Sunday, January 16, 2011

Federal debt limit -- what are those dumm people thinking?

A Reuters/Ipsos poll marched through the headlines last week with a surprising result:  a 71% super-majority of Americans polled opposed increasing the US federal debt limit when it comes up in the spring.  What??  This is the federal teat we are talking about here, people.  If the debt limit is not raised, the teat dries up, got that?  It didn't matter whether people heard the following warning as part of the question:
As you may know, not raising the debt limit would damage the US’ sovereign debt rating, which is like our credit rating: it would seriously damage our credibility abroad, would make it much more difficult for us to borrow in the future, and would likely push up interest rates.
All that did was move 2% from unsure to in favor.  Seventy-one percent opposed raising the debt limit whether they heard that warning or not.

The reaction from the political right generally took the form of "aha, see, told ya !!"  From the left, it was more like "people are so stooopid."  See for example this page from Democratic Underground, an online news forum where activists aligned with the Democratic party go to vent.  "They have no clue... A sad commentary on our poor educational priorities ... Most people do not understand finance..."  The general assumption among those venting activists seemed to be that people are victims of Republican sound bite politics.  If they only understood, people would support the debt limit increase.

It's true that a different, perhaps more relevant warning could have been included in the question:  "Without an increase to the debt limit, the federal government would need to immediately cut spending by 40%, since the government is now borrowing 40 cents of every dollar spent."  Perhaps if that fact were front of mind, people would think differently.  Or maybe not.  Maybe people really aren't stupid, and understand this issue, and really don't want the government taking on more debt in their names.  As a random illustration, consider the following snapshot of the Yahoo News "most popular" section late on Saturday, January 15:

That is fairly typical.  The world could be crumbling around us, and most of the most popular items would concern Blackbeard's sword or tragedy related to an elephant.  But note the item on federal debt.  Maybe ordinary people really are concerned and informed on this issue.

(It's not true that Social Security payments would suddenly stop without a debt limit increase, since the payroll tax continues to roll in, and before the payroll tax reduction recently gifted to the people by our leaders, Social Security was nearly running at break-even.  It's also worth noting that the warning that Ipsos actually read to half the sample is not even necessarily true.  If the government continued to make interest payments on existing debt out of tax revenue, and continued to redeem maturing bonds, no harm would come to our debt rating or credibility.  On the contrary, both would strongly improve.  Lack of political discipline, and the rapid rise in our debt beyond what we ever could or would pay back, are the bigger threats to our debt rating and credibility.  A sudden drop in supply of new US federal debt on the market would actually raise the price and lower the yields, which is to say lower interest rates.)

Never fear, the debt limit will be raised.  In Washington, which in its own strange way is neither left nor right, but off on its own tangent, the will of the people will not be respected on this issue.  It never is on any issue.  The debt limit raise will be scheduled as a coming episode of the great game the parties are playing, called "2012."

President Obama cares about only one thing:  his own re-election.  He assumes that his chances come down to only one thing:  the economy, stupid.  If the economy is humming in the summer of 2012, and unemployment is falling, surely the voters will forget about this debt limit stuff and put him back in office.  Obama's big gamble is that massive Keynsian-style stimulus running all through 2011, in the form of massive federal deficit spending and massive monetization of that debt by the Federal Reserve, will do the trick.  A lot could go wrong.  In particular, rising prices of food and fuel, combined with the deep unpopularity of the Fed and its quantitative easing programs, could force the Fed to stop or even reverse course.  And Fed Chairman Bernanke is on the record predicting that unemployment will not fall for several years.  Not to mention whatever market crises or black swans that might pop up.  If anything goes wrong, Obama is doomed.

The Republicans, on the other hand, think they own this issue, because their talking points match the public mood as illustrated by the Ipsos poll.  Yet the Republicans could be marching into their own buzz saw.  Two problems:

1) A substantial cut to federal spending would shave points off of GDP and send the country back into recession.  If the GOP does manage to force federal spending cuts in fiscal year 2012 (which starts in October 2011), the election will come down to a blame game regarding the results.  To their credit, the GOP is well positioned for the blame game.  Obama is currently "moving to the center" and plans to "work with both parties" which means working with the Republicans, which means adopting a lot of their agenda.  Obama is famous for ignoring his erstwhile base and catering to the opposition.  If a double-dip recession starts in 2012 due to budget cuts, how can he blame his Republican partners?  When in October 2012 the GOP says Obama is an incompetent big government liberal who stands for nothing, who will disagree?

2)  The favorite big spending category to cut according to the Ipsos poll (and every other decent poll on the subject) is defense.  Among the half of the Ipsos sample who were informed that defense, Social Security, and Medicare are the big three, 54% said to cut defense vs. 23% cutting Medicare and 20% cutting Social Security.  (Among respondents given no additional budget information, the numbers were 47%, 22%, and 19% respectively.)  The GOP establishment, meanwhile, regards the defense budget, the surveillance state, homeland security, and our endless foreign wars as untouchable.  To make good on their spending cut pledges, while preserving endless war and protecting the special interests that control their agenda, they will need to gut nearly all federal programs that benefit ordinary people.

Obama and the Democratic Party establishment are locked into their positions, and nothing can change.  Probably they will lose their game of "2012."  Nothing to be done about that.  So maybe the left should break with the Democrats (face it, they broke with you already), and stop condescending to the people, and join with independents and the honest faction of the tea party to change the rules of the game right now.  Don't raise the debt limit.  Let TSHTF now, and lets have a real discussion of priorities.

I realize that state and local government employees are now the true base of the Democratic party, and a lot of them are counting on the Federal government to bail out the states and cities and save their jobs and pensions.  For those folks, any talk of balancing the federal budget is talking to the hand.  I know.  Recall that the Democrats lost the 2010 elections on the state level even more badly than on the federal level.  The voters are not stupid.  A majority wants state and local government hollowed out, not bailed out.  The Democrats better get that message if they want to hold office in the future.

Obama is the new Hoover, in the wrong historical place at the wrong historical time.  If you like him, let him off the hook that way.  (I don't and I wouldn't, but whatever.)  The country is on a very risky policy path -- hoping that huge fiscal stimulus from federal deficits will goose the economy back to rapid growth, and increase tax revenues, so we can reduce deficits with a minimum of unpopular spending cuts.  If that strategy fails, big pain.  As the Ipsos poll clearly shows, the American people no longer support the current policy path, and you have to admit, it looks a lot like a shagged out debt junkie trying one last big hit of dope before collapsing in the street.  The Republicans are in the position to be the new FDR, using the coming crisis to work radical change on the country.  Stop a minute and picture what that might mean.  Will there even be elections in 2016?

Maybe it's better to quit the drug of debt, and get into rehab now, and let the 2012 elections be a referendum on national priorities given a clear view of where we stand.

Wednesday, January 12, 2011

Thanks for waiting, The psycho will shoot you now.

Conventional wisdom has settled on a view of Jared Loughner as merely a troubled individual; an undiagnosed schizophrenic with (in hindsight) a long, visible descent into mental illness; a nutcase.  Just call him a psycho for convenience.  Not a self-appointed foot soldier of the tea party, or unstable acolyte of Sarah Palin.  Not someone with a political program that anyone else would recognize as rational or coherent.  Early commentary associating the Arizonal killing spree with the Tea Party movement or the tenor of right-wing political rhetoric now looks hasty if not embarrassing.  (The same is true for right-wing defenses which noted Das Kapital on his favorite books list and declared him a leftist; though the latter group tends to be immune to embarrassment.)  The climate-of-politics angle seems ready to disappear under the rug.  See for example David Brooks, the go-to guy if you want to know how Washington elites view an issue.  Politics, he says, had nothing to do with the killing spree, but everything to do with the media response (and of course the left is at fault.)

OK, he was just a psycho.  And gun rights are beyond question in America, so psychos have access to machine pistols with 31-round magazines.  This sorta thing happens, tragically, lets move on.  The gun rights crowd, playing defense even though they don't need to, has already started combing the record to see whether Loughner could have or should have been prevented from obtaining the gun he used to shoot a member of Congress in the head and kill six others.  In theory, with hindsight, whatever.  In practice the psycho will often get the gun, because getting guns is easy, while undiagnosed psychos don't easily find their way into treatment or onto a list until it's too late.  As a matter of policy, American psychos will have guns, and we are all on the firing line.  The only question is, who will they target?  That is where the political angle comes back.

An obvious comparison would be to the Virginia Tech shooter a couple of years ago, another angry young man failing in college and failing in mind at the same time.  The students and faculty of Pima Community College, where Loughner was recently suspended, are probably breathing a secret sigh of relief, because typically the target would have been them.  But this time the psycho decided his chief tormentor was the local member of Congress.  He wanted to create chaos, according to one friend in interviews.  Past generations of psychos did that by shooting up a McDonalds, or some other institution of daily life.  Create fear in everyone because it could happen anywhere, anytime, to them.  Makes sense, in a psycho sort of way.  But Loughner thought the best way to create chaos was to kill the local member of Congress.  You don't suppose the current political climate had something to do with that?  The demonizing of (especially Democrat) politicians; steady talk of riots and revolution due to the failures and growing illegitimacy of government as revealed by the recent financial crisis; etc.  Loughner was most likely absorbing all of that in his own irrational way.  Psycho thinking is by nature not overly rational or predictable, but psychos take cues from the social milieu.  Since the late 20th century, some think they have microchips implanted in their brains, though obviously no one thought that before microchips existed.  Somewhere in America there is probably a psycho who watches Glenn Beck and thinks his microchip was implanted by George Soros.  The current political climate did not cause Jared Loughner to kill, but it very likely influenced his target.

Members of Congress were keenly aware of the danger posed to them by hateful rhetoric and violent metaphors, flowing mostly from the right wing, even before the Arizona incident.  It doesn't matter whether the bullet is fired by a Tea Partier gone rogue or a simple psycho; the current political climate makes them more likely targets.  They don't like that.  Members of Congress are a privileged class who insulate themselves from the hardships faced by ordinary people.  They enjoy gold-plated health care and generous pensions, to free their minds for the difficult work of stripping health care and pensions from every one else.  Makes you want to just ... wait, don't go there.   Needless to say, they also want exemption from the risk of psycho violence, even though they ultimately control the laws which determine how easily psychos get guns.  So now they talk about cooling the tone, and a couple of Democrats actually called for criminalizing or suppressing "inciendiary" speech.  Good luck with that.  Hard to say if that is just nonsense spouted in a moment of fear; or if they really believe they could muzzle Rush Limbaugh; or if the real target is small-time bloggers and ordinary people posting anonymously on the internet, and the Washington elites think they can exploit the Arizona killing spree in a further bipartisan effort to silence dissent.

The threat of violence against elected officials in the current climate is very real, even if people like David Brooks pretend otherwise.  After a quarter century of relative calm, it might even seem like a historic departure and a new crisis weighing down on an already over-burdened America.  Actually, it's more like a return to the bad old days.  In the period from JFK's assassination to Ronald Reagan's psycho run-in, bullets shaped national politics on a regular basis.  Figures across the political spectrum were targets.  Now the question will be whether the current threat is bipartisan, or whether it targets Democrats in particular.  The Arizona case was "just a psycho" but the next one could be a one-man militia.  With just one data point so far, no empirical answer is possible.

A couple of distinctions need to be made.  First, between political rhetoric that is merely hateful, overheated, and divisive; and use of actual gun metaphors and imagery -- cross-hairs, second amendment remedies, don't retreat reload, etc -- with an implicit but clear threat of gun violence against the opposition.  On the former, you could spend forever trying to count and weigh all the statements made, by whom, where, in what context during the last election cycle.  Overall, I think the right wing is much more reliant on the ad hominem shift -- labeling their opponents as not merely misinformed or wrong, but evil people, sick, un-American, traitors.  But right wing partisans could respond all day long with anecdotal evidence to the contrary.  Regarding the use of actual gun metaphors and imagery, however, the right wing clearly predominates.  With a searchable database of everything Barack Obama has ever said, they were able to quickly produce a single example of Obama comparing politics to an armed struggle.  But right wingers are stroking their guns all the time.

A second important distinction is between the actual body count that will emerge over the next decade, and the chilling effect that threats of violence have on political life.  The actual body count is not likely to grow large enough to satisfy a statistician (one would hope); and if it does, all bets are off.  But the chilling effect seems to weigh more on Democrats.  Viable candidates will not run for fear of having Republican cross-hairs drawn on their foreheads.  Officials already in office will think twice about voting for measures opposed by the right-wing noise machine, for fear of being targeted for death -- oops I mean defeat in the next election.  This chilling effect seems to be no accident, and to be an actual part of GOP strategy.  Turns out one of their self-appointed foot soldiers was one Turner Haberman, a somewhat nutty 32-year-old trust fund brat from California who threatened to kill Democratic Rep. Jim McDermott of Washington State, and his family and friends for good measure.  "I hate Jim McDermott. I hate his family. I hate his kids. I hate everybody. … I could round them all up, you know, I could look for them."  He did that during the debate over extending Bush tax cuts, a month before the Arizona shooting.  Only after Gabrielle Giffords was shot did the FBI decide maybe they better arrest Haberman.  After arrest he claimed he was drunk at the time; wouldn't ever really hurt anyone; and only made the telephone calls to try to scare members of Congress into voting to extend the Bush tax cuts.  Yes, I know, Haberman was a cell of one, not directly guided or encouraged by any "official" right-wing source.  That is how it must be.  Candidates, professional operatives, and donors can't make those sort of graphic threats directly because it's illegal (and embarrassing).  The program works like this:  first you demonize the opposition, say they are Marxist, hate America etc. and then wait for one of your less inhibited followers to do the ugly part.

Not to say that Jared Lougner was part of a GOP script.  Psychos can't be scripted.  But you make your own luck.  Also not to say that every Republican or right-winger is on board with this strategy or takes part in the implementation.  Large, smart movements like the American right wing always use a division of labor whereby only a few participants actually do the dirty work.  Most are allowed to reap the benefits while remaining oblivious; and a few might even offer up criticism of the strategy as window dressing.  (But no candidate will ever be disowned, nor any political operative fired for training figurative gun-sights on the opposition.)  Some Republican office holders might genuinely have second thoughts now that the bullets are flying for real.  But the hard-core operatives and their financial backers care more about victory than the safety of their front men.  Second amendment remedies to big government liberalism will remain on the table until they are clearly seen to turn off voters and lose elections.