SMATTERINGS 10/26/13: The Nub of Some Ongoing Issues

Our main stream television media must believe we can’t handle thinking about more than one issue at a time.  All the world was the congressional budget/debt ceiling battle for three weeks or so.  Before that, all the world was Syria and their chemical weapons.  Before that, I can’t recall.   Like most Americans, I have a short memory, even shorter than most as a member of the social security set.

English: Depiction of the House vote on H.R. 3...

English: Depiction of the House vote on H.R. 3590 (the Patient Protection and Affordable Care Act) on March 21, 2010, by congressional district. Click the map for a much larger image and details (Photo credit: Wikipedia)

Now all the world is the faltering Obamacare web site.   Of course, this is the world the Republicans want us to dwell in, while the Democrats wish to constantly refresh our memories about how obstructionist the Republicans were in regard to the extension of the budget and raising of the debt ceiling.

Meanwhile the Republican Civil War is steadily simmering en route to a boil, with many of that party angry at Ted Cruz and his Tea Party set for making Republicans look imbecilic to a majority of the rest of us with their non-plan to stop Obamacare.    Had that not been the case, they could have been focusing attention on the clownish internet roll out for weeks.

Oh, well, they are making up for lost time by holding congressional hearings to accentuate the disaster to the public mind, the “train wreck” that they “knew” to be Obamacare even before it was passed.   Well, of course, they didn’t know, and they still don’t know, nor does anyone know how this will play out overall.   ( I know, many individuals already have personal stories, seemingly more negative than positive, but the whole thing has barely begun to be rolled out.)

The Federal Debt Ceiling and Budget Extension Battle

After much struggle and gnashing of teeth, the government reopened what was closed and will remain “open” at least until January 15, when the appropriated money runs out.   Also, the debt ceiling either will need to be raised again Feb 7 or government default on federal debt payments will once again be in the offing.

In short, the political arm twisting accomplished little more than postpone the match for a few months so both sides can enjoy the holidays and rest up.    Well, there are two things that may be seen as accomplishments down the line.  One is the formation of a Senate/House committee to try to actually come up with joint budget recommendations by Dec 13.

Given the inability of the two parties to come to terms on budget issues for a few years now (except for the sequester which they forced upon themselves through inaction), it is hard to get too excited about the prospects, but the upcoming second point might help.

Point Two is what seems a clarification of the political hazards of using the threat of a government shutdown and/or a default on federal debt as bargaining chips in future negotiations.  According to most polls the Republican “brand” took a big hit through all of this because they are blamed more for causing it.  (Don’t you just love how everything has been turned into a brand these days, including each of us.)

While the Tea Party types say they will continue to use such tactics, the rest of the Republican party doesn’t look like it will fall in line next time out.

The Republican Civil War

Recently I heard that Liz Cheney called John McCain a “liberal” which among the right is like “sinner”  was used in the early days of Puritan America.   A little Googling of the issue will reveal that Republicans are deeply divided between those who think of Ted Cruz as a hero and those, like Representative Peter King of New York, who called him a “fraud.”   Of course, party leadership tries to paint this as healthy debate within the party, but when one side in a debate refuses to compromise, there is no room for resolution.  Hence, a civil war.

I never tire of pointing out the irony of the Tea Party folks always proudly defending the constitution as if it were dropped from the heavens on a tablet.  It is a remarkable piece of work but it came about through torturous compromises, the most profound being the toleration of slavery in the new republic.   “Compromise” was not a dirty word to the founders, but a necessity to establish a stable central government.

How the Republican split will play out by January is sheer guess work, but if the rift doesn’t heal (and i do not think it will), Republican moderates and Democrats may actually work together on some sort of fiscal compromise that lasts longer than a few weeks.

Obamacare

As indicated above, one reason many Republicans are angry at Ted Cruz and his posse is that in pushing for changes in Obamacare that weren’t going to happen and in turn making the party resemble the keystone cops of early film days while trying to somehow look sensible, attention was paid to their intra-party squabbles and not to the initial roll out of the Obamacare website, which turned out to be the Democrats’ own version of the Keystone cops.

Here is my take on Obamacare.   It has barely begun to be rolled out and it is not going away, so let’s just wait and see how it plays out.   When Republicans argue that it is a disaster and a majority of Americans agree, keep in mind that the right has called it a disaster from the beginning, even when it was little more than an elaborate idea.  Since most Americans, including me, know little about it, if they feel it is a disaster it is because the Republican message has been more effective than that of the Democrats.   A part of that success is because negative advertising is more effective than positive, which is why campaigns are largely made up of the former.

In man-in-the-street interviews, when asked if they prefer Obamacare to the Affordable Care Act, most people state the latter, while oblivious to the fact they are the same thing.  In terms of brands, Obamacare doesn’t look good right now.  But it is not going away anytime soon, so let’s see what happens between now and the mid-term elections in 2014.

If Obamacare really is the train wreck portrayed by the Republicans, they should come to dominate both houses of Congress, that is if they haven’t torn apart the party by then.

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The Budget/Debt Ceiling Truce: A Return to Sanity

The subtitle of my post last Wednesday was a misstatement.   I wrote: Welcome to Crazy Day.    It should have been more along the lines of Welcome to a Return to Sanity.   It just felt crazy watching the Republican controlled House push the debt limit issue to the final hour.

Official portrait of United States Senator (R-KY)

Official portrait of United States Senator (R-KY) (Photo credit: Wikipedia)

If we can agree that a large part of “crazy” is being out of touch with reality, the crazy element was provided by the Tea Party in general and Ted Cruz in particular.   If taken at face value, Cruz believes that Obamacare is “such a train wreck” that he is willing to do anything to stop it, even play poker using “the full faith and credit” of the United States as a bargaining chip.

I think it safe to say that most economists and businessmen would say it is a terrible misjudgement, to say the least.   The U. S. government bonds are considered the safest investment in the world, and that should last for a long time, unless Cruz and company actually succeed in pushing us to the edge of debt default as a ongoing month to month strategy.

That seems unlikely after this recent stalemate, but it is worth noting that he and his followers seem not to realize that the leading economy in the world cannot maintain world trust ( and the rewards therein) when these matters are battled over every few months and potentially taken to the edge of default whenever the Tea Party chooses to.   You may have heard about a Chinese editorial titled:  U.S. fiscal failure warrants a de-Americanized world.   They are working on creating a de-Americanized world and these recent shenanigans only help make their case.  Click the article and see.

But back to Ted Cruz and his fellow T. P.’ers.   In keeping with their collective insanity, they act as if they won this last round, with Cruz praising many in the House as “profiles in courage.”  What courage?  They were elected from gerrymandered districts whose voting majority share their insanity/simpled-mindedness.   Their reckless behavior only enhances their stature, at least from the extremist base.  Again, what courage?

Amongst the numerous opinions and statements about this recent bit of congressional trench warfare, to me the most significant comes from Mitch McConnell, minority leader of the Senate.   He has stated there will not be another government shut down when this issue comes to a head again Jan 15 and I infer he won’t work to put our remainingl “full faith and credit” in jeopardy by playing games with raising the debt ceiling when that comes due Feb 7.

This is a weather vane of changing winds because McConnell is up for reelection in 2014 and he has been careful to draw as little Tea Party criticism as possible fearing a strong primary challenge from them.     His indicating he will not play the Tea Party’s game in upcoming months suggests he is willing to take the heat they will torch him with, thinking that his chances of surviving politically are higher going against Tea Party wishes than endorsing them,

It is one of many signs of a widening Republican civil war, which makes it impossible to predict what will happen regarding these matters in upcoming months.   But more interesting than the normal gridlock.

Speaker Boehner Says there will be No Default on Debt

What with the federal government continuing to shut down as i write and the question of raising the debt ceiling by Oct 17 (or so) looming even larger, I have too many thoughts and too little space, unless I turn this blog into a booklet.

Official portrait of United States House Speak...

Official portrait of United States House Speaker (R-Ohio). (Photo credit: Wikipedia)

Fortunately, House Speaker John Boehner has helped simplify matters some by telling colleagues he will not allow us to default on our debt for the first time in history.    That’s the biggest economic iceberg to avoid as indicated by the last time we got close to defaulting in 2011.   According to a Treasury report, consumer confidence and the stock market plummeted and interest rates spiked.  Also, one credit agency lowered our credit rating.

And we didn’t even default, just danced around the cliff of possibility.   When Boehner says he will not let a default happen it is BIG NEWS, if you believe him and I do.   It means he will allow a measure to come to the floor in the House before Oct 17 that can attract enough votes from each party to pass.  That thought figures to settle a lot of nerves here and around the world.

Need I point out that we are what I would call the world’s cornerstone economy?   That our currency is used as the reserve currency by all other nations who also buy our government bonds in times of tumult because we are considered the safest place in the world to keep one’s money.  Not paying our debts would make us a world class deadbeat with world wide ramifications that defy prediction.

Boehner’s willingness to bring a debt ceiling bill to the floor contrasts with his unwillingness to bring a continuing resolution to extend the budget and reverse the government shutting down.   In this matter he seems stuck in searching for some face saving measures regarding the Affordable Care Act (Obamacare), which is what extreme Republicans in the House, egged on by Senator Ted Cruz, have insisted on making part of any continuing resolution (CR) deal.

While the shutdown isn’t as big a deal, economy-wise, as defaulting on our debt payments.  economist Mark Zandi has suggested it will have a snowball effect.   Now suffering is a matter of a number of individuals, but in four weeks the economy figures to suffer, and suffer exponentially more the longer the shutdown.

With the debt ceiling looming in a couple of weeks, it seems that the two issues will be combined by Congress in some form or fashion, though I couldn’t say what sort of sausage the congressional cooks will paste together.   A combination of delays of this and that and short term budget measures and a raised debt ceiling ……..who knows how much? ……supposedly giving them time to come up with a real deal in a month or two…..   a song we have all heard often before.   But at the moment there is no other.

At least, the Republican extremists that I wrote about in my previous post have lost some of their power to obstruct any kind of reasonable deal.   Most Republicans agree with the sentiments of Tea Party types, but many are angry about the Ted Cruz strategy to link dismantling Obamacare to keeping the government open.  At a luncheon two days ago he got an earful from several  Republican Senators for blasting fellow Republicans who did not agree with his “strategy”,   even though his strategy has no end game.

The President seems unlikely to give much ground on Obamacare, so what are the Republicans in the House supposed to do regarding passing another temporary budget?  They are now offering the ploy of suggesting refunding the government one piece at a time,  like turning the budget into one huge jig-zaw puzzle with all the time in the world to complete.  Budget Hawk Grover Norquist   dismisses the Cruz “strategy” like so:  “He pushed House Republicans into traffic and wandered away”

And no one has been left dodging more cars than the Speaker himself.   While stepping up to the plate in terms of the debt issue, thanks to Ted Cruz and company, Boehner is stuck demanding some kind of face saving measure in terms of refunding the government.  Perhaps the Obama team will end up offering a small concession or two on Obamacare, like taking away Congress’s exemption from the program and delaying a tax on certain medical instruments.   Nothing that really impacts the program much, but can be spun by Republicans into some kind of victory.

Or these issues might become camouflaged in a combined measure to both extend the budget and raise the debt ceiling.   Or perhaps Obama will hold firm and try to force the Republicans to cry uncle regarding his health care plan.  I’m curious as to how this will play out.

Yesterday President Obama blamed Boehner for preventing a budget deal to be reached by refusing to put the issue to a vote in the House.   Obama’s point was well made, but I think the timing unfortunate, as Boehner’s comments about the debt ceiling took place prior to it.

Boehner, unwilling to play games with the debt ceiling this time around, deserves credit for having cast aside the biggest Republican bargaining chip. the possibility of defaulting on the debt, so I wish he had not gotten immediately lambasted by the President for his position on the other main issue, extending the budget.

Oh well,  I guess John Boehner is pretty used to being batted around like a Pinata by now, within his own party and without.  Even though I usually disagree with what he says and does, I like his fortitude.   Remember that movie Being John Malkovich?   I wonder what it is like being John Boehner these days.

Ever hear the phrase “a cat on a hot tin roof.”

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.