The Debt Ceiling: Welcome to Crazy Day

I hear that 69% of the Tea Party think we do not really need to raise

Debt Payment

Debt Payment (Photo credit: Images_of_Money)

the debt ceiling in order to avoid a default on our debts.   It does seem we can squeeze out enough money to keep things going into November depending on how much money the government takes in on a daily basis. But that doesn’t mean that the world won’t be shaking apart economically and financially between now and then because they have lost faith in us.

Incredibly the relatively itty bitty Tea Party is holding all the world hostage, but I still believe House Speaker John Boehner will finally break with them.  Apparently the stock market believes that, too, as the Dow  is up nearly 200 points at the moment.   As I predicted a couple of posts ago, Boehner will allow for a vote on some version of the raising of the debt ceiling and probably an extension of the budget.  Then we can breathe a collective sigh of relief for a few weeks or so.  Maybe even a few months when it comes to the debt ceiling.

With political polarization bringing us to this precipice. it seems a good time to step back and remember that a majority of us are more or less moderate, and not on the rabid right or left.    The problem is our political structure does not allow this middle to prevail.  Not that that will be corrected any time soon, but it does raise the possibility that it might be corrected SOME DAY before we really sink ourselves.

Perhaps my favorite moderate conservative columnist is Kathleen Parker.  She just wrote an editorial about this issue and a recent study confirming the notion of a majority middle, and not a nation totally polarized.

We might yet be able to get things right one day, assuming that we do not self-destruct in the mean time.  Here is Parker’s piece in the Washington Post.

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The Budget/Debt Ceiling Battles and the Republican Civil War

As I type, Republican Senators are meeting at the White House with the President to discuss the issues of extending the budget and raising the debt ceiling, one of many recent maneuvers in Washington that suggests some kind of deal will be reached soon regarding at least the raising of the debt ceiling for a short period of time and possibly an extension of the budget (“opening of the government”).

Ted Cruz - Caricature

Ted Cruz – Caricature (Photo credit: DonkeyHotey)

According to polls the Republicans are being blamed significantly more than the Democrats for the morass in which the government resides, but a NBC/WSJ poll indicates 60% of respondents would like to fire every member of Congress, so while the Republican “brand” seems to have taken a bigger hit in this ongoing  folly, Democrats should keep celebrations to a minimum.   They are not exactly being embraced, either, by many Americans who are angry at them all.

What I find most interesting in all of this is the shape the Republican party will take after the dust eventually settles over these budget/debt issues (for awhile at least;  it figures to dust up again and again).

Flicking back and forth this morning between Fox and MSNBC,  America’s divergent realities, I saw Senator McCain on Fox’s America’s News Room.   While he called the Obama handling of the death benefits for 29 military families a “disgrace,” I was surprised to see him blame the Tea Party faction of his own party even more (*1).  Had they not insisted on a losing strategy tying these fiscal issues to Obamacare, the government wouldn’t be shut down and these death benefits would be a non-issue.   Deep in his soul, I think John McCain would iike to punch out Ted Cruz.

Flicking to MSNBC, they were showing the Cruz-ader himself at the Values Summit (reactionary values) preaching to the faithful, getting big applause while tripling down on rolling back Obamacare, as if he has been right all along and the rest of his party had better wake up.  Then back to MSNBC and conservative Columinist Charles Krauthammer is being quoted as lambasting the Cruz strategy of attaching Obamacare to the current fiscal issues which he and obviously McCain see as the party shooting itself in the foot.

Watching the happy-as-a-clam Cruz basking in the love of his fellow travelers while also seeing establishment Republicans like McCain and Krauthammer slice and dice his Obamacare non-strategy, I have to conclude that there will be no healing of this rift.

Establishment Republicans have embraced the Tea Party for the energy it has elicited in the base of the party, but at the same time have found themselves being threatened and voted out of primaries by that passionate hard core.   Until recently, they have refrained from harsh attacks on  Cruz and company, but since Cruz shows no inclination to play political ball with them, a nasty battle for the heart of the party seems inevitable.

It should get very interesting.

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(*1)  While it gets complicated, I think the administration has not done everything it could to make the shutdown the least painful as possible.   The fiasco over not paying death benefits to the families of troops seems the most egregious case in point.   It is likely the administration has believed the Republicans would receive more of the blame, but in the death benefits case, they don’t look good, either.  Hence, Obama just signed a bill allowing these payments despite his position he would not except piecemeal moves to fund parts of the government.

It is because blaming the administration would seem the normal target for John McCain, his emphasizing the fault within his own party is striking.

John Boehner: You Have the Keys to the Car. When will you drive it?

Maybe John Boehner can’t be counted upon to do the sane thing after all.   Especially as some other Republican voices are saying the default could be managed, paying off the most important things while delaying others.   They act like this is a very simple matter that can be controlled once let loose.

John Boehner - Caricature

John Boehner – Caricature (Photo credit: DonkeyHotey)

In my previous post I praised Boehner for telling Republican colleagues that he would not allow a default of federal debt Oct 17, i. e. he would not hold that possibility as a bargaining chip.  He would not risk bouncing the world’s economy around like a basketball.

Apparently he has changed his mind. Since my post he has indicated there must be negotiations for such a bill to pass.   He now says a “clean” bill (one with no strings attached like defunding Obamacare)  to raise the debt ceiling would not have the votes to pass in the House.   However, many observers disagree with that assessment.   Around 20 Republican Representatives have said they would sign such a bill to prevent default and they, along with all 200 or so Democrats, would reach a majority of 218.

When I last wrote it seemed Boehner would use the government shutdown as his bargaining chip, while sparing the world’s nerves about the debt, but It seems he has changed his mind.   He seems to think he needs all of his chips to get some sort of face saving deal for the Republicans.   They were stuck in a corner by Senator Tom Cruz and 30 or 40 members of the House who insisted on linking both a Continuing Resolution to extend the budget and the raising of the debt ceiling to defunding and/or delaying Obamacare.

Even though many Republicans, including the 20 or so Representatives indicated above, are angry with Cruz and frustrated by his dead-end strategy, they are trying to get some sort of concessions so save face, essentially broadening their stand beyond Obamacare to their key identity issue of reducing government spending and size.

In the process they are making many empty accusations about the Democrats’ unwillingness to negotiate despite the fact that Republicans have refused for months to negotiate on these issues through what once was a normal process of appointing conferees from both houses to work out a deal between their two separate budgets.

Boehner now keeps talking about their willingness to have a conversation, but the President won’t, as if there is time now to have much of a conversation about anything of substance.   And the House has come up with several pieces of the Budget they are willing to pass individually, heart string pullers, like cancer trials for children, a disgusting attempt to make the Democrats seems heartless, as if there are not many others suffering due to this shut down, but not quite as high profile.

Underlying this struggle are memories of the last big battle over raising the debt ceiling months ago which led to the sequester which has been a victory for the anti-spending Republicans but now seems modest after Cruz and company have aimed for so much more.

I still believe that Boehner will not allow a default of federal debt and he does have the power to call a vote in the House on a clean resolution to raise the debt ceiling.  Just as he does on a  vote on a clean continuing resolution to extend the budget and “re-open” government, if he was willing to bring that to the floor,   He has the keys to the car.  The question is if and when he will drive it.

To me, that makes him the most powerful man in the world for now and maybe he likes the adrenalin rush.

Here’s what I think will happen.   One way or another bills will be passed to both extend the budget and raise the debt ceiling, but for short periods, even a few weeks perhaps, that will leave us mired in this struggle.

The can will continually be kicked down the road.  Quite likely at least to the 2014 mid-term elections.

Against Raising the Debt Ceiling: What are they thinking?

Now that the crisis regarding chemical weapons has been resolved in Syria, for the moment at least, let’s turn our attention to what many see as a potential crisis here at home, a failure of Congress to agree to raise the debt ceiling.

English: Chart of the United States' debt ceil...

English: Chart of the United States’ debt ceiling from 1981 to 2010 in $ trillion. Click chart to enlarge.  (Photo credit: Wikipedia)

We have witnessed these struggles before and eventually the debt ceiling was raised in each case, but in 2011 the dysfunction prompted a lowering of our credit rating and a tumble in the stock market before an agreement was reached.

This year a Republican minority of Tea Party hardliners appear willing to take the issue to the limit. Ted Cruz and a few others in the Senate and more in the House appear to think either Obama will blink or they are willing to chance whatever disruptions in the world economy that a failure to raise the debt ceiling might prompt.

The conventional wisdom is that by hook or by crook the debt ceiling will be raised “Because they have no real choice if they want to avoid a U.S. default. A default would hurt the economy and markets, and most lawmakers know this. That’s why they regularly raise the debt ceiling before it comes to that.”(CNN Money)

However, judging from a  a recent Wall Street Journal-NBC News poll, 44% of Americans are against raising the debt ceiling.   That statistic startled me and was enough to drive Washington Post columnist Jonathan Capehart  “nuts.”  his argument being that the 44% should have responded “I don’t know – because then they’d be telling the truth.”

What Capehart doesn’t acknowledge is that most of these people are sure they do know.  What disturbs me is that the Tea Party types seem to be voicing the anger and frustration of many Americans who are looking for a simple answer to our complex problems.  That simple answer is to cut government spending.

The simplicity of that “solution” makes it very powerful.  Positive plans tend to be complex which give rise to disagreements (Obamacare being a maximum example) which undermines action.  But lots of people can coalesce around “just say no” and if that poll can be believed, that is what is happening now.

If one argues that the debt ceiling being raised simply allows the federal government to pay bills it has already accrued, that it isn’t raising government spending, T. P. types might counter:   Yes, but how are we ever going to get spending under control unless we can turn around the trend and here is where we are going to dig in to do it.

And if told:  “Any default on the nation’s debts could be calamitous for the U.S. economy.  A default would rock Wall Street and hurt businesses and families by fueling a sharp increase in interest rates.”(Reuters).  They simply don’t seem to believe it.   Or, at least they believe that Obama would not let that happen.  It is like a game of chicken for them.   And their idea of guts is to not blink first.

If one points out that since 1940, Congress has effectively approved 79 increases to the debt ceiling, the reaction would be, well, that’s been the problem all a long.   If they hadn’t done that we wouldn’t be facing our current problems.

That the federal government has always functioned with a deficit from its inception, but our economy has continued to expand despite periodic set backs suggesting our key problem now is an economy that is barely growing and not the debt we have at the moment…  well, this starts sounding too egg heady for most Tea Party types, and wasn’t it the eggheads in government and Wall Street, the supposedly really smart people, who got us into this Great Recession to begin with?

So, you can see the line of thinking here.   And, according to that one poll, it seems to be gaining momentum. (*1)  It all reminds me of something H. L. Mencken once wrote, which I’ll paraphrase as:   For every complex problem there is a simple solution.  And it’s wrong.

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(*1) There are other polls which seem to contradict this one, which is not surprising since polls use different wordings or different questions altogtether.  As Huff Post describes one:   “Despite the lack of support for increasing the debt limit, a CNN/ORC poll released earlier this week found that 62 percent of Americans said failing to do so would cause a “crisis” or “major problems.”

So, if 62% of Americans see failing to raise the debt ceiling would produce major problems or worse, how many of the 44% who don’t want to raise the ceiling accept major problems as the cost of bringing the government to heel?  Your guess is as good as mine.