Status of the debt ceiling fight

Not a whole lot of good news to pass on. As Time puts it, the Tea Party fringe of the Republican/right-wing movement has now broken off from the Establishment big-finance Republicans and is running wild, without any clue as to how the economy actually works. Heck, not many people in the American establishment generally, appear to have any clue about how economics works!

A major problem is that right-wingers don't really seem to understand how representative democracy is supposed to work and are giving up vastly too much authority to groups that demand pledges. A representative democracy is one where one chooses a representative based on basic compatibility with ones own viewpoints and then give the representative some latitude to negotiate bargains. President Obama expressed this basic point of view but, according to progressives at least, went much, MUCH too far towards pleasing the other political party. Unfortunately, the President appeared to reinforce this view that he's far more a Blue Dog Democrat (as opposed to a Progressive Democrat, which a lot of people thought they were electing in 2008). Good video commentary on that last piece

Is there hope? Actually, there is.
Grover Norquist demanded that Republican Congresspeople sign a "No new taxes! EVER!" pledge, but appeared to grant dispensation to break that pledge before hastily taking it back. Still, it's a very positive sign to see that at least some people are at least open to discussing tossing the Bush tax cuts into the wastebasket.

It was also very good to see the Inky (The Philadelphia Inquirer) recognize that the Republican Party appears to be more and more fanatical and separated from reality, though they ultimately wimped out and accused Republicans of "pandering to their right-wing base" instead of being Tea Partiers themselves.
Don't know. We certainly hope the President does the right thing. Let's just hope he has to take a better approach than the one he's been taking up until now.

Update: Interesting piece by Megan McArdle. McArdle is well to the right of me, politically (If, on a scale of 10, I count as a 2, McArdle is about an 8), but she brings up a debate that's at least as old as Reagan's 1980 campaign for the presidency. I was 20 years old at that time and going to college in Washington DC, so the debate may very well have been a good deal older, but that's when I became aware of it. McArdle has taken the very same position that I subscribed to back then. Essentially, that position is "Okay, so ya wanna cut the budget, eh? Okay, fine. What, exactly, do ya wanna cut?" Reagan himself solved that problem by using the "magic asterisk" and "rosy scenario" along with a few other sleight-of-hand tricks, but essentially, the problem has remained  what it was back during the 1980 campaign, that is, no one really knows. Republicans know they want the budget to be smaller, but they're pretty fuzzy when it comes to specifics.

The President’s wishful-thinking approach

Once again, the President tries to move in two different directions at once. He's trying to adopt two wildly contradictory approaches with his strategy on the debt "crisis." What really amazes me is to hear statements like this:

You know, if you care about making investments in our kids and making investments in our infrastructure and making investments in basic research then you should want our fiscal house in order so that every time we propose a new initiative, somebody doesn’t just throw up their hands and say more big spending, more government.

But Republicans and to some extent, Blue Dog Democrats, oppose the New Deal and Great Society programs, period! They oppose these programs root and branch! Cutting these programs down to size is not going to satisfy them. Giving them a half a loaf is just going to whet their appetite for grabbing the whole loaf. Republicans want these programs destroyed, completely, absolutely and without anything left standing. They're not the slightest bit interested in "splitting the difference" or in reaching some sort of reasonable compromise.

My recommendation is that we make the needed investments, period! Heck, even the right-wing NY Times columnist David Brooks recognizes that "The fiscal crisis is driven largely by health care costs." The US spends about twice as much on health care per person than what every other advanced society does, yet the results are mediocre, in the middle and unspectacular. Yes, it would be marvelous to produce an even better health care system than what Obama managed to pass in 2010, but it's actually even easier than that. There are ways in which American health care can be globalized and made to compete with other countries in ways that would lower America's per-person costs. What does it mean that health care costs are the primary driver of deficits? It means that cutting grandma's Social Security check and reducing grandpa's Medicare reimbursement will do absolutely nothing to put our "fiscal house in order."

Progressives managed to come up with a comprehensive plan that, unlike both the Representative Paul Ryan plan and the "Cat Food Commission" (Actually, the Simpson-Bowles Deficit Commission) plan, actually "gets the budget into primary balance by 2015." Do Republicans/Blue Dogs like the plan? Of course not. They absolutely hate the plan because it preserves the New Deal and Great Society programs. Our President appears to want to please everybody, but maybe that simply isn't possible.

As the FireDogLake piece says:

This “get it off the table” strategy was behind the 2002 Iraq war resolution, actually. Getting Iraq off the table would lead to a focus on the economy and a victory for Democrats in the midterms. It didn’t work out that way. It never does.

Blue Dog Democrats, and I'm including Obama in that group, appear to be extremely bad at judging what their opponents will do.  Obama wasted week after week talking with Senator Olympia Snowe (R-ME) about the ACA, trying to find areas on which they could agree. Sure, it would have been preferable to have gotten the votes of more than just the Senate's 59 (Later 60 when Al Franken was approved as the Senator from Minnesota, but that went back down to 59 when Senator Ted Kennedy (D-MA) died) Democrats and the two Independents who were in the Democratic Caucus. But ultimately, Snowe decided not to vote for the ACA, thereby wasting many valuable weeks during which other things could have gotten done.

Would anyone have known or cared that the ACA was passed using the filibuster-proof reconciliation process? Considering how many times G.W. Bush used it (To pass, among other things, the Bush tax cuts of 2001 and 2003) Republicans would likely have made a stink about it, but that's an "inside baseball" kind of thing where very few people are up to speed enough on the details to really care one way or another.

The essential political problem here is a rhetorical one, one of the political language that's being used to describe the situation, not one of real facts. Keynesianism is not dead or disproven or discredited, it's just that the President has not mounted a full-throated defense of it. He's permitted Republicans to define political reality and to set the parameters of what is and isn't politically possible. This was a completely incoherent and thoroughly confused statement when it was made back in February, but it's pretty obvious that the thinking of the Obama Administration hasn't improved at all:

"Well, Sam, I would point you to our logic, to the president's logic, which is that we need to live within our means. We need to reduce spending. We need to demonstrate our seriousness about that, but we also need to invest where it's essential. And we feel that we need to be careful about cuts so that we don't threaten the recovery, that we don't threaten growth, that we don't threaten our national security. But we obviously agree with others that spending cuts are necessary."

The obvious problem here is that ANY cuts to government spending are bad and counter-productive! If there were any harmless and necessary cuts, no one had identified them back in February and no one has identified them today.

Update: The President also engages in a false equivalence:

"Let's be honest. Neither party in this town is blameless," he said in his weekly address. "Both have talked this problem to death without doing enough about it. That's what drives people nuts about Washington."

Daily Kos responds:

Wrong. There is one party that is to blame for the debt and the deficit: The Republican Party. From 1981-2011, this deficit problem emerged. Twenty of those years were under Republican rule, and the 10 years of Democratic rule produced a net surplus. Democrats balanced the budget. Republicans ruined it. No, Mr. President. There is not blame on both sides. There is blame on one side.

Debt negotiations

Ga-a-ahhh!!!!! Some statements from the President just drive me absolutely crazy! They were made in response to Speaker Boehner's question to him that:

"After embarking on a record spending binge that left us deeper in debt, where are the jobs?"

Okay, first off, House Minority Leader Nancy Pelosi was talking about the Republican Speaker's failure to put up any jobs-creation bills after being the Speaker for 163 days (That was on 16 June), so yeah, where are the jobs, Mr. Speaker?!?!?!?! Money bills begin in the House, after all.

Second, someone ran a chart of spending year-to-year increases going back to John F. Kennedy. Yes, Clinton had relatively small increases during his two terms of 3.1% and 3.48% respectively, but Obama's increase of 6.71% is quite similar to George W. Bush's increases of 6.41% and 6.82%. BTW, Ronald Reagan had increases of 9.62% and 5.79% and Lyndon Johnson led the way with 10.79%. It's far from clear that Obama oversaw a "record spending binge," especially when one considers that Obama added the war spending to the normal budget. He didn't try to keep war spending sequestered off from the rest of government spending.

As to the President's infuriating statements:

And over the last 15 months, we've actually seen two million jobs created in the private sector.  And so we're each month seeing growth in jobs,  But when you've got a 8 million dollar -- 8-million-job hole and you're only filling it 100,000-200,000 jobs at a time each month, obviously that's way too long for a lot of folks who are still out of work.

[snip]

It's estimated that we have about $2 trillion worth of infrastructure that needs to be rebuilt.  Roads, bridges, sewer lines, water mains; our air traffic control system doesn't make sense.  We don't have the kind of electric grid that's smart, meaning it doesn't waste a lot of energy in transmission.  Our broadband system is slower than a lot of other countries.

For us to move forward on a major infrastructure initiative where we're putting people to work right now -- including construction workers who were disproportionately unemployed when the housing bubble went bust -- to put them to work rebuilding America at a time when interest rates are very low, contractors are looking for work, and the need is there, that is something that could make a huge, positive impact on the economy overall.  And it's an example of making an investment now that ends up having huge payoffs down the road.

Now, my objection is not to the accuracy of any of this, but goes to the President's priorities. Why on Earth is the President concentrating on deficit reduction at this point in time when there are so many obvious needs that need to be tackled now?!?!?!!
I strongly agree with this piece, which says Obama is destroying the Democratic "brand." Obama clearly wants trillions of dollars in cuts, taken out of programs that help less wealthy Americans. AARP and the very wealthy, strongly anti-Social Security Pete Peterson are of course, on the same page along with him. All three use "clever" euphemisms to disguise the fact that they want to impoverish the non-rich. And yeah, I'm completely on the same page with this statement:

Now if you think that this is something the President is doing because it’s the only way to get Republican cooperation you can stop reading here, because we’re going to disagree.  From the moment he took the White House, the President has wanted to cut Social Security benefits.  David Brooks reported that three administration officials called him to say Obama “is extremely committed to entitlement reform and is plotting politically feasible ways to reduce Social Security as well as health spending” in March of 2009.  You can only live in denial for so long and still lay claim to being tethered to reality.

It's been apparent for quite awhile that the President is holding his own arm behind his back and chuckling while he complains about his arm being twisted by those terrible Republicans. That's not to say Republicans haven't completely swallowed the Tea Party Kool-Aid and aren't the flaming maniacs that they're accused of being. I'm just saying it's hard to say who's really representing the American people here.

What we’re watching is the death of the Democratic Party.  Or, at least the Democratic Party as most of us have known it.  The one that has taken its identity in the modern era from FDR and the New Deal, from Keynsianism and the social safety net.  Despite any of its other shortcomings (and they are myriad), the Democratic Party has stood as a symbol for commitment to these principles.

AARP makes a pretty good statement here, but I'm bothered by the inclusion of one word (emphasized):

"AARP is strongly opposed to any deficit reduction proposal that makes harmful cuts to vital Social Security and Medicare benefits," Rand said.

I'd have much preferred that word not have been in there at all. There's a big potential difference between "harmful cuts" and just plain "cuts." There's no demonstrated need to make any cuts whatsoever.

Looks like at least some of the House Progressives are standing firm. We need to encourage them to keep it up.

The gist of [Pelosi's] remarks: "Members of her caucus won't vote for a grand bargain to raise the debt limit and reduce future deficits if the final deal includes cuts to Medicare and Social Security benefits—and that means it probably won't pass."

Fortunately, no deal has been reached as of yet, but Sunday (10 July) is the next day for negotiations.