordered the president to hire 50 new employees provided that none of them is a woman. The second requirement violates the Constitution, so the president can hire the 50 employees and ignore the discriminatory provision.
Here the president would argue that existing appropriations plus the debt ceiling create an unconstitutional combination of commands. Therefore he chooses to obey the appropriations bill -- which was passed later in time anyway -- and ignores the debt ceiling. He orders the secretary of the Treasury to issue new debt sufficient to pay the government's bills as they come due.
The big test would be whether the markets treat these new bonds just like older bonds. If they do, or if they demand only a slightly higher interest rate, the president will have avoided economic Armageddon and saved the country's economy -- and the world's. The president and Congress can then move on to the real issue: fighting about future appropriations and revenues.
At this point, the president should ask Congress to ratify his actions by raising the debt ceiling. If they do not, he can continue the process until they do. His actions might set a precedent: Knowing that the president will invoke Section 4, congressional threats of using the debt ceiling to extract political concessions will become a defunct strategy in the future.
In fact, this was one reason why Section 4 was put into the Constitution in the first place.
An angry Congress may respond by impeaching the president. However, if the president's actions end the government shutdown, stabilize the markets and prevent an economic catastrophe, this reduces the chances that he will be impeached by the House. (After all, he saved the country.) Perhaps more important, the chances that he will be convicted by a two-thirds vote of the Senate, which has a Democratic majority, are virtually zero.
The public may regard an impeachment trial as a waste of time, since the ultimate result is clear. In addition, the president will point to the shutdown and the impeachment when he runs against his political opponents in the 2012 election, arguing that they did nothing to save the country from calamity while he has risked impeachment to protect the republic.
The final possibility is that members of Congress will sue the president for ignoring the debt ceiling. Under existing Supreme Court precedents, groups of individual congressmen would not probably have standing to sue. It is possible that a contrived suit could be created by bond holders, but courts will probably see through it. Moreover, even if the bond holders have standing, the courts will likely treat the constitutional issues as nonjusticiable under the "political question" doctrine, as they do in the case of war powers.
In fact, the struggle between the president and Congress is similar to recent disputes over the president's power to use military force to protect national interests or in emergency situations. If the courts won't intervene in the Libya affair, they probably won't intervene here.
It is still unlikely that things will get this far. Our Constitution, however, was designed to deal with extreme situations when ordinary politics fails. Let us hope that our institutions do not fail us now.
The opinions expressed in this commentary are solely those of Jack M. Balkin.
© 2011 Cable News Network. Turner Broadcasting System, Inc.
http://edition.cnn.com/2011/OPINION/07/28/balkin.obama.options/ [with comments]
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Why The GOP Aims To Sink The Economy
By Terrance Heath
July 28, 2011 - 9:00am ET
"Suppose you were an idiot, and suppose you were a member of Congress; but I repeat myself."
~ Mark Twain ~
If our economy was the RMS Titanic [ http://www.rmstitanic.net ], Republicans would be like an ambitious first mate, so eager to seize power from the captain that he steers the ship of state into an iceberg, thinking he'll take over when the captain goes down with the ship [ http://www.dailykos.com/story/2011/07/24/996976/-A-Brilliant-Strategy ]. Republicans have forgotten — or no longer care — they're on the boat too, and they're working very hard to ensure that the country will be nearly ungovernable should they succeed in seizing the reins of government.
If it seems like the White House is arranging deck chairs on the Titanic, the GOP is busy measuring the the captain's quarters for drapes, even as the ocean pours in. And the tea party orchestra plays on, with just one song on the playlist — "Under the Sea [ http://www.youtube.com/watch?v=jgA2xo0HYrE ]."
You can take your pick for the moment the GOP noticably went off the rails. I have two favorites: when it fell to Peggy Noonan to be the Republicans' voice of reason following Sarah Palin's VP nomination [ http://www.republicoft.com/2008/09/03/pundits-on-palin/ ], and when David Brooks warned the GOP that it "may no longer be a normal party [ http://www.huffingtonpost.com/2011/07/05/david-brooks-republican-party-debt-ceiling_n_890738.html ]". Together, they're the political equivalent of Courtney Love showing up at your intervention and Charlie Sheen offering you a ride to rehab. But this Republican party isn't likely to heed such sane voices as Noonan and Brooks, and would just as soon throw them overboard.
The defining moment [ http://www.huffingtonpost.com/carl-pope/the-party-of-crazy_b_902116.html ], as Carl Pope points out, is one that shows how disturbingly deep the GOP's current brand of crazy (that Noonan, Books and others are just noticing) runs, and how far back it goes.
Paul Krugman last week argued that commentators who are suddenly lamenting the "insanity" of the Republican Party are culpable, because they didn't call the craziness out when it began to surface. He's right, in the sense that the American Right began to unmoor itself from reality long before the Tea Party, or even Barack Obama's nomination. One of the lamentably ignored alarm bells came with an "undisclosed" Bush administration official who dismissed his opponents in 2002 on the grounds they were "reality based."
By that he meant "people who believe solutions emerge from study of discernible reality." The aide went on that "that's not the way the world works anymore. We're an empire, and when we act, we create our own reality."
While these comments generated a certain amount of mockery in the blogosphere, most political, economic, and media leaders shrugged it off. The obvious resonance with Fascist theories -- that "will" creates truth, rather than truth being an external reality to be determined -- alarmed far too few.
While GOP confidence in the ability of imperial "will" to reshape the politics and cultures of Iraq and Afghanistan has dimmed over the past nine years, the scope of their ambition has merely grown. Most recently the Right appears to believe that its desires can reshape the global bond markets, so that a U.S. default would become simply "short term volatility [ http://sierraclub.typepad.com/carlpope/2011/07/can-the-center-hold.html ]."
There have been other moments, and debt deal debacle has spawned some real jaw-droppers — like Sen. John McCain [ http://www.huffingtonpost.com/2011/07/27/john-mccain-tea-party-_n_911189.html ], fresh from blaming Arizona's forest fires on illegal immigrants [ http://abcnews.go.com/US/john-mccain-claims-illegal-immigrants-started-arizona-wildfires/story?id=13879568 ] — calling the GOP's game of chicken on the debt limit [ http://www.huffingtonpost.com/robert-creamer/reckless-republicans-risk_b_907852.html ] "foolish" and "bizarre." One that was brought to my attention this morning, was former Club For Growth [ http://www.rightwingwatch.org/content/club-growth ] vice president, Sen. Pete Toomey's interview with CNN's Ali Velshi [ http://www.youtube.com/watch?v=fKcFcG8ly8E ].
OK. Let's just stop right there, shall we? Notice that there is no hesitation on Toomey's part when Velshi asks whether it would be worth it to close a few corporate tax loopholes to avoid default and the immediate cessation of about 40% of government spending. He says, "No," without even pausing to think about it. If the GOP's and the tea party's corporate funders can't keep their tax loopholes wide open, there's no deal [ http://www.dailykos.com/story/2011/07/26/999123/-The-New-Class-War:-Corporate-jets-vs-corporate-shareholders ].
Just to prove he's a reasonable man, Toomey proposed a partial shutdown [ http://dyn.politico.com/printstory.cfm?uuid=DD6C9BD6-722C-4F5E-B5D4-69671414D9A6 ] that would keep Social Security checks and military paychecks flowing while everything else gets zeroed out. (I'm guessing this is the Michelle Bachmann legislation [ http://www.washingtonpost.com/opinions/michele-bachmanns-defaulty-logic/2011/07/13/gIQAKtxADI_story.html ], which basically empowers the federal government to squeeze blood from turnips [ http://www.usingenglish.com/reference/idioms/squeeze+blood+out+of+a+turnip.html ].) But it's not until you look at a list of what Toomey and the rest of his caucus are would rather see come to pass that you get a look at how deep this goes. Kevin Drum posted just such a list [ http://motherjones.com/kevin-drum/2011/07/40-less-government-will-be-fun ] (borrowed from Megan McArdle) at Mother Jones.
• You just cut the IRS and all the accountants at Treasury, which means that the actual revenue you have to spend is $0.
• The nation's nuclear arsenal is no longer being watched or maintained.
• The doors of federal prisons have been thrown open, because none of the guards will work without being paid, and the vendors will not deliver food, medical supplies, electricity, etc.
• The border control stations are entirely unmanned, so anyone who can buy a plane ticket, or stroll across the Mexican border, is entering the country. All the illegal immigrants currently in detention are released, since we don't have the money to put them on a plane, and we cannot actually simply leave them in a cell without electricity, sanitation, or food to see what happens.
• All of our troops stationed abroad quickly run out of electricity or fuel. Many of them are sitting in a desert with billions worth of equipment, and no way to get themselves or their equipment back to the US.
• Our embassies are no longer operating, which will make things difficult for foreign travellers.
• No federal emergency assistance, or help fighting things like wildfires or floods. Sorry, tornado people! Sorry, wildfire victims! Try to live in the northeast next time!
• Housing projects shut down, and Section 8 vouchers are not paid. Families hit the streets.
• The money your local school district was expecting at the October 1 commencement of the 2012 fiscal year does not materialize, making it unclear who's going to be teaching your kids without a special property tax assessment.
• The market for guaranteed student loans plunges into chaos. Hope your kid wasn't going to college this year!
• The mortgage market evaporates. Hope you didn't need to buy or sell a house!
• The FDIC and the PBGC suddenly don't have a government backstop for their funds, which has all sorts of interesting implications for your bank account.
• The TSA shuts down. Yay! But don't worry about terrorist attacks, you TSA-lovers, because air traffic control shut down too. Hope you don't have a vacation planned in August, much less any work travel.
• Unemployment money is no longer going to the states, which means that pretty soon, it won't be going to the unemployed people.
Kind of makes "Cut, Cap and Balance [ http://www.ourfuture.org/blog-entry/2011072919/gops-slash-shred-and-punish-agenda ]" look like a walk in the park doesn't it? Yet, this is what the GOP is willing to do to the American economy and the American people in order to get its way. In fact, it's just a taste. It's a sampling of what Americans are going to get if the tea party doesn't get what it wants when it wants it [ http://www.ourfuture.org/blog-entry/2011072815/tea-party-wants-what-it-wants-when-it-wants-it-or-else ]. And even a "Jane Galt"-ish type like McArdle doesn't find it appealing
These are just the very immediate, very theatrical outcomes. Obviously, over any longer term, you'd have issues from bankrupt vendors stopping work funded with federal highway money, forgone maintenance on things like levees and government buildings, and so forth. Averting any of these things would require at least small cuts in Social Security, Medicare/Medicaid spending, or military payrolls.
Now, maybe you look forward to these outcomes. There are certainly some on this list that I would be okay with. But because I am not delusional, and I did not fall off of a turnip truck last night, I recognize that the American public does not agree with me, and that if any of these things happen, they will freak out and besiege their local representatives.
McArdle's certainly right about the American public not agreeing with her. The ground of public opinion on the debt ceiling has shifted away from congressional Republicans [ http://prospect.org/csnc/blogs/tapped_archive?month=07&year=2011&base_name=new_polls_on_debt_ceiling_show ]. Republican and independent voters want a debt ceiling compromise [ http://www.dailykos.com/story/2011/07/19/996138/-Gallup:-Republicans-and-independents-want-debt-compromise ]. Eight in ten Americans believe default would do serious harm to the economy [ http://www.washingtonmonthly.com/political-animal/2011_07/the_tide_of_public_opinion_kee030981.php ]. Sixty-two percent of Americans want a balanced approach to the deficit [ http://www.huffingtonpost.com/jared-bernstein/the-people-want-balance_b_904272.html ] — consisting of both spending cuts and tax increases. That includes 54% of Republicans [ http://www.dailykos.com/story/2011/07/20/996631/-Republican-House-out-of-touch-with-Republican-voters-who-want-to-raisetaxes ].
Of course, no one really knows what will happen. There are any number of different ways it could all come crashing down. Even if the Treasury needs to issue bonds to keep getting checks out to senior, creditors, federal employees (what's left of them, anyway), etc. But it's going to have to skip out on 40% to 45% of the rest of its bills [ http://www.slate.com/id/2300207/ ], and there's just no precedent for the chaos that could ensue. If government stops spending at the same time that consumer spending appears down for the count, we're looking at an economy like we haven't seen since Hoover [ http://www.nytimes.com/2011/07/17/sunday-review/17economic.html ]. The right's beloved "private sector" might be part of the collateral damage.
The Republicans are right about one thing: A default would cause government spending to contract in real terms. But which would fall more, government spending or the size of the private sector? The answer is almost certainly the private sector, given its dependence on credit to purchase inputs. How much could it fall? Take the contraction that followed the near-collapse of the financial system in 2008 and multiply it by 10.
The government, on the other hand, has access to the Fed, and could therefore get its hands on cash to pay wages. With the debt ceiling unchanged, this would require some legal sleight of hand. But the alternative would clearly be a collapse of U.S. national security—soldiers and border guards have to be paid, the transportation system must operate, and so on. Issuing money in this situation would almost certainly be inflationary, but the Fed might conclude otherwise, because the United States has never been in this situation before, credit is now imploding, and the desperate credit-expansion measures implemented in 2008 proved not to be as bad as the critics feared.
So this is what a U.S. debt default would look like. The private sector would collapse. Unemployment would quickly surpass 20 percent. The government would shrink, but it would remain the employer of last resort.
Even though the debt deal proposals currently on the table call for trillions in painful cuts to programs for the poor, working- and middle-classes, the damage they would do to important programs in education, transportation, infrastructure and health care pale in comparison to what even a "partial default" or "selective default" would do to those millions of Americans, and the consumer economy itself.
Maybe that's why Wall Street is nervous about a short term deal [ http://www.washingtonmonthly.com/political-animal/2011_07/wall_street_fears_shortterm_de031139.php ] that would mean another round of economic Russian Roulette, and the Chamber of Commerce is pressing for a debt ceiling increase [ http://www.nytimes.com/2011/07/27/us/politics/27chamber.html ].
Ah, and that's the difference between McArdle and today's conservatives. She's not delusional enough to believe the majority of Americans agree with her that even some of the above might be acceptable. Congressional Republicans are either: (a) delusional enough to think that a majority of Americans agrees with them, or (b) just too far gone to give a damn.
Before you hazard a guess as to which is the case, listen to Sen. Mike Lee articulate the GOPs basic demand [ http://www.truth-out.org/mike-lee-i-want-americas-house-come-down-unless-congress-votes-rewrite-constitution/1311700688 ]: Give us what we want, or we blow the damn thing up [ http://www.youtube.com/watch?v=It3bOySjTjM ].
In an interview on MSNBC’s Hardball Monday evening, tenther Sen. Mike Lee (R-UT) admitted that he is using the threat of a catastrophic default to extort the nation into rewriting the Constitution to force a permanent era of conservative governance:
CHRIS MATTHEWS: How many days do you think we have, on the outside, to get this debt ceiling through before we have a problem? How many days?
LEE: I don’t know, maybe ten days.
MATTHEWS: Okay, in ten days you want to change the United States Constitution by two-thirds vote in both houses? That’s what you’re demanding.
LEE: Yes. If possible we can’t change the Constitution just in Congress but we can submit it to the states. Let the states fight it out.
MATTHEWS: And you think you’re being reasonable by saying you want a two-thirds vote in the House, which is Republican, and in the Senate which is Democrat. You want the Democratic Senate, by a two-thirds vote, to pass a constitutional amendment or you want the house to come down?
LEE: Yes. That’s exactly what I’m saying and I’ve been saying this for six months.
It may be that "blowing the damn thing up" and sinking the ship is what they really want, if that's what has to be, as Eric Cantor put it, "if we want America to be what we want America to be [ http://ourfuture.org/blog-entry/2011031329/cantor-social-security-cannot-exist-america-we-want ]." As Carl Pope points out, maybe that their ultimate goal.
...Most Americans, regardless of their politics, do not really have enough information to evaluate either the impacts of failing to raise the debt ceiling or failing to take action on carbon pollution. Almost all of us end up being primed by leaders whom we have decided to trust. It is a weakness of the populist Right that science (party for religious reasons) is in disrepute as a reliable guidepost. But that doesn't mean that the average member of the Tea Party is in love with Exxon-Mobil -- they're not.
But the Grover Norquists and the Newt Gingrichs and the Charlie Kochs and the Eric Cantors -- they all probably have a pretty good sense of what economics and science tell us will happen if we take their advice. They think it is good for the world, even though they understand that the world will become a less safe place. Those who will suffer are, quite simply, not worth worrying about. Risk is good. Failure and suffering are appropriate. Only the tough deserve to thrive.
Welcome to the latest version of the politics of spite [ http://www.washingtonmonthly.com/political-animal/2011_07/never_underestimate_the_power031057.php ] and mendacity [ http://www.huffingtonpost.com/andrew-reinbach/mendacity-and-the-gop_b_907621.html ], in which the Republican party would rather bring the U.S. economy to a crashing halt than risk giving president Obama a "win," and will threaten to tip America into default and force a global depression in a last ditch effort to lock in policy changes [ http://prospect.org/cs/articles?article=the_ultimate_republican_threat ] they admit they've failed to accomplish through persuasion and the political process [ http://thinkprogress.org/justice/2011/07/13/267791/mcconnell-hates-democracy/ ].
It is one of the anomalies of today’s politics: The party that professes absolute fealty to the Constitution in its original form is also the most eager to change it. Exhibit A is the amendment pushed by Republicans to require a balanced budget every year, cap federal spending at 18 percent of gross domestic product, and bar any increase in taxes without a supermajority of two-thirds of Congress or any increase in the national debt without a supermajority of three-fifths.
The immediate explanation for the amendment may seem obvious. Republicans in Congress want to please their party’s base. But why is the base so interested in putting government in a straitjacket? A party that sees itself as likely to win future elections is generally not interested in limiting its own powers. But according to Ran Hirschl, a legal scholar in the field of comparative law, parties expecting their fortunes to decline often attempt to entrench their views in constitutional provisions while they have the power to do so. Hirschl calls this pattern “hegemonic preservation,” and the Republican Party’s eagerness to amend the Constitution is a perfect example.
Republicans know in their gut that theirs is a demographically declining party. The GOP does poorly among younger voters, and it has little appeal to ethnic minorities who represent a rising share of the population. The native-born whites at the party’s base worry that they are losing control of American society, and they see themselves as the source of the nation’s wealth and values, besieged by claimants on the public treasury who steal their money through taxes. Locking in low taxes through the Constitution would offer them protection even after they can no longer dominate elections.
Maybe the Republicans' "Titanic Politics" isn't about steering the ship of state into an economic iceberg, in hopes of taking over when the captain goes down with the ship. Maybe it's not that they've forgotten they're on the boat, too. Maybe they know they're never really going to take the helm any other way, and are willing to send it to ocean floor if they don't. Either way, they'll go down with the ship too, and take the rest of us with them.
Copyright 2011 Campaign for America's Future (emphasis in original)
http://www.ourfuture.org/blog-entry/2011073027/why-gop-aims-sink-economy [with comments]
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Greensburg, KS - 5/4/07
"Eternal vigilance is the price of Liberty."
from John Philpot Curran, Speech
upon the Right of Election, 1790
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