The crisis of 2011?

by John Quiggin on July 16, 2010

I’ve been too absorbed by my book projects and by Australian politics (of which more soon) to pay a lot of attention to the forthcoming US elections, but it seems to be widely projected that the Republicans could regain control of the House of Representatives. What surprises me is that no-one has drawn the obvious inference as to what will follow, namely a shutdown of the US government.

It seems obvious to me that a shutdown will happen – the Republicans of today are both more extreme and more disciplined than last time they were in a position to shut down the government, and they did it then. And they hate Obama at least as much now as they hated Clinton in 1995 (maybe not quite as much as they hated him by 2000, but they are getting there faster this time).

The big question is how a shutdown will be resolved. It seems to me that it will be a lot harder for Obama to induce the Republicans to back down than it was for Clinton. IIRC, no piece of legislation proposed by Obama has received more than a handful of votes in the House, and (unlike the case with Bob Dole in 1995) no aspiring Republican presidential candidate will have an interest in resolving the problem – the base would be furious. On the other hand, the price Obama would have to pay if he capitulated the Republicans would demand from Obama in a capitulation would be huge, certainly enough to end his presidency at one term. So, I anticipate a lengthy shutdown, and some desperate expedients to keep things running.

As far as I can tell, there is no mechanism for resolving this kind of deadlock – the House can’t be dissolved early as would happen in a parliamentary system. I think the Founders probably envisaged the House as having a “power of the purse” comparable to that of the British Commons. Whether they did or not, I’m sure this argument will be made, probably by people who have argued, until very recently, that the power of the Executive is essentially unlimited.

But, my understanding is limited and I’d be keen to hear what others think about this.
[1] I’ve tried to clarify my point about capitulation, which was poorly expressed the first time.

{ 79 comments }

1

bob mcmanus 07.16.10 at 3:36 am

1) Obama can get away with a lot more capitulation that you think he can, but I am not sure he wants a second term.

2) Republicans will cooperate more than you think.

The examples would be welfare reform and the end of Glass-Steagal during the 2nd Clinton term.

Neither party cares about a functioning government anymore, as evidenced by the year and a half it took Obama to look at the Interior department or appoint members to the Fed. It is all about theatre to distract the plebs from the graft. Former Wellpoint VP Liz Fowler has been appointed by Obama to implement health oversight. A kleptocracy.

Rahm Emmanuel will leave, and become very very rich, and establish contacts for Obama.

2

Hattie 07.16.10 at 4:51 am

I may be cynical, but I’m not THAT cynical!

3

novakant 07.16.10 at 5:39 am

I’m beyond cynical – exhibit a, b and c

4

NomadUK 07.16.10 at 6:06 am

I may be cynical, but I’m not THAT cynical!

Then you simply haven’t been paying attention.

5

Pliggett Darcy 07.16.10 at 6:07 am

I’m not a big fan of Obama either, but Bob McManus’s ipse dixit about what would happen strikes me as wildly eccentric. But at any rate, it seems to me that in any showdown Obama is bound to win. The Republicans don’t have a party leader, as Obama is the de facto leader of the Democrats. And nobody can get more media attention than the President of the United States. So in terms of “messaging,” Obama easily comes out ahead; he will win any public relations war. Also, keep in mind that Republicans in Congress now take pride in being — and more importantly, are publicly identified as — the Party of No (forgive the shopworn phrase). The Republican base sees this as good; Democrats see it as bad; and the rest of public is mostly somewhere in between. But the point is that they are publicly identified as reflexively obstructionist. If a shutdown comes, then, the Republicans will naturally be seen as the cause, rather than Obama.

Those are my two cents, but the only special insight I have is American citizenship, nothing more.

6

bob mcmanus 07.16.10 at 6:07 am

I think the Steinbrenner family made an extra 367 million dollars this year because of the inheritance law glitch. There is real money at stake.

What is interesting to me right now is the lame duck session, when Republicans will either have actual or effective control (with Blue Dogs) of the next Congress. Big big plans are being made. Evisceration of Social Security and pork filled energy bill among them. There will be 30-40 Democrats looking forward to the private sector, and the rest of the Democrats will know this may be their last chance to please their corporate donors. The Republicans will be safe for two years, and can get their base to forgive them with the usual barbarisms.

Most people think deals cannot be made. But making Bush tax cuts permanent in exchange for raising the retirement age, sending the Trust Fund to Wall Street, and a regressive VAT looks possible to me. We are talking trillions of dollars to spread around.

Then we will get scandals, impeachment, and racism for two years so no one notices all the cashing in. The liberal bloggers will play along.

7

Adam Hyland 07.16.10 at 6:19 am

I think you overestimate the cost of capitulation for Obama–not to mention we have no idea what capitulation would look like in practice.

I’ll do the first comment last! As for the nature of capitulation, what might we see? We are already in a legislative equilibrium where if a few republicans were to defect, they could effectively write legislation. We re-wrote the financial reform bill to suit Scott Brown, and he wasn’t the only marginal stakeholder (in expectation). The health care reform bill could have been substantially more republican friendly were a few senators willing to step across the aisle. I’m not repeating this to chastise republicans for their unwillingness to make tactical decisions for policy gain; it is clear their goals aren’t focused on policy. I’m simply noting that the set of possible decisions a republican congress can make when faced with a democratic president which might look like “capitulation” to liberals might also be beyond the pale for conservatives. The conservative leadership has spent the past few years demonizing Obama and maintaining relative discipline regarding cooperation (to say nothing of the base and FNC). What issue could you see them forcing a compromise on?

Second (or rather, first!), what is the material cost of capitulation? Clinton’s welfare reform bill was about as tactical a triangulation ploy as you could dream up (apart from any positive or negative policy implications): election year, republican issue, democratic sacred cow. Clinton didn’t pay at the polls and most democrats even stood with him through the impeachment nonsense (the circus environment may have had a lot to do with that). Likewise Obama has already upset a number of “progressives” for not pushing a public option, not pushing a bigger stimulus, not closing guantanamo (and expanding a lot of Bush era programs he ran against), and not going to the mat for a variety of liberal issues (EFCA, cap and trade, etc.). That’s not to say he couldn’t get worse, but really who are disenchanted liberals going to vote for? Even Nader only got ~3% of the vote in 2000. Can you see a credible third party siphoning off liberal votes in 2012? Liberals may stay home. I will argue that liberals are going to stay home in 2010, but presidential elections tend to be more personal and more emotional. Especially if the GOP picks someone fun like Palin or Bachmann (and not someone boring like Pawlenty)–hard to see how some disappointed liberals will upset that race.

A final point. The optics change slightly when the opposition party controls one or both houses of congress. When the legislature and the white house are split, some cooperation isn’t just necessary (avoiding a shutdown) it is politically savvy. Gingritch shut down the government in 95, but budgets had to be passed in other years, bills were written and things went on as they needed to. Because the opposition party now was responsible for the behavior of the congress. As the minority party, republicans can gum up the works confident that the public will blame “congress” and reward non-incumbents. With control of the houses, blaming “congress” means putting republican incumbents at risk. Journalists report stories differently, placing the onus on the majority leader and speaker of the house. Democrats become the desired compromise votes for legislation, forcing republicans to woo a few over if they want to clear 60 votes (and you bet the dems will abuse the filibuster). Of course, this all doesn’t mean that more cooperation will be had. Just that extending the current levels to an imagined republican majority will overestimate the level of gridlock.

8

bad Jim 07.16.10 at 6:26 am

Deadlock means that the sun sets on the Bush tax cuts. It bites the plutocrats precisely because the Democrats did a deal back when. A zombie Congress could only resurrect the previous tax rates, which would be great for deficit reduction even though not many more people will be working, since the moneyed are not doing that badly with the Dow back above 10k.

Revenues will improve and non-military outlays will come to a dead halt. The pain will be so great and the craven, rabid, brainlessness of the right will be so brazenly obvious that Obama won’t even need to thrill his horny base with rumors of fellatio to breeze to victory in 2012.

9

Lee A. Arnold 07.16.10 at 6:47 am

Republicans are 5-6% ahead in the generic election poll, but this is due to anger at the economic conditions, not out of any special love for the Republicans. In fact, a lot of different kinds of poll questions show that Republicans are held in far LESS esteem than the Democrats. President Bush may have something to do with it. Despite the current wave of Republican operatives flooding the blog comments at the daily newspapers, most people really haven’t forgotten who got us into this mess. So, if the Republicans shut down the government, they better have devised a reason that is far more convincing than any we have heard. Because if it fails, as it did with Gingrich vs. Clinton, they are very unlikely to regain the Presidency.

If the Democrats could figure out a way to propose a quick, loud, well-publicized extension of unemployment benefits, despite the unlikelihood of passage, it might do wonders for their November electoral prospects.

One real and lasting problem for U.S. conservatives is that they haven’t passed through their intellectual crisis — Reaganism has imploded, and they haven’t figured out an alternative. Far from it: Currently they are trumpeting their false belief that tax cuts don’t have to be paid for, in the face of 100% complete evidence to the contrary. This is propped-up by their electronic propaganda outlets, and the bad reportage in the mainstream media, but it’s hard to see how long this farce can be maintained.

Also, the Democrats don’t have to stand still. If the Republicans retake the House, or even the Senate, the Dems can start teaching the policies they have passed.

For example, any attack on Obamacare or Dodd-Frank can be countermanded with a public discussion of what the new provisions are supposed to do, and what the Republican repeals would return us to. And that discussion would finally get the public to think through each detail. Will there be falsehoods and slanders? Yes. But the Republicans really aren’t ready for the policy discussion. It’s almost no-win for them. That’s why they are so furious to begin with.

After all, with the commitment to universal healthcare implicit in PPACA, U.S. liberals have secured perhaps their biggest remaining issue, and that may begin to cure one of the outstanding mental defects of the United States: the rock-hard tradition of personal self-reliance by people who couldn’t think their way out of a paper bag. PPACA is an interlocking set of policies and chipping away at any of it directly questions the commitment to universality.
We are going to have to EVOLVE into intelligent beings, and Obamacare promises the opportunity to think it through quite naturally.

Tax cuts? Above all, people should demand that if there are to be any tax cuts, or the Bush Tax Cuts are to be extended, then they MUST be offset, in the SAME Congressional bill, with long-term spending cuts. Then the American public can see, and be sure, that one hand balances the other hand. Long-term tax cuts do NOT pay for themselves and they have only moderate effects on long-term growth; government safety-net and infrastructure spending is worth as much.

As opposed to long-term tax cuts, short-term tax cuts for a stimulus ought to be offset in the same business cycle, or else we start to carry deficits. Then it turns into this ridiculously toxic political environment. No more of this stuff!

10

Hidari 07.16.10 at 8:05 am

11

Guido Nius 07.16.10 at 8:11 am

I think Obama will get a lot more dirt from the small but vocal left of him alongside the big but silentish center to the right of him in the next years before, in about 5/6 years, he’s recognized as a real, hmm, historic figure.

12

lemuel pitkin 07.16.10 at 8:29 am

The analogy with 1995 is inexact. Then, the Rs controlled both House and Senate, but there’s no chance of that next year. So a budget will have to get through the Democratic Senate before it gets to Obama’s desk. That means for a 1995-style confrontation, the Rs have to make a budget proposal that’s acceptable to several Democratic Senators but unacceptable to Obama. Not an easy needle to thread.

13

Adam Hyland 07.16.10 at 8:50 am

@lemuel

I think it is easier than we imagine. Joe Leiberman is a “democrat” for the purposes of counting to 60. Ben Nelson could be swayed. And the likely democratic nominee for Robert Byrd’s seat will lean to the right. Add in Blanche Lincoln if she survives the fall election. In fact a Lincoln win could push more democratic legislators to the right; Lincoln survived a public primary challenge from the left and adopted a relatively blue-dog approach to legislating. If she is rewarded electorally the story in washington will be driven by that outcome.

Republicans finding democrats to defect on single issues has never been a long term problem. The list above is just off the top of my head on budget issues. National security, reproductive rights, and other issues have their own individual “Ben Nelsons”.

14

Henri Vieuxtemps 07.16.10 at 9:46 am

Republicans are 5-6% ahead in the generic election poll, but this is due to anger at the economic conditions, not out of any special love for the Republicans.

I have the impression that the Democrats need to be 5% ahead in the generic poll just to end up even on the election day; therefore 5% Republican lead indicates a big win for them.

Also, I got the impression that having a hostile congress is a huge advantage for a president, any president. It virtually guarantees the second term.

As far as the relevance of all this to the rest of us: what bob mcmanus said. One or another group of politicians will get rich, and those who’re paying them will get what they want either way.

15

PHB 07.16.10 at 12:18 pm

The power of incumbency is rather greater than most commentators admit. And the GOP position is actually rather weak as they have no alternative strategy – apart from ending Medicare, Medicaid and Social Security to ‘fix’ a budget deficit that they caused with their tax cuts for the ultra-rich and their two wars they started but couldn’t finish.

Opinion polls taken this early are not a very good measure of voter intent. And many of the polls in individual races come from the prolific, but spurious Rasmeussen group, which exists to produce polls that surprisingly show a GOP lead.

Pretty much every observer admits that the GOP has fielded a remarkably weak field of candidates in winnable seats. They have pretty much thrown away Kentucky, Florida and Nevada. If they win it will be in spite of their candidate. But one reason the candidates look so weak is that the party position is weak, it is based on opposition to everything Obama, there is no alternative program.

If the GOP did get any measure of control they would behave stupidly. I would not be at all surprised by another shutdown. But the demand will be even stupider than Gingrich’s, which was to phase out Social Security. But the shut down is not necessarily going to involve Obama. They have to get any idiocy through the Senate as well, and the chance of the Democrats losing 9 seats is quite small.

16

Jacob T. Levy 07.16.10 at 12:58 pm

But the 1995-96 shutdown was traumatizing for Congressional Republicans– they lost, and lost badly, and seem to have learned the lesson never to seriously challenge a president on budget questions again. They went after Clinton in other ways, of course– but they treated serious budget fights as radioactive for the rest of his presidency. And, of course, they never challenged a Bush budget.

It’ s possible that the lesson’s been forgotten because so much of the class of ’94 leadership is now out of office. But I doubt it. Expect omnibus continuing resolutions throughout 2011-12– no actual budgets, but no shutdowns either.

17

Henri Vieuxtemps 07.16.10 at 1:10 pm

Here: New Gallup poll shows largest generic lead for Republicans in history. That’s 49 to 43, and that’s “the largest lead Republicans have ever had in the poll, which Gallup began tracking back in 1950.”

18

chris 07.16.10 at 1:13 pm

Joe Leiberman is a “democrat” for the purposes of counting to 60.

In order for the Republicans to pass a Republican (i.e. non-compromise) budget and force Obama to sign or veto it, they have to get to 60 *Republicans* (or abolish the filibuster). It’s going to be hard enough for them to get to 51.

And I don’t think Obama would lose politically by vetoing, say, an extension of the Bush tax cuts. Certainly he’d gain with his base.

19

Keir 07.16.10 at 2:02 pm

The analogy with 1995 is inexact. Then, the Rs controlled both House and Senate, but there’s no chance of that next year. So a budget will have to get through the Democratic Senate before it gets to Obama’s desk. That means for a 1995-style confrontation, the Rs have to make a budget proposal that’s acceptable to several Democratic Senators but unacceptable to Obama. Not an easy needle to thread.

This isn’t true: you can’t spend money that hasn’t been appropriated, and the Senate and President can’t appropriate money without the House. Therefore, for Obama to spend money, the House must appropriate it. The only thing the House need do is fail to pass a Budget, and Obama can’t spend any money.

Now, in order to pass a Budget, it’s different, but then the House needn’t exactly force the President to veto a Budget, They might deicide they just need to force the President to put forward an acceptable Budget.

(I am also unsure if Presidents ever need veto Budgets. Surely the Congress only authorises spending & doesn’t spend money? But that’s a Westminster-ism, I don’t doubt.)

20

MattF 07.16.10 at 3:02 pm

It’s quite possible that the government will be shut down. And then, we will have a demonstration of Cohen’s Observation: “Government is the enemy until you need a friend.” Welcome to interesting times.

21

Alex 07.16.10 at 3:10 pm

Bad Jim wins the thread – the tax cuts are an IED set to explode under this idea.

22

onymous 07.16.10 at 3:16 pm

Pretty much every observer admits that the GOP has fielded a remarkably weak field of candidates in winnable seats. They have pretty much thrown away Kentucky, Florida and Nevada.

Depressing though it is, it looks like the GOP will win Kentucky.

23

Anderson 07.16.10 at 3:51 pm

So in terms of “messaging,” Obama easily comes out ahead; he will win any public relations war.

That may be the wrongest thing I have ever read.

Obama *is* president and he *is* losing the PR war. He’s made next to no effort to sell what the Dems have accomplished. The one thing we expected of Obama was that he had the charisma and communication skill to do good PR, and he’s been a miserable failure in that respect.

– That said, a shutdown will hurt the GOP, because it will inconvenience the public at some point, and the public does not like to be inconvenienced. Tho the GOP Spin Empire is much more effective now than it was under Gingrich; they just *may* be able to shut down the gov’t and convince the public it’s the Dems’ fault. The Dems’ response to that, judging by recent experience, will be to agree in part. Fuckers.

24

Uncle Kvetch 07.16.10 at 4:27 pm

But the 1995-96 shutdown was traumatizing for Congressional Republicans—they lost, and lost badly, and seem to have learned the lesson never to seriously challenge a president on budget questions again. They went after Clinton in other ways, of course—but they treated serious budget fights as radioactive for the rest of his presidency.

I agree with this. Those “other ways” exist in abundance, and if the R’s take the House I think it’s going to be an avalanche of bullshit subpoenas and hearings…the birth certificate, ACORN, and about 100 other things we can’t even imagine at this point…they’ll continue to pass budgets, but otherwise it’ll be gridlock. Which results in Obama looking weak and ineffectual, which helps set up the Republicans nicely for the presidential race…

A disaster for the country, but on the bright side, it’ll be a great time to be a pundit…partying like it’s 1999.

25

y81 07.16.10 at 5:16 pm

I agree with Jacob Levy and Uncle Kvetch. (I don’t expect ever to write that sentence again.) So there won’t be a shutdown.

On the extension of the Bush tax cuts, I think this is a net plus for the Republicans. They won’t have enough votes to extend the cuts, certainly not over a veto. That means a tax increase which (i) isn’t a good idea in a recession, at least if what I learned in college is true, and (ii) is never popular.

26

Newmanium Reveler 07.16.10 at 5:20 pm

Is it true that the incoming class of Republicans is more disciplined than Gingrich’s? Do they have a contract with America? Established Republicans in the congress have been united and disciplined, to be sure, but if the incoming class heavily features that special brand of tea person, I’m not so sure it’ll work the same way.

Also, the 1995 gridlock was largely about Medicaid, and one of the bizarre lessons from PPACA is that people really really like their Medicare, to the point of shouty incoherence. And Medicaid, while ostensibly a poor program, is really an old-people’s program…

It will be interesting to see if a lameduck session gets scheduled to implement recommendations from the deficit commission, since it’s easy to imagine that the recommendations will include both benefit cuts and tax increases – which a Republican House would be loathe to enact.

27

Substance McGravitas 07.16.10 at 5:31 pm

It sure would be nice to think that Republicans learn lessons.

28

ScentOfViolets 07.16.10 at 5:32 pm

That means a tax increase which (i) isn’t a good idea in a recession, at least if what I learned in college is true, and (ii) is never popular.

Really? Sure this wasn’t a tax cut that is going to expire soon? Please tell me you’re not one of those people who refer to the inheritance tax as the “death tax”.

29

y81 07.16.10 at 5:50 pm

“Sure this wasn’t a tax cut that is going to expire soon?”

Well, undergraduate macro in 1981 didn’t draw that distinction. In Lipseysteinerland, you just take the taxes away from C or I, and therefore Y goes down. I defer to those who know more than I do for a more sophisticated (maybe even a more correct!) analysis.

30

Salazar 07.16.10 at 6:02 pm

@ Jacob, # 16:

“It’ s possible that the lesson’s been forgotten because so much of the class of ‘94 leadership is now out of office. But I doubt it. Expect omnibus continuing resolutions throughout 2011-12—no actual budgets, but no shutdowns either.”

Keep in mind Gingrich is the one calling for a new shutdown in 2011, while Davis and DeLay say it was a noble idea they just failed to properly market to he public. So, no, I don’t think the former leadership learned its lesson at all, if I understood you properly. In fact, they may egg the new freshman class on to have a go a Obama.

31

Adam Kotsko 07.16.10 at 6:45 pm

Maybe in an “only Nixon can go to China” moment, Obama will seize the opportunity to finally get rid of Congress altogether.

32

ScentOfViolets 07.16.10 at 6:50 pm

“Sure this wasn’t a tax cut that is going to expire soon?”

Well, undergraduate macro in 1981 didn’t draw that distinction. In Lipseysteinerland, you just take the taxes away from C or I, and therefore Y goes down. I defer to those who know more than I do for a more sophisticated (maybe even a more correct!) analysis.

Given that your undergraduate macro apparently didn’t even bother to distinguish between the types of taxes, I wouldn’t trust it. This is what I call the Libertarian’s disease, where having a course in econ101 automatically makes one an authority, despite the fact that econ102 and up will contradict any facile analysis based upon the one earlier class (raising the minimum wage will not necessarily increase unemployment?!? But but but that’s not what I learned in econ101. You must be one of those math-challenged Liberals who envy us our talent, practicality and savvy.)

Oh, and I am well aware of your extensive posting history over on McArdle’s blog. You are by no means an unknown quantity.

33

Substance McGravitas 07.16.10 at 7:10 pm

Maybe in an “only Nixon can go to China” moment, Obama will seize the opportunity to finally get rid of Congress altogether.

I’m sure his friends in the Senate would have a more sober and serious plan for the country.

34

Jacob T. Levy 07.16.10 at 7:11 pm

@Salazar :

The fact that the ’94 leadership is saying that now doesn’t mean that they missed the lesson at the time. When Gingrich was worrying about keeping his majority in office and keeping his own power, he never picked another budget fight. Now that he a) doesn’t have any actual responsibilities and b) only gets in the news when he says something provocative, his incentives lie entirely in the direction of bomb-throwing.

Republicans who *do* have to keep facing re-election have an incentive to do as Gingrich did post-95, not as he says.

35

J— 07.16.10 at 7:19 pm

Maybe in an “only Nixon can go to China” moment, Obama will seize the opportunity to finally get rid of Congress altogether.

This move is sometimes referred to as a Fujimori.

36

Salazar 07.16.10 at 7:21 pm

“Now that he a) doesn’t have any actual responsibilities and b) only gets in the news when he says something provocative, his incentives lie entirely in the direction of bomb-throwing.”

Well, that and a possible presidential bid, of course.

http://politics.usnews.com/news/blogs/washington-whispers/2010/07/14/conservatives-warm-to-gingrich-for-president-in-2012.html

37

Marc 07.16.10 at 7:34 pm

People here seem to be completely missing the big lesson: the Republican voter base is fanatical in punishing any perceived deviation from the most extreme positions. Several conservative incumbents lost their seats in primaries this cycle because they criticized Glenn Beck, Rush Limbaugh, or even made a public attempt to work with Democrats. This follows very similar lessons from previous cycles, and it is consistent with the California disaster. In that state 1/3 + 1 of the seats in the leg are republican, a 2/3 majority is needed, and the last couple of cycles the state has been paralyzed until a single republican flips their vote.

At which point their career ends and they are recalled prior to the next election.

This is not politics as usual; and it will not be the same old same old. It wouldn’t surprise me if they refused to raise the debt limit, for another example. The true believers expect no less.

38

Martin Bento 07.16.10 at 8:26 pm

Obama’s own rhetoric will make a Republican blockage harder to oppose. The excuse will be the need to address the long-term deficit *right now*, which Obama has endorsed. The technique may be refusing to raise the debt limit, as Marc suggests, rather than failing to pass a budget (I think, as before, delivering an unacceptable budget is out. If it passes the moderate Dems in the Senate, Obama will sign it, no matter how horrific). Its pretext will probably be implementation of the Deficit Commission recommendations sans any tax increases. Obama implicitly endorsed that commission by creating it and has praised tax cuts. Obama could counter by going for military cuts, but his own foreign policy seems to rule this out. The objective will be to gut SS and Medicare, and the press will treat this as heroic thinking of the long-term, with an Internet undercurrent of deserved punishment of the boomers, as opposed to the Democrat’s short-term populist dishonesty in trying to save these programs. So will many academic economists. The sunset of the Bush tax cuts is a valid point: Republicans will first cut any deal to get those extended, and then renege on that deal to shut down the government. Meanwhile, arguments against the bad effects of reduced spending are undermined by the Administration’s agreement that government spending can’t produce jobs, and that the government needs to tighten its belt too. Republicans will beat the heck out of Obama with the latter clip, deservedly so, frankly.

39

Walt 07.16.10 at 8:49 pm

SoV: While I frequently disagree with y81, I think he expressed his view here with the appropriate amount of diffidence. Rather than pass himself off as the True Voice of Economics, he admitted up-front that it was something that he learned in class and wasn’t sure if he remembered it right. If everyone who had only taken Econ 101 took the same tack, the Internet would be a better place.

40

Josh R. 07.16.10 at 8:55 pm

Obama is president and he is losing the PR war. He’s made next to no effort to sell what the Dems have accomplished. The one thing we expected of Obama was that he had the charisma and communication skill to do good PR, and he’s been a miserable failure in that respect.

Why should we assume that he could win it in the first place? On the one hand, the research on presidential influence on public opinion through public appeals reveals that president are not particularly effective in moving public opinion very far or for very long. Add in the fact that economic performance is strongly related to how the mass public judges the incumbent President, and his party, and it is unclear how much rhetorical leverage the current president has, no matter his oratorical abilities. (Cf. Nyhan: http://www.brendan-nyhan.com/blog/2010/07/the-bogus-presidential-salesman-narrative.html).

On the other hand are the changes in the composition and habits of the media-consuming public–the propensity for low-interest individuals to opt out of watching much of the news means that those who do watch tend to be more partisan to begin with (cf. Prior, “Post-Broadcast Democracy”), in which case presidential appeals shouldn’t be expected to move opinion much since the people most swayable aren’t paying attention (the co-partisans will stay with the President, while counter-partisans will reject the information as discordant). Add to that the ability to epistemically close oneself off, and well, it isn’t clear why we should expect presidential rhetoric to have a substantial impact on mass opinion independent of, say, economic performance.

41

Bloix 07.16.10 at 9:18 pm

Just to remind people how the 1994-95 shut-down occurred: the Treasury to borrow the money necessary to pay the government’s debts (which it does by issuing T-bills). The administrative branch does not have the right to borrow without limit; Congress must authorize revenue raising measures. Instead of approving T-bill sales individually, Congress approves borrowing up to a ceiling. As the debt increases, debt ceiling is routinely raised. But if Congress refuses to raise the debt ceiling, the Government cannot borrow and it stops being able to pay salaries, rent, heat and light, and phone bills; to buy gasoline for its vehicles; etc. Ergo the Government shuts down.

Thus, shutting down the Government is accomplished by refusing to allow the Government to take on more debt. This is a made-for TV crisis with the Republicans holding the high ground: no lifting of the debt ceiling if the Administration won’t agree to cuts. And gutting Social Security would by No. 1 on the list.

42

ScentOfViolets 07.16.10 at 9:33 pm

SoV: While I frequently disagree with y81, I think he expressed his view here with the appropriate amount of diffidence. Rather than pass himself off as the True Voice of Economics, he admitted up-front that it was something that he learned in class and wasn’t sure if he remembered it right. If everyone who had only taken Econ 101 took the same tack, the Internet would be a better place.

Good on you Walt. Yes, everything you say is 100% true and I’d be a fool to say otherwise. I’m just being preemptive, given the displayed past behaviour on another blog. That is, I just want to be sure that the “I’m just an honest skeptic” schtick in the service of right-wing talking points is never even considered, let alone brought into play here. If y81 wants to turn over a new leaf and have his days at McArdle’s place be forgotten, that’s fine by me.

43

Gene O'Grady 07.16.10 at 10:04 pm

Martin Bento,

I wouldn’t be so sure that Obama’s foreign policy rules out military cuts. Gates has already taken the first steps toward eliminating some useless AF procurement programs that Congress loves and might actually accomplish something if he gets his momentum going.

Plus there are two new big aircraft carriers projected, which could be cancelled at a big cost savings, two existing carriers and their support forces could be mothballed, and some of the nuclear deterrent submarines could either be not built or scrapped, again fairly big savings, and there would be very little impact on any real world military interventions.

44

Red 07.16.10 at 11:16 pm

Marc @37 is correct. It will be Obama standing between us and the crazies; and we’d better keep him there for a while.

45

Pooltrader 07.17.10 at 2:04 am

They will fight him every inch of the way, however the current economic front is trending towards 20%-Infinity unemployment, they will be forced to do something, say something along the lines of what Harold Ford Jr presented the other day, capital gains tax rate reduction, some spending, and a lot of praying!

46

Lee A. Arnold 07.17.10 at 2:46 am

” The excuse will be the need to address the long-term deficit right now, which Obama has endorsed.”

The thing is, there is no long-term deficit worth worrying about. Obama should change his rhetoric. The CBO just said that if we stick to “PayGo”, then it is manageable. See the CBO’s Long-Term Budget Outlook, July 2010.

This is a circumstance where we should insist upon PayGo, from here on out. Let’s make it very simple, simple as possible. “PayGo” means EVERYTHING gets paid for.

So, if you want to get long-term tax cuts, then you must have MATCHING long-term spending cuts, proposed in the SAME Congressional bill. Then the rest of us can discuss it, before you pass it.

If you don’t propose spending cuts for us to consider, then you don’t get tax cuts.

This way, the U.S. public can see that everything gets paid for, and that “spending” balances “taxes”. Because tax cuts do NOT “pay for themselves”.

Similarly: NO new long-term spending, unless it is paid for by tax increases! Show us how you are going to do it, up front!

Notice we consider “long-term” spending cuts and tax cuts. “Short-term” is different. It comes to an end. Short-term spending and short-term tax-cuts ALWAYS come to an END.

Short-term is “fiscal policy” — which is about managing a business cycle, which usually lasts around 5 to 10 to 15 years.

In the short-term, BOTH tax cuts and spending increases can help fight a business recession. You don’t pay for them right away — you make a short-term “federal deficit”. When the business cycle swings up again, the good economy gives tax-receipt SURPLUSES, so you can pay off that deficit.

President Obama’s stimulus plan, for example, was 1/3 tax cuts and 2/3 spending increases — although it wasn’t enough. We need more — but it’s only for the short-term, until business picks up. Then, both tax cuts and spending increases must END. Similarly, President Bush’s Tax Cuts are short-term tax cuts (to 2010) and their stimulus value is already gone — while their deficits continue — and they END later this year.

So: short-term tax cuts have an END. On the other hand, long-term tax cuts must be MATCHED by long-term spending cuts in the same Congressional bill, so we can see that it balances. This is because tax cuts do NOT pay for themselves in the long-term.

Why not? Because long-term tax cuts do not do much for long-term growth, according to economic research and also economic theory. Long-term GDP growth depends on continuing new ideas and innovations, and that depends on education. (In fact, government spending on education and infrastructure and safety-nets can be worth more — as long as the budget stays balanced.)

That is why long-term tax cuts without long-term spending cuts turn into long-term deficits. And long-term deficits are bad for U.S. government credit.

Yes, the current short-term deficit is a monster. So it looks like it is going to be long-term, but it isn’t.

In ten years we have gone from Clinton’s Administration looking towards budget surpluses, to having monster short-term deficits. It eventually will go away, but in ANOTHER ten years from now, it will still be here. And it will be composed of the following contributions, in order of rough size: Year 2020 deficit = 1/2 (one-half) Bush Tax Cuts + 1/4 Great Recession’s slowdown + 1/8 (Iraq + Afghanistan) Wars + 1/15 Obama Stimulus + 1/32 Miscellaneous + 1/64 Financial Bailout.

Conclusion? It is time to “get real” about who has caused what, and what to do about it.

The Democrats just put universal medical coverage into law and the CBO says they have brought the long-term deficit into a rough balance. It is shaky, but it’s a start.

By contrast the Republicans have increased deficits insanely, both short-term and long-term-without-spending-cuts. Reagan and Bush are the two recent Presidents who blew up the long-term deficits bigger than anyone else.

Who should lead?

47

David 07.17.10 at 5:13 am

Dems wont lose either house.

48

James Kroeger 07.17.10 at 5:23 am

Y81:

That means a tax increase which (i) isn’t a good idea in a recession, at least if what I learned in college is true…

Lee Arnold 9:

As opposed to long-term tax cuts, short-term tax cuts for a stimulus ought to be offset in the same business cycle, or else we start to carry deficits.

Well, Y81, it turns out that the simplistic account that you learned in college re: tax cuts is wrong.

Something Lee did not acknowledge in his comment is that tax cuts provide no stimulus whatsoever to the economy if/when they are paid for with matching govt. spending cuts. What your economics professors did not tell you, Y81, is that tax cuts by themselves (i.e., when they are not combined with another fiscal initiative that is truly stimulative) cause the economy to contract, not expand.

This is true because a tax cut automatically deprives the government of the money it needs to continue spending. Unless something else is done, the government will be forced to cut its spending by the amount of the tax cut. That ‘something else’ that enables governments to continue spending when they have cut taxes is borrowing.

Government borrowing is a purely stimulative fiscal initiative because it takes money that was removed from the economy by savers and injects it into the economy when it is spent. The only time it becomes possible to suggest that tax cuts have a stimulative effect on the economy is when they have been combined with the truly stimulative effects of borrowing (to maintain government spending at pre-tax-cut levels). Without the borrowing, tax cuts are nearly always contractionary.

The empirical evidence of this has been available for a while; it just hasn’t been recognized by progressive economists. Just check out this graph that Paul Krugman put on his blog a while ago…

http://krugman.blogs.nytimes.com/2008/01/15/stimulus-never-mind

The graph shows that when the Republicans cuts taxes under George Bush, the economy suffered from a ‘jobless recovery’, the weakest one on record (and that was with historically low interest rates). Yet, when Clinton raised taxes on the wealthy, the economy experienced a long period of sustained economic growth.

The only time a tax cut is not contractionary is when it is given to the poor, who can be counted on to spend all of their tax refunds. When this happens, the increase in consumer spending that occurs exactly matches the decrease in government spending. Net result? No increase in aggregate spending; no net stimulus to the economy. Keep in mind that that is the best that can be hoped for when taxes are cut.

If any part of a tax cut is given to rich people, the tax cut becomes truly contractionary, because it takes money that would have been spent by the government and puts it into the hands of people who will remove some small—or large—amount of it from the economy (i.e., they will save it). When that happens, the total increase in consumers spending will be less than the decrease in government spending, and that = economic contraction.

Contrary to Republican economic mythology, tax INCREASES actually provide the economy with an economic stimulus if/when any part of the money collected by the government would otherwise have been saved by taxpayers. That is precisely what happens when you increase the tax rates of rich people. Money that would have been removed from the economy by rich people gets spent by the government, instead. Krugman’s graph reveals this clearly.

I mention this because increasing the taxes of rich people is the one thing that the Democrats could do that would invigorate the economy, reduce the debt burden of the government, and guarantee them victory at the polls. Unfortunately, that is not going to happen unless progressive economists like John Quiggin make an earnest effort during the next few months to enlighten the non-Republican Members of Congress re: these facts. Instead of bemoaning the possibility/likelihood that the Republicans might seize control of Congress in November, he and his cohort could actually do something to prevent it from happening.

49

Glen Tomkins 07.17.10 at 6:10 am

The same as the crisis of 1642

This country has already had one civil war because the Founders didn’t, couldn’t, really, specify clearly whether sovereignty resided in the new Union, or remained with the states. They had to incorporate into the written Constitution several doors to disunion for the states to use (the 2d and 10th amendments; Art IV, sec 4; the absence of any prohibition of secession), or the states would not have surrendered their sovereignty and walked through the door into the Union.

The scenario presented here in this post would lead to a second civil war (which is why Americans will never, until after the events are upon us, credit the possibility of such an occurence as anything but a 1994-style farce, as anything that could possibly be made to work by the Republicans), but this time we wouldn’t be able to blame the Founders for any sort of contradiction within the Constitution. That document makes it quite clear that the Congress is the absolute master within the Union, however unclear the document is on the the supremacy of the Union over the states. Despite that, there has grown over the centuries, at a much accelerated pace the past two generations, an unwritten constitution that makes the president the sovereign. The two are quite irreconcilable, and there would be no way but a resort to force to resolve a dispute between the two constitutions, should their contradictions ever be forced, as they would be by a serious attempt by Congress to foist its budget on the president.

We do indeed have a “power of the purse” vested in Congress, and the House in particular, in that money can only flow into the Treasury as revenue by way of a bill originating in the House (Art I, sec 8), it can only flow out of the Treasury by way of an appropriation made by the legislature, and, most importantly, there are no limitations placed on the absolute discretion of Congress as to what money will be spent on, beyond the requirement to keep paying the president, vice-president and the justices of the Supreme Court at least the same salary they started their terms with. There are no other requirements, no other offices or functions specified by the Constitution, that Congress is required to fund.

So, yes, absolutely, the House could write up its own annual appropriations, ignoring the budget prepared by the president, in a practice not at all required by the Constitution, but which they have meekly accepted for generations. Those appropriations would be perfectly free to fail to fund anything the House didn’t want the government to do, and those functions could not then be accomplished.

Sure, the Senate would be free to withold its concurrence from the House’s appropriations, and the president, exercising the only actual power (aside from appts) given him by the Constitution, his power to participate in the legislative process by way of the veto, could veto this raft of appropriations. But their power is strictly negative. The Senate and president could only destroy the House’s budget, keep it from becoming law, but they could not substitute their own and make it law.

An impasse would arise if these three institutions with a piece of the legislative power fail to achive consensus. Now, because the president is sovereign by our unwritten constitution, Americans who look at such an impasse tend to assume that the president, assuming that he was standing behind the status quo, would always win such a game of legislative chicken. We assume that public opinion would predominantly feel that Congress, far from being the master, has some sort of (admittedly woozy) duty to fund the federal govt, headed by the president, as it exists now, that fundamentally altering the scope and purpose of that vast structure, can only only legitimately be done by the usual legislative process, after gaining the assent of all three legislative players.

I’m not claiming that this conventional wisdom on this matter is foolish and wrong. The unwritten constitution is quite strong in most American’s minds. The problem with arguing from public opinion and and this unwritten consitution, is that the formal power structure is quite at odds with it. A House that actually meant to use the struggle over a budget impasse to take control of the federal govt, would not be deterred by fear of a public opinion long accustomed to presidential rule, because it would calculate that it would not have to face the voters again until after two years of House rule of this country had cured the public of this false acquiescence in the pretensions of the imperial presidency.

I would argue that the experience of 1994 is completely irrelevant to this question of how an actual attempt by the House to take over the govt would fare, because in 1994, the Republicans were engaged basically in a publicity stunt of very limited aims. It was foolish of them to enter into such a game of chicken unless they were playing for keeps, which they were not, and therefore they were easily brushed aside. A House leadership, if backed by even a bare majority of the majority needed to stay in leadership, that seriously meant to take over the govt from the president, would simply discard the executive branch budget, and only allow consideration of an appropriations raft that funded waht the majority of the majority wanted the govt to do. It would, for example, have the military funded, it would fund the FBI (mostly, minus white collar crime squads and civil rights enforcement, etc.), it would fund air traffic control and border patrol — it would fund everything the Right thinks govt should be doing, but it would not fund anything the Right doesn’t like, no matter what existing law says the govt should be doing. There would be wailing and gnashing of teeth, but there’s no way the Senate or president is going to let the troops go unsupported for two weeks, much less two years, and they would surely cave almost immediately rather than let ammunition shipments to Afghanistan be interrupted for even an hour. Once caved, and it would be all over, since a serious attempt at this game of budgetary chicken would have the appropriations raft redefine and re-fund the govt completely out from under presidential control

If public opinion about the role of the presidency were to be effective at stopping this House power grab, that opinion would have to be mobilized to take action immediately and outside the law, not two years later in the next election, which would be, formally and within the law, the soonest intervention possible for the countervailing belief that the president and Senate should get their say, that the House overreached by taking over the govt all by itself by winning at legislative chicken. Give a House that had actually taken charge two years to work its will unopposed, and one way or the other, the opposition would not find itself able to win that next election.

It’s not that I have any strong feeling that such a serious attempt by a Republican House to assert House rule is at all a high probability. I wouldn’t know how to assess the odds of what is inherently a ploy that reverses conventional and usual behavior. But I do think that a political party that keeps questioning the incumbent president’s legitimacy in office, that speaks of even modest policy inititives by the opposing party as if they were monstrous governmental oppression — even if all of this is intended as mere rhetoric to inflame the base — could easily find itself forced to put its money where it’s mouth is, to finally act as if it believed the rhetoric of revolution it spouts. This dynamic s especially likely if they score a big and notable victory in the next election, by taking the House, after kowtowing to this revolutionary talk. Even it it’s really the economy that gives them all of those seats, they are setting up the revolutionaries to take the credit, to feel entitled to demand bold action to match all the bold talk of “gathering your armies”.

50

John Quiggin 07.17.10 at 6:24 am

Glen, that’s pretty much my view, and you make the case more convincingly than I did.

51

addicted 07.17.10 at 6:33 am

@Lee A. Arnold

You are way too optimistic.

The idiot American electorate has already forgotten that it was Bush, and not Obama that passed TARP. They also believe that Tax cuts for the top 1% actually help everyone.

Idiots getting what they deserve, to be honest. Unfortunately, the 30-40% of Americans who aren’t idiots, also have to suffer along.

52

Henri Vieuxtemps 07.17.10 at 7:38 am

Those appropriations would be perfectly free to fail to fund anything the House didn’t want the government to do, and those functions could not then be accomplished.

I don’t think it’s quite that simple, though. In 1996, for example, the Clinton administration sold a part of the strategic petroleum reserve to fund and accomplish some of the functions.

For that matter, an imperial president could, I suppose, easily demand and receive tribute from weaker states: “Dear Luxembourg, please transfer $100 billion to this account by the end of the week, or face the consequences of harboring, 10 years ago, such and such, wanted terrorist. Sincerely…”

53

mike 07.17.10 at 9:03 am

John and, especially Glen Tomkins, you’re REALLY freaking me out!

54

Peter Evans 07.17.10 at 10:50 am

That’s a good comment Glen Tomkins (48), but a Republican controlled House will be willing to deal on one specific agenda. The Republicans have morphed into this strange beast which exists only to remove Government regulation of the behavior of large corporations (the Tea Party idiocy being a case in point), so that will be the position on which they will trade. Budget approval for deregulation. And Budget spending to be specifically tagged to go through certain corporations and bypassing Departmental oversight. It’s an end game for the Republicans because the only place they have to go in the future is to advocate explicit disfranchisement of large swathes of the population based on wealth (obviously they do that already, implicitly). I can’t see this not getting a lot uglier.

55

lambert strether 07.17.10 at 1:46 pm

Addicted at #50 is 180 degrees wrong.

TARP was passed over significant R opposition, and Obama personally whipped for it.

Now, that just means that the continuities between the R and D administrations are far greater than the differences, as can be seen not only in the dominance of rentiers and banksters, but also in war policy and executive power, but I think that’s off topic for this thread.

56

Adam Kotsko 07.17.10 at 2:51 pm

Or the Fed could buy T-bills and then write them off.

57

Glen Tomkins 07.17.10 at 3:33 pm

Henri,

As far as it not being straightforward for a House rampant to do whatever it wants, to take over the US govt just via appropriations, I agree that there would be all sorts of legal challenges over some very basic principles, such as the president’s rights, imagined by our unwritten constitution, or actually, arguably, in the real document, to find other sources of revenue independent of Congress, and to not have his appointees in the bureaucracy cut out from under him by the de-funding of their departments or functions. I find this whole tangle of issues similar to what got the English into their Civil War, thus the title of my little contribution. These principles are so fundamental, that I don’t think their resolution by the courts would be acceptable to the side that loses in that forum., the more so now that the SC is rather nakedly partisan. A decision by the Republicans to filibuster Kagan would, in my mind, besides being constitutional hardball in itself, indicate a clear Republican intent to engage in more such hardball in the immediate future.

As to the US going into the international protection racket, I think that will be an ongoing temptation until and unless we stop spending unsustainably huge amounts of money on a military establishment that will have nothing useful and remunerative to do until the day we start using it to enforce a protection racket. Again, I offer no odds on this eventuality, just point out that water still runs downhill, and will therefore probably get to the bottom eventually, no matter how high a moral standard we imagine for the US, that it would never do such a thing, etc. Prudent people would remove the temptation, no matter how moral we might imagine the temptee to be. And yes, the rationale for this protection racket would be the GWOT, that nations getting a free ride for the US’s enormous expenditures to “protect” them from global terrorism, should be forced to pay up and quit free-loading.

58

lemuel pitkin 07.17.10 at 3:35 pm

The problem with Tomkins’ analysis is that, except for the irrelevant formalism that budget bills must originate in the House, his comment could be rewritten switching “House” and “Senate” in every case, and it would remain just as true. It may be the case that

The Senate and president could only destroy the House’s budget, keep it from becoming law, but they could not substitute their own and make it law,

but it is exactly as much the case that if the Senate and President concurred on a budget, the House could block it, but could not substitute its own.

You may, if you like, believe that in this symmetric standoff the political character of the House leadership will make it less likely to back down. But the idea of some kind of structural “House supremacy” is sillly.

59

Bloix 07.17.10 at 4:18 pm

Glen Tompkins @48 and John@49 are overlooking the actual mechanism of a government shut-down. It’s not about the budget. It’s about the debt ceiling. It will be much, much easier for Republicans to vote against raising the debt ceiling – and much, much harder for them to vote for it – than it would be for them to vote against “funding the troops,” or for any specific budget. And you don’t need to have any plan of your own to vote against raising the debt ceiling – it’s entirely a destructive move, intended to cause maximum havoc while shifting the blame for media purposes onto the administration. The Republicans in the House have no interest in changing the balance of power between the presidency and the Congress as an institutional matter. What they want is gridlock until the Republicans can take back the powers of the imperial presidency.

60

lemuel pitkin 07.17.10 at 4:46 pm

they are setting up the revolutionaries to take the credit, to feel entitled to demand bold action to match all the bold talk of “gathering your armies”.

That dude lost his primary.

In general, I think we need to be careful not to be suckered by the media spectacle of the tea parties. All the evidence points to the number of people involved being extremely small, and their practical influence quite limited.

61

Cranky Observer 07.17.10 at 5:05 pm

> A House leadership, if backed by even a bare majority of the majority
> needed to stay in leadership, that seriously meant to take over the govt
> from the president, would simply discard the executive branch budget,
> and only allow consideration of an appropriations raft that funded waht
> the majority of the majority wanted the govt to do. It would, for example,
> have the military funded, it would fund the FBI (mostly, minus white collar
> crime squads and civil rights enforcement, etc.), it would fund air traffic
> control and border patrol—it would fund everything the Right thinks govt
> should be doing, but it would not fund anything the Right doesn’t like, no
> matter what existing law says the govt should be doing.

One consideration here is that over the course of a budget year the Executive Branch probably has several thousand full-time-equivalent people working on the budget, and several hundred preparing the final document (which would not be a simple thing even under a radical right mandate). If the Republicans are going to attempt such a maneuver they would to have at a minimum several hundred people working – right at this moment – on preparing such a document. Is there any evidence that any such action is occurring? I suppose one could get the Scaife and Walton families to fund it, but it would be hard to hide the disappearance of that number of numbers wonks from the right-wing think tanks and the sudden massive increase in the number of research and document requests being submitted to federal agencies, the Library of Congress, etc.

Cranky

62

Lee A. Arnold 07.17.10 at 5:22 pm

Glen Tomkins, you write in #48, “Those appropriations would be perfectly free to fail to fund anything the House didn’t want the government to do, and those functions could not then be accomplished.”

Exactly; and that is the Republicans’ biggest problem. They have to come up with a list of spending items to cut. The voters aren’t going to like most of that list, and they aren’t going to vote for them again.

That is why insisting upon “PayGo” (i.e., coupling tax cuts to the necessary spending cuts in the SAME bill) is politically savvy for the Democrats.

Notice that the Republicans, in recent times, have always decoupled them. Then later, they never bring the necessary spending cuts to the floor, in fear of crucifixion (in fact they always increase spending — see for example, Medicare Part D: huge, unfunded, and the cost hidden until after passage.)

Addicted #50′s pessimism is correct in a way, although most people aren’t idiots, they just don’t have the time to pay attention. And that leads back to my conclusion: if you demand that tax cuts be linked in the same bill to the spending cuts that would become necessary, then even someone who is usually too harried to notice, will SEE it for a moment.

Clearly the Republicans are already following the course of this same logic. Their only antidote is the argument that you don’t NEED to offset tax cuts; that tax cuts “pay for themselves.”

And so that is exactly why we heard leading Republicans in the last week try to reassert that argument again. It is wrong, and it needs to be firmly disproved, over and over again, until even the mainstream media reporters understand it.

The Democrats are in even better shape than they think. Not for the November elections, although it doesn’t look to me as bad as advertised, but in the larger scheme of things. (Obama himself would probably do well having an opposition Congress to rail against — because then the Republicans will actually be compelled to come up with ideas, and he can excoriate or triangulate as he pleases — it would almost ensure his re-election.)

The reason the Democrats are in good shape is because they have achieved their last remaining big item, as Ted Kennedy called it: the institutionalization of the promise of universal health coverage. It’s not perfect by a long shot and so there is a lot more to do. But most people want it (including, really, most Republicans), and it sets in motion a social thought-process that will be epochal, and will spin off additional virtues. The Democrats can spend the next 20 years just nursing it along.

63

b9n10nt 07.17.10 at 6:26 pm

Lee @ 58

But might it not be that the further entrenchment of welfare state liberalism provides for the middle class in such a way that they can “purchase” austerity theatre? “Govt-shouldn’t-take-our-money” properarianism is perhaps understood as a luxury product resulting from all manner of collectivist interventions that civilize a market-based economy.

Democrats thus have the paradoxical stench of want and insecurity about them: you need their program like a college kid needs their parents’ credit card. A frustrating reminder of dependency.

So it is welfare state liberalism that has secured a political economy equilibrium that actually undercuts its purveyors legitimacy. Right wing vrass roots (oops, the “tea party”) represent the specter that too much of the rabble will actually become propertarian true-believers and shift the country to a new equilibrium.

This would be a hard landing for the empire when we can still hope for a soft landing and a rather constrained prosperity.

64

Lee A. Arnold 07.17.10 at 7:31 pm

b9n10nt @ 59, I think Paygo can start to rid the stench, and in a few generations it can be eliminated. It’s an enormous discussion — and the effort will require constant engagement and tactical change. Lefties are lazy and always want perfection in the beginning, so the real danger is as always and as right now: that the defenders of the safety-net will discombobulate into feckless whining about reified abstractions, or else complain that Obamacare, for example, didn’t give them what they want (not noticing that Obamacare sets up the means to their ends!) Etc.

My own reasoning would go down these avenues:

(1) The welfare state “entrenchment” has a finite purview: it has achieved its intellectual objectives: it isn’t getting any larger in the number of basic applications.

(2) Paygo throws it in everyone’s face and it really can be epochal if we want it to be. Because (as the Republicans know and fear!) under Paygo the “rabble” finally will stick with defending a short list of gov’t spending that includes, in the U.S.: education, Social Security, Medicare, universal coverage, etc. (see number 1), to be funded by progressive taxation. As the teabagger said, “Keep your government hands off my Medicare!”

(3) Over the long term? Institutional design will get better, more focused, and less costly over time, as well as change according to the advantages of innovations as they come. (In fact, far beyond what is required along these lines, I think medicine is going to cure just about everything, and become as cheap as a laptop computer and then as cheap as chewing gum.)

(4) Consequently, “welfare-state luxury propertarianism” is a long moment in thought, but not a psychological end-state.

65

Lee A. Arnold 07.17.10 at 7:31 pm

b9n10nt @ 59, I think Paygo can start to rid the stench, and in a few generations it can be eliminated. It’s an enormous discussion — and the effort will require constant engagement and tactical change. Lefties are lazy and always want perfection in the beginning, so the real danger is as always and as right now: that the defenders of the safety-net will discombobulate into feckless whining about reified abstractions, or else complain that Obamacare, for example, didn’t give them what they want (not noticing that Obamacare sets up the means to their ends!) Etc.

My own reasoning would go down these avenues:

(1) The welfare state “entrenchment” has a finite purview: it has achieved its intellectual objectives: it isn’t getting any larger in the number of basic applications.

(2) Paygo throws it in everyone’s face and it really can be epochal if we want it to be. Because (as the Republicans know and fear!) under Paygo the “rabble” finally will stick with defending a short list of gov’t spending that includes, in the U.S.: education, Social Security, Medicare, universal coverage, etc. (see number 1), to be funded by progressive taxation. As the teabagger said, “Keep your government hands off my Medicare!”

(3) Over the long term? Institutional design will get better, more focused, and less costly over time, as well as change according to the advantages of innovations as they come. (In fact, far beyond what is required along these lines, I think medicine is going to cure just about everything, and become as cheap as a laptop computer and then as cheap as chewing gum.)

(4) Consequently, “welfare-state luxury propertarianism” is a long moment in thought, but not a psychological end-state.

66

Lee A. Arnold 07.17.10 at 7:34 pm

Okay, I think I only hit it once!

67

JMG 07.17.10 at 9:23 pm

The two mega-actions taken by the GOP Congress in the Clinton years were the shutdown and impeachment. Each had terrible blowback. The Republican party’s ratings during impeachment were horrible, and Bush specifically ran as “different from them” using the code word “compassionate conservative.”
The possibility that the House would provoke a genuine constitutional crisis seems remote to me. The President, of whichever party, would be bound to win it, since after all, he has all the tanks and planes and stuff, and just as important ALWAYS rates higher in public esteem than the Congress.

68

Bloix 07.17.10 at 10:52 pm

All you need are a handful of safe-seat lunatic right-wingers – Michelle Bachmann, Mike Pence, Dan Burton – to say that they refuse to vote to increase the debt ceiling unless the administration agrees to “reform” Social Security. What will the rest of the Republicans do? Set themselves up to be primaried into oblivion? It doesn’t matter to them whether what they do will hurt them in the general if they’re afraid of the primary.

69

Lee A. Arnold 07.18.10 at 12:20 am

That’s an interesting idea. To remain optimistic, I suppose they could try it, but Social Security isn’t in much trouble, and the only “reforms” it needs in the long-term are some minor tweaks that don’t make much of a current issue, and the only “reform” it needs in the short-term is to sunset the Bush Tax Cuts — which is where the “Trust Fund” disappeared to, because Clinton had set-up those coming surpluses and then Bush/Cheney/Greenspan drained them. So I really don’t know how far Bachmann et al. could get with explaining this ploy, beyond the continued sympathies of the 27% that is hardcore wingnut. At some point the Republican leadership might consider jumping ship to become Democrats.

70

Lee A. Arnold 07.18.10 at 12:41 am

Another demand they could make is to shrink the long-term budget, which is scheduled to grow to a larger portion of the GDP in several decades from now. But the first problem for them here, is that the CBO just said that the Democrats have brought the long-term budget into rough balance: it grows, but there are no deficits worth mentioning. So then the question is, “Who do you trust? At least the Democrats moved in the correct direction!” The next problem is that Bachmann et al. will be doing it in return for INCREASING the short-term deficit. And many people, particularly their supporters, confuse short-term and long-term: a deficit is a deficit. (I just ran into that last night from an Ivy League lawyer.) Bachmann et al. will be undermining their own simpletonian credibility, as it were. So I’m not sure this will work for them either.

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Robert the Red 07.18.10 at 12:53 am

The basic symptoms are that the Republicans are demented and power mad, and the Democrats are cowards. If the Tea Party is seen as propelling the Rs into power, then the dementia will increase, and a crisis is likely — though not necessarily of the forms predicted. Ugh.

72

Alex 07.18.10 at 2:02 pm

I think bad Jim has a key point here – shutdown implies accepting the reversal of tax cuts for the rich. The raison d’etre of the shutters-down is, in fact, tax cuts for the rich.

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Uncle Kvetch 07.18.10 at 2:33 pm

Social Security isn’t in much trouble, and the only “reforms” it needs in the long-term are some minor tweaks

Factual, and therefore irrelevant.

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Martin Bento 07.18.10 at 10:30 pm

Alex, I think I responded to Jim’s point. There is nothing to stop the Repubs from first securing the extension of Bush tax cuts and *then* shutting down the government. Given how much Obama loves to make unilateral concessions in return for nothing, not even a rhetorical something (no single payer, OK to offshore drilling, stimulus needs tax cuts), that should be quite doable for them. If they do need to promise something in return, they could always say that’s just a promise, like using the SS fund for SS was just a promise.

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The Fool 07.19.10 at 2:23 am

Seems highly unlikly to me.

First of all, I don’t think the Republicans, generally speaking, hate Obama as much as they hated Clinton. The Republicans are just generally more extreme now even than in the 90′s, but that is not due to Obama specifically. Of course they have to hate Obama and the more racist ones probably feel it more viscerally, but I think Clinton got much more under their skin than Obama. Clinton drove even the comparatively more sane Republicans wild. I don’t get the feeling that Mitt Romney and Sarah Palin have it out for Obama specifically. Its not personal for them like it was with the 90′s era Repubs and Clinton.

No, a government shutdown, a la Gingrich, is not in the cards. But there would effectively be a government shutdown as very little got passed other than caretaker budgets. They have no desire to shoot themselves in the foot exactly the same way twice.

But rest easy: the current crop of Republicans is crazier than a bunch of loons on a full moon. They will find other ways to embarrass themselves thoroughly.

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The Fool 07.19.10 at 2:35 am

Hey McGrabass:

You know when you’re not calling people troll, you really don’t have much to say, do you?

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Bruce Wilder 07.19.10 at 5:24 am

A full shutdown?

The Republicans don’t know or care enough about governing, to figure out how. Their philosophy of government is: don’t. And, that satisfies their main constituencies. They are, increasingly, spokesmodel politicians, ambitious for celebrity and pretty, but not much unconcerned about the rest.

Would the Republicans go after the subsidies that balance the mandates of Obamacare? Or, try to throw a monkey wrench into the slow roll-out of new structures, under that rubric? There might be some skillful lobbyists willing to pull the strings for that marionette show.

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Jon 07.19.10 at 5:50 am

JMG @63

Yes. Megablow back. It was so bad that Bush was in for two terms and we had 4+ years of unified Republican rule.

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bartkid 07.19.10 at 3:02 pm

>What surprises me is that no-one has drawn the obvious inference as to what will follow, namely a shutdown of the US government.

Dude, the government has been two-thirds shut down already.
How many cloture votes have there been? The most ever.
How many judicial nominees have holds on them? The most ever.
How many other nominees have holds on them? Just look at the outrage over one recess appointment.
Look at the latest dance with extending unemployment payouts.

The only difference between today and December 2010 is the dozens of subpoenas being served to White House staffers.

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