Shutdown

by John Quiggin on February 21, 2011

Back in July last year, I was puzzled that no one seemed to be worried about the shutdown of US government that would inevitably follow a Republican victory in the House. Now with the shutdown due on March 4, I’m even more puzzled. It seems virtually certain that the shutdown will take place, and even more likely than before that it will be protracted. It’s true that there is a lot happening in the US, and the world, to distract our attention. But precisely for that reason, a shutdown of the government in Washington will be a much bigger deal than it was in 1995. Yet no one seems particularly worried, or even interested.

Compared to the situation in July, the big difference is the arrival of the Tea Party Republicans. One possible analysis is that, by demanding massively unsustainable cuts, they have shifted the Overton window, making it possible for Obama to give the Repug leadership the $30 billion or so in cuts they originally demanded and sell it as a compromise.

I see a couple of difficulties with this. First, there’s no guarantee that the Tea Party crowd will go along with the deal, rather than mounting an all-out attack on the RINO collaborators. So, the Repug leadership will find it hard to concede on things like Planned Parenthood, which will make it enough to round up enough Dem votes for capitulation.

Second, on the assumption that Obama has some interest in re-election, he’s presumably counting on the Repugs to fold as they did last time. All the background stuff from the White House I’ve seen suggests that this, finally, is where the eleven-dimensional chess master has his opponent trapped. Obama’s uncharacteristic support for the unions in Wisconsin seems like scene-setting for a much bigger fight in Washington.

If I had to predict an outcome, I’d go on track record and predict a capitulation by the Dems. But, in the circumstances, I can’t see this happening until the consequences of the shutdown become a lot more serious than closing the Smithsonian. And, while no one really knows, it’s intuitively obvious that a couple of months on emergency status will produce some pretty serious problems. So, I’m surprised this isn’t a bigger story.

{ 60 comments }

1

Brett Bellmore 02.21.11 at 12:25 pm

By “massively unsustainable cuts”, we mean, I presume, a reduction in spending to what it was during the Clinton administration? Or perhaps the early Bush administration? Because that’s the sort of thing the Tea Party are demanding… Well, you got me there, who has forgotten the roving bands of mutants in that post-apocalyptic landscape?

In reality, if we have a shutdown on March 4th, it will be over an approximately 3% cut to stimulus spending levels. You know, the spending levels which are supposedly just a temporary stimulative measure, meant to expire? If that’s your idea of a massively unsustainable cut, what’s your idea of massively unsustainable spending levels? Do they perhaps overlap, and we’re just screwed no matter what we do?

2

Salient 02.21.11 at 12:46 pm

By “massively unsustainable cuts”, we mean, I presume, a reduction in spending to what it was during the Clinton administration?

Riiight, because during the Clinton administration we all know that NPR, the National Endowment for the Arts, ACORN and Planned Parenthood received zero dollars from the federal government. But let’s just gloss over those details and talk about reducing “spending” in the abstract, no?

…I’ll start believing the right-wing is serious about reducing spending right about when they start demanding that we reduce defense spending to the level it was at when we last won a war.

3

Tom M 02.21.11 at 1:13 pm

…a reduction in spending to what it was during the Clinton administration? …

Which makes the keening over the request to allow the Bush tax deficits to expire rather ironic, no? By all means, cut spending but where are the Clinton taxes?

As a high level analysis shows, if one sets aside the revenue and spending of Social Security and Medicare, the government spends $2.8 trillion on a revenue base of $1.3 trillion. Saving a few bucks here or there won’t cut it.

4

Brenton 02.21.11 at 1:28 pm

“Repugs”? Really? How exactly does name-calling serve the point of the post?

5

wufnik 02.21.11 at 1:30 pm

…a reduction in spending to what it was during the Clinton administration? Or perhaps the early Bush administration?

Ah, you mean as if that trillion dollar or two war had never occured? Seems like lots of people have short memories these days. No one else seems to remember it either.

6

Morat20 02.21.11 at 1:30 pm

I can only assume that Brett feels that there has been neither population growth nor even the tiniest smidge of inflation over the last, oh, 15 years or so. That would explain his belief that government could offer the exact same services for the exact same dollar amount.

So allow me to correct you: There has been population growth and inflation over the last decade and a half.

However, if you’d like to ‘reduce’ government down to the same % of GDP as it was under the Clinton years, I’d be thrilled to agree with you. I suggest ‘reducing’ taxes back to the Clinton rates too, so it’s paid for.

7

Marc 02.21.11 at 1:32 pm

Obama, like Clinton, is blessed in his enemies. The sheer extremism of the House Republican budget makes for poor optics, in particular its naked partisan nature (tax cuts for me, service cuts for people I don’t like.) This is one bad side consequence of living completely in a bubble: the Republicans honestly don’t comprehend that everyone doesn’t share their particular worldview. Endgame will be the corporate republicans breaking with the diehards, likely on a status quo budget for the next two years. Their masters lose too much money in a real shutdown.

8

Adam Kotsko 02.21.11 at 1:36 pm

I’ve always assumed it would go down like on West Wing, where the president shows that he’s just better than the speaker, and the two personally hash out a compromise budget in the Oval Office.

But now I realize that I don’t have information to go on — we barely got into the first month of the Santos administration, and we certainly didn’t reach the point where Josh leaves as Chief of Staff to run for mayor of Chicago and Santos brings in a CEO to replace him.

9

Robert the Red 02.21.11 at 1:40 pm

Part of the reason there is little angst about this is the unclear nature of a “lapsed appropriation” furloughing of large numbers of government employees. Which ones are deemed to be be “excepted” because of the need to preserve life or property is very vague. In the past, for example, air traffic control was deemed to be essential by very weak reasoning. The alternative (shutdown all flights) would have a drastic effect on many people immediately. If the list of functions to be turned off were known ahead of time, then perhaps there would be more to report.

However, I don’t think this list is known even at the agency head level. In my Federal agency, the word spread (by rumor in response to informal questions) that we are forbidden to plan for a partial shutdown. So everyone plans in their head based on what they’ve heard about 1995-6 — most of which is only partially accurate, at best.

10

y81 02.21.11 at 1:55 pm

@4: Prof. Quiggin isn’t interested in discussion. He just likes to rant. He’d have people like me in a re-education in a second, if he had the power, but fortunately he doesn’t.

11

Leinad 02.21.11 at 2:09 pm

First they came for the Dhimmicrats…

12

Walt 02.21.11 at 2:23 pm

There’s a big difference between being a being bored by you, y81, and desiring you to be put in a re-education camp.

13

Satan Mayo 02.21.11 at 2:31 pm

The problem, John, is that the Republicans literally put no thought at all into their policies, and nobody involved in developing them gives even the tiniest fraction of a shit about having them make sense, because it’s all about creating nebulous political atmospheres in which they can hang on to power and give our country away to the global elite. Therefore, it’s not possible for people who actually think about what the government should do to take them seriously. It’s as if we were threatened with the sesame-seed-shaped high-gravity creatures from “Dragon’s Egg” dictating our health safety standards. There’s no possible way it can work out well for any ordinary person, under the conditions that are being suggested. Literally every normal person will be worse off, for no reason other than the stupidity and selfishness of a few. The only way to believe that you live in a universe that makes sense is to ignore these bizarre interlopers completely. Unfortunately we don’t live in a universe that makes sense, but how can we get through our day if we accept that fact?

14

MPAVictoria 02.21.11 at 2:32 pm

y81:
Taking a couple of evening classes at the local community college wouldn’t kill you…

15

Steve LaBonne 02.21.11 at 2:33 pm

IMHO it’s time to ban y81.

16

Nur al-Cubicle 02.21.11 at 2:48 pm

March 2011: L’An Zéro begins. And all this time we we worried about a nuclear winter,

17

AcademicLurker 02.21.11 at 2:53 pm

I hate to kvetch, but CT has been one of my favorite destinations on the web for years, in part because of the generally high level of the commentariate.

It would be a real shame if it turned into a copy of Matt Yglesias’ place.

18

bob mcmanus 02.21.11 at 2:58 pm

16: One way to destroy a commentariat is community troll-bashing. There is nothing more ugly and boring. Let Quiggin deal with it.

19

Amanda Pingel 02.21.11 at 3:27 pm

The whole point of a shutdown is to be drastic enough to make the other side give in. I can’t imagine both sides having sufficient nerve to stand up to voters for several months.

20

Matt McIrvin 02.21.11 at 3:35 pm

Like I said before, the big question here is Social Security/Medicare. The Tea Party base of “anti-government” conservatives depends crucially on Social Security and Medicare recipients; they’re anti-government only to the extent that any other government program competes with their Social Security and Medicare. So either the Republicans aren’t going to let those payments stop, or they will and they pay the price, or we find out just how much concealment of causal relations these people can take.

The worst political case is, of course, that Obama caves to let the payments continue but gets the blame for them almost not continuing. Worst moral case, I don’t know, it depends on your time horizon.

21

Nur al-Cubicle 02.21.11 at 3:37 pm

Have you read academic David Kaiser’s post of yesterday comparing Obama to Hoover? A bone-chilling post, believe me.

http://historyunfolding.blogspot.com/

22

wkwillis 02.21.11 at 3:42 pm

We have (pull a number out of the air) a six hundred billion dollar budget hole. Since the six hundred billion dollars we borrowed last year went to people who paid taxes, subtracting that six hundred billion dollars from their income and therefore their taxes means the budget deficit is really seven hundred and fifty billion dollars. We are going to reach the debt limit next week, unless the conservative democrats and the republicans decide to increase the debt limit.
Two hundred and fifty billion dollars of that at the very most is medicaid, food stamps, negative income tax, and other liberal welfare, in that order. Welfare is about 20 billion or thereabouts.
The other five hundred billion is right wing welfareby definition.

Obama doesn’t actually have to sign the order to lift the debt limit….

23

AntiAlias 02.21.11 at 3:44 pm

The US Gov is being shut down? Oh damn, this is a calami…

Hey wait.

Actually, it sounds great.

24

Bloix 02.21.11 at 4:03 pm

#21 – the comparison with Hoover is not new. See the July 2009 Harper’s (Kevin, Baker, “Barak Hoover Obama: The Best and Brightest Blow it Again, http://www.harpers.org/archive/2009/07/0082562?redirect=1982284879)

But another relevant comparison is with the real FDR, not the one of memory – the FDR who strangled the recovery and plunged the country back into recession in 1937 due to an obsession with balancing the budget.

25

Lemuel Pitkin 02.21.11 at 4:09 pm

John, can you spell out a bit more why you think a shutdown is inevitable? Specifically, what are the constraints that prevent Obama from making the necessary concessions? From the outside, it certainly seems that there are many people in the administration who would prefer, on both political and substantive grounds, to move significantly to the right – quite possibly including the Preaident. Under the circumstances they might be happy to be “forced” by the House to turn toward deregulation and austerity. If you look at something like the Simpson-Bowles commission, it looks like policy preferences in the white House might be as close to the Rs as to the Ds.

26

Steve LaBonne 02.21.11 at 4:32 pm

But another relevant comparison is with the real FDR, not the one of memory – the FDR who strangled the recovery and plunged the country back into recession in 1937 due to an obsession with balancing the budget.

Obama had better hope that comparison extends to getting re-elected as FDR was. If there is a second recession, all bets on that are off.

27

jim 02.21.11 at 5:01 pm

The conventional wisdom in Washington is there won’t be a shutdown. There will be a short term CR while the House and Senate negotiate their differences and then another and then another …. I don’t know whether the conventional wisdom is right, but its existence explains the relative calm.

28

Brett Bellmore 02.21.11 at 5:44 pm

“We have (pull a number out of the air) a six hundred billion dollar budget hole. Since the six hundred billion dollars we borrowed last year “

I think you probably want to pull numbers out of someplace other than the air, if you’re going to be off by a factor of two to three fold. We borrowed closer to $1.65 billion last year.

29

chris 02.21.11 at 6:17 pm

@28: Really? That’s like five bucks per capita. What is all the screaming about, then?

30

Marc 02.21.11 at 6:41 pm

On the subject of complaints about material like this on CT:

I think that John correctly tagged the nature of the Republican party many months ago, and he deserves credit for that insight. I’m sure that he doesn’t take any particular pleasure in that insight. I’ve differed with him on Obama pretty strongly, but this is a conversation worth having still.

I still see no reason to budge from my prediction: that the wealthy patrons of the Republican party would lose too much from a sustained shutdown, and as a result they won’t let it go too far. The true believers will not go along, but is there an issue where the Republicans have yet sided against the money people?

31

Lee A. Arnold 02.21.11 at 7:20 pm

I think Marc at #7 has it essentially right. There may be drama and perhaps even a U.S. shut-down, but it feels like Republicans have overplayed their hand too soon, this time. The country isn’t entirely behind them. Repub-leaning parts of the news media played up a lot of false stories to create discontent with the Democrats, then a lot of Dems stayed home in the last election, while Independents were fooled into believing that the Repubs’ cries about bipartisanship were in earnest. The Dems shall be aroused again, and voter sentiment may quickly move back the other way.

It may help the understanding to get a broad purchase on the dynamics of Republican political rhetoric. The present episode is a part of a unified “starve the beast” rhetoric, which has a tune for every season, in other words it has predictable, repeating cyclical stances: Wait for a recession; get the business lobby to blame it on government; then give preferential tax cuts; use the resulting fiscal crisis to claim that spending cuts are necessary; then wait until the next boom to claim that it is reduced government spending which caused the new growth; and so then, vote for our side.

It’s a self-propelling cargo cult, replete with incantations from pseudo-economics, that happens to jibe perfectly with the wishes of the plutocracy. So it gathers big contributions, not least in the current episode. All of them worked on variations of it: Reagan, Greenspan, Bush with the Social Security Trust Funds disappearing into the Bush Tax Cuts, and now Governor Walker of Wisconsin, who appears to be chummy with the Koch Bros. and has decided to blame the teachers’ union.

The current stage of the rhetorical cycle is based upon the hidden premise, again, that the recession will recede and growth will return: so it is necessary to put in place conservative policies which can be touted as the reason why that growth has returned, in order to fool another round of rubes again. The whole mental contraption is coordinated by less than 10,000 intellectual workers, I imagine, in the conservative thinktanks and media brigades.

And it is likely to work, because the Democrats are so stupid that they can’t possibly think in terms of long-range rhetorical counter-strategies: they sit around dumbly flailing and waiting for their candidates to come up with the positions to suit their emotions. The Dems are no different from the Tea Party cattle in that regard. They are disappointed at Obama, for example, because he hasn’t become a “leader”.

Also, most of the Dems I talk to have a nonsensical belief that the economy may not come back and that it is being permanently destroyed — you have read the same here on Crooked Timber, in comments by otherwise sane and intelligent people — so they don’t see the entire contours of this predictable political-economic rhetorical cycle.

Consequently, everytime the Repubs recycle one of these entirely predictable positions, the Dems scramble as if it were a whole new attack, oh golly how are we going to deal with this!, or else darkly blame it on the Austro-Reaganical alchemy of late capitalism, which shall someday destroy itself in contradictory fustian and fireworks.

No, it is just boring politics. And you aren’t prepared, and so they are winning.

However, the problem for the Republicans is: reality works a little differently, and people like their social services and they like helping the poor. This brings us to the Repubs’ lasting weaknesses, for surely the Dems are only half the dunces in America: (1) their economic ideology, Reaganomics, has intellectually imploded, while (2) the most reliable Republican voters are a bunch of zany nincompoops, a.k.a. the Tea Party. Both parts of this are currently on display in the House.

32

ScentOfViolets 02.21.11 at 8:20 pm

As I recall, John, it’s not that people discounted the threat of a government shutdown should the Republicans win the House/Senate; it’s that this wasn’t enough of an incentive to get out and vote for Democrats.

Really. I can’t say this often enough: “Vote for Us or the Republicans Win” just isn’t any sort of viable (let alone defensible) election strategy. And that’s all you’re giving us here, an I-told-you-so, the Republicans won, now look what happened.[1]

Bear in mind that if you say every election cycle that people should vote for the Democrats or else the Republicans will shut down the government, this becomes nothing more than an exercise in perpetual hostage-taking. And people simply won’t put up with that.

[1]I’ll channel the old Naderite gang and say that as events in WI play out, people are finally waking up to the fact that on the national level the Democrats simply aren’t going to be there for them. They’ve got to help themselves. Who knows? Maybe this is the straw that broke the camels back, the incident that finally gets the collective action ball rolling again. And this, btw, is not a particularly progressive or liberal opinion. It’s a moderate – dare I say “populist” – opinion.

33

MyName 02.21.11 at 8:24 pm

The conventional wisdom is that the last time they had a shutdown, it was the Republicans who were the big losers, so any talk about refusing to raise the debt ceiling is just the same ritual theater that they always go through in order to pretend to be hard on deficits.

When push comes to shove, they caved on DADT repeal in the Senate in exchange for keeping the Bush Tax cuts. There may be more hardcore right wing cowboys in the House, but it’ll all come down to whether they believe they were elected to pass theater legislation that dies in the Senate (or is vetoed by the President) or if they were elected to pass actual bills. If the later, then they will have to compromise at some point, and the Democrats will realize this eventually.

34

Omega Centauri 02.21.11 at 8:35 pm

Lee,
Thanks for a very insightful comment. I want to ask you just one thing, why do you think the economy will come back in a meaningful way?. I see several challenging trends converging. One is simply that our expectation of normal is roughly 2006, when the economy was being unsustainably stimulated by the housing bubble, so any return to a trendline, should be to a trendline some unknown distance below that. Then we have the poinonous effect of US politics, coupled with the deleterious effects of increasing maldistribution of wealth. Finally we have the world running into various limits to growth issues. The later is likely in the very near future to be augmented by the fallout from the Jasmine revolution whirlwind. We have an extrordinary series of difficult challenges, and simultaneously an almost complete breakdown of our political machinery. That doesn’t bode well for recovery.

35

ScentOfViolets 02.21.11 at 9:19 pm

The country isn’t entirely behind them. Repub-leaning parts of the news media played up a lot of false stories to create discontent with the Democrats, then a lot of Dems stayed home in the last election, while Independents were fooled into believing that the Repubs’ cries about bipartisanship were in earnest.

I don’t agree that this is exactly how the dynamics played out last election, but let that pass. I’m more interested in the role of the news media, specifically, how they become co-opted. Consider how our two “serious” local radio stations have been covering the situation in WI. We have KOPN, very local, who reports the straight talk and doesn’t have a very large listening audience, mostly powerless old retreads of the liberal/progressive variety from decades past. We also have KBIA, which is the local NPR affiliate. It’s considered the “intellectual” station (and plays classical music during the day to prove their bona fides), is sponsored by the university, and has a comparatively large audience. This disparity is made more so by the fact that KBIA’s audience has a high proportion of movers and shakers from the local university/business/political scene.

Yet oddly enough, despite it’s pretense to being serious and intellectual, and despite it’s vastly larger resources, KBIA/NPR has not seen fit to mention any of a number of salient points, such as the fact that a large percentage of the budget shortfall is due to the Republican majority and the Republican governor rewarding their contributors with tax cuts and other goodies at the expense of the general population. In fact, the “progressive” NPR seems to be covering this story as a straight-up he said/she said sort of affair. So, for example, you get straight-faced reportage of Scott Walker stating that the unions need to take a hit to make the budget balance with no additional mention that the unions have been “taking the hit” for at least the last six or seven years already, what with no or sub-inflationary pay increases, etc. to counter his claims.

My question then is this: why is it that even supposedly “independent” media seem to cover these stories with just such a slant, rather than actually do some real investigative journalism and report some actual facts? And why is it that even a tiny little station like KOPN with a tenth the of the funding and audience of the supposedly “liberal” KBIA do superior journalism despite this handicap?

Other than the obvious reason, of course :-(

36

spyder 02.21.11 at 9:20 pm

To avoid the pitfall of pulling numbers out of me arse, i did a quick check of the recurring interest on the US debt as of January 2011. With an annual deficit of a bit less than $1.5 trillion, the interest on that is running in the $400 billion range; this cannot be so easily ignored when determining the likely outcome of a shutdown. Just wanted to offer some substantive numbers.

37

Antti Nannimus 02.21.11 at 9:20 pm

Hi,

“…a shutdown of the government in Washington will be a much bigger deal than it was in 1995. Yet no one seems particularly worried, or even interested.”

Well, yes, we are worried, if not interested. However, the dogs may bark, but the caravan goes on. And besides that, our dysfunctional U.S. partisan politics are long since far beyond the reach of either reason or complaint.

Anyway, we probably have a permanent situation here because the fundamental problem with our government finance is the persistently faltering economy, both caused by and resulting in chronic high unemployment. Thus reduced government revenue and higher “safety net” costs will now continue to cause a permanent deficit imbalance. We need to consider that this is probably irreversible since last week “Watson”, the computer, has beaten the best in the Jeopardy game, finally and unmistakably signaling arrival of the much anticipated “Singularity”. Since computers and robots are now as smart as human beings, and can reproduce and educate themselves much more quickly than we ever could, they can soon dispense with us entirely at an ever-accelerating rate. Thus all the work for which we might be useful, and which hasn’t yet been outsourced to the “third world”, is finished, and most of us will probably never again be gainfully employed.

How this brave new world will be financed by the computers and their owners is yet to be discovered though. But it is increasingly clear that most of us will be casualties no matter how it is done.

Rather than getting excited about the perennial mischief in Washington D.C. I would think we should probably get quickly back to tending our gardens and comforting each other. But perhaps I’m a little ahead of myself here.

Have a nice day!
Antti

38

Guido Nius 02.21.11 at 9:33 pm

Well, welcome to Belgium ;-)

(and to a world in which domestic concerns are not necessarily world news)

39

Keith 02.21.11 at 9:33 pm

But precisely for that reason, a shutdown of the government in Washington will be a much bigger deal than it was in 1995. Yet no one seems particularly worried, or even interested.

Of course it’s no surprise. Shutting down the government has been Plank Zero in the GOP platform since Reagan. They’ve finally brow beaten the US citizens into accepting the idea as the natural outcome of democracy and convinced Democrats to go along with it out of Bipartisanship.

40

ScentOfViolets 02.21.11 at 9:35 pm

By “massively unsustainable cuts”, we mean, I presume, a reduction in spending to what it was during the Clinton administration? Or perhaps the early Bush administration?

Er, Brett? Just about everyone here discounts anything you have to say as simple and simple-minded partisan idiocy. Mostly because of your continual and constant efforts to pass off your own opinions as some sort of fact. You’d leave yourself a lot less open to ridicule if you actually posted some real facts and real cites to back them up.

For example, when you claim that the Clinton administration spent a lot less, what are the figures you used to arrive at this conclusion? Where can I find them? Are these figures nominal, or are they adjusted for inflation? Are these figures flat on a per-capita basis, or do they reflect an increase in per-capita spending? If the latter, is this increase evenly distributed? Do these figures show an across the board increase in spending on all programs and outlays, or is this increase in just a few concentrated areas? And so on and so forth.

If you can give me credible cites and figures to back up your claims, I’ll believe you. If you refuse to give them, well, I will – as usual – dismiss what you have to say content-free editorializing.

What’s it going to be?

41

John Quiggin 02.21.11 at 9:55 pm

y81, since you’ve invited me to do it, I’m happy to oblige. You’re banned.

42

Henri Vieuxtemps 02.21.11 at 9:56 pm

My prediction: they’ll do the usual kabuki (with shutting the government down or without, doesn’t matter), raise the social security eligibility age by a few years (’cause that’s the only “politically feasible” thing to do), and everything back to normal.

43

Tom M 02.21.11 at 10:20 pm

SoV, re the Wisconsin budget issue see Somerby’s The Daily Howler with links to Politifact which grades the claim that Walker “created” the budget deficit as false. He also links to Ezra Klein’s retraction of the claim from TPM.
Somerby: We’re glad Klein and Leonhard retracted and re-explained; we only wish that TPM and Benen would follow suit.

44

Lee A. Arnold 02.21.11 at 10:38 pm

Omega Centauri #34 Yes there are lots of long-term problems but I don’t see anything in your list that would prevent a short-term cyclic recovery. We have already had 5 quarters of positive growth, interest rates and inflation rates are still low, consumer confidence is going up, all the recent recoveries started “jobless” but then led to job growth, and last but not least, there are lots of people who want to go back to work, and to express that pent-up consumer demand. I expect a hot GDP.

I also expect a hot climate, and this is a challenge you didn’t mention, though it may very soon face us squarely. My fear is of abrupt temperature change in the next 20-30 years, disrupting agriculture. We know that the climate system has experienced abrupt temperature changes in the distant past, though we have found this evidence accidentally, we have only vague theories of attribution, and we don’t know how to predict them. But it seems likely that forcing a systemic parameter (like CO2) would be a good trigger. If Earth has a sudden heat spike that shuts down world agriculture for a few years, it would starve most of civilization, though not before enormous panic and mayhem.

45

Lee A. Arnold 02.21.11 at 10:49 pm

ScentOfViolets #35 I would like to read your version of the dynamics of the last election.

46

mpowell 02.21.11 at 11:11 pm


One is simply that our expectation of normal is roughly 2006, when the economy was being unsustainably stimulated by the housing bubble, so any return to a trendline, should be to a trendline some unknown distance below that.

There are any number of ways to interpret this statement, but most of them seem to as being wrong or irrelevant. It is true in the limited sense that consumers were able to borrow against housing value to support demand in 2006. But on the supply side of the equation, only a very small percentage of GDP was going into housing construction and it was itself only mildly above a sustainable trend. There is no sense in which a housing bubble was hiding a lack of productivity in the general economy. Another way of saying this is, the quantity of stuff we were making in 2006, that was a lot of stuff and we are still capable of making that much stuff (and more). And our economy is still operating below capacity so the return to trend trajectory is still upwards.

You might argue that weak consumer incomes will leave demand suppressed. My answer to that is that if it is the case (and consumer demand is non-responsive), then the government can continue financing massive deficits without generating inflation. But anyways, we are seeing increased consumer demand, so I don’t think the short run picture is that gloomy as long as the Republican house members are brought to heel by their financial masters (though here I am not as confident as Lee A. Arnold).

47

JMG 02.22.11 at 12:15 am

Dear Mr. Quiggin: Betting on Democrats to surrender rather than fight is always a chalk play, but in this case I believe the odds and you are wrong. There were two government shutdowns in recent U.S. history, and it’s the lesson of the forgotten one that I feel will put some steel in Obama’s spine.
In 1990, the DEMOCRATIC Congress shut down the government. George H. W. Bush, seeking above all to get ready for the first Gulf War, compromised, violated his campaign promise and agreed to a tax increase. He was perceived by his base as the loser of the compromise. As a result, the base splintered, Bush was primaried by Buchanan, Perot happened, and Bush was a one-term President.
Obama’s been very cavalier with the Democratic base. This time, he can’t afford to be seen as a loser by them, because they go off the reservation looking for a winner.

48

ScentOfViolets 02.22.11 at 12:24 am

SoV, re the Wisconsin budget issue see Somerby’s The Daily Howler with links to Politifact which grades the claim that Walker “created” the budget deficit as false. He also links to Ezra Klein’s retraction of the claim from TPM.

Try as I might, I can’t see how anything you wrote or what you linked to refutes anything I said. Could you walk me through your reasoning on this one?

49

Omega Centauri 02.22.11 at 12:30 am

SoV @35:
My theory on why public media like NPR seem to be corrupted. They get a lot of their funding from corporate sources, including the Koch’s. They are probably sensitive to the messages these sponsors want.

Lee @44
I think the climate changes that will hit us is less heat, than disruptions of the patterns we have long taken for granted. I remember the climate guys in the 70′s remarking how the recent past (several hundred years) seemed to be unique in the paleoclimate record for climate stability. So the likely effect of any change is likely to be much greater variability (one year flolods, another drought, unseasonable heat and cold snaps etc. etc.). And this seems to be playing out. I really doubt we would see anything like a near complete collapse. But a couple of years with say 20% global shortfalls, would cause widespread suffering and starvation, unless we solve the distributional issues related to the free market.

We are probably actually on the same page, w.r.t recovery. I assumed by recovery, you meant something like gaining the precrisis unemployment levels. I think we won’t come close, but may gain a point or two. However, we are just one good oilprice spike ($150-$200) away from a double dip. The instability brought on by the Jasmine revolutions might just deliver it.

50

Timothy Scriven 02.22.11 at 1:43 am

My advice for commentors, re: trolls. They feed on attention, so no matter how eregagious their reasoning or ethics, never, ever, ever respond to them. Humans can take anger and scorn, trolls even enjoy it, but as KD Williams has shown pretty convincingly, we can’t take the silent treatment. Never respond and I promise they’ll just go away.

51

Lee A. Arnold 02.22.11 at 2:14 am

#46 “I don’t think the short run picture is that gloomy as long as the Republican house members are brought to heel by their financial masters (though here I am not as confident as Lee A. Arnold).”

It was Marc at #30 who expressed that; I am hoping for something more comical and nincompoopish. A total “Okay, NOW I remember the Republicans!” moment, for the U.S. public.

52

MS 02.22.11 at 12:39 pm

Please, no use of ‘repug’. I’m a life-long Democrat and don’t really care for Republicans, but if I want Atrios, I’ll read Atrios; and there’s a reason I rarely read Atrios. Keep CT safe.

53

Map Maker 02.22.11 at 12:42 pm

“The current stage of the rhetorical cycle is based upon the hidden premise, again, that the recession will recede and growth will return: so it is necessary to put in place conservative policies which can be touted as the reason why that growth has returned, in order to fool another round of rubes again. The whole mental contraption is coordinated by less than 10,000 intellectual workers, I imagine, in the conservative thinktanks and media brigades.”

Lee – I don’t see any difference between that explanation and Clinton’s economic miracle as described on the left. The coldwar defense cuts cost Bush I a reelection, but Clinton was there for the recovery and 8 years of raising spending, cutting taxes, AND balancing budgets. If Bush I had been re-elected (either through no Perot or an intern issue with Clinton), he would have had much of the same economic story to write his narrative on.

54

Barry 02.22.11 at 1:56 pm

Map Maker, the right back then was crystal-clear in denying that there would be good times again (see the WSJ for examples). They claimed that the Bush I /Clinton tax increase would lead to disaster.

Then, when the good times came, they flipped.

And please note, the late 1990′s were better than the Reagan era or the Bush II era.
In fact, for most Americans, I believe that the gains in the Clinton era were greater than the combined gains under Reagan and Bush II. Not average gains, but combined gains.

55

piglet 02.22.11 at 3:21 pm

Lee:

The current stage of the rhetorical cycle is based upon the hidden premise, again, that the recession will recede and growth will return… Also, most of the Dems I talk to have a nonsensical belief that the economy may not come back and that it is being permanently destroyed—you have read the same here on Crooked Timber, in comments by otherwise sane and intelligent people—so they don’t see the entire contours of this predictable political-economic rhetorical cycle.

A data point to consider: the past decade has been the worst performing since the depression in terms of both employment and GDP. Right now, everything points to the possibility that the right wing extremists in power in the House and in the states are fully ready to throw the economy off a cliff by depressing wages, cutting essential services and infrastructure projects, and giving more money away to the plutocracy to be “invested” on the Cayman Islands. You seem to think that the economy will always “come back” no matter how insane and destructive the economic policies in place. Not convinced here. It hasn’t “come back” in any meaningful way for the majority of Americans in 10 years. This time around, I am not even convinced it will “come back” for the rich.

56

Lee A. Arnold 02.22.11 at 4:15 pm

Mapmaker #53 I think that you are correct, and I imagine that all presidents understand that the economy is mostly the luck of the draw.

I remember that Bush’s re-election chances were destroyed, not by the defense cuts, but by his tax hike (“read my lips”) and the short 1990-91 recession. Had Bush won, he might have adjusted the Republican rhetorical narrative (remember, he was originally against “voodoo” economics).

I would want to hear what an economist would say about the 1990′s technically, but the insight I have taken from Clinton’s years is that you can raise taxes enough to project balanced budgets, and still get a booming economy.

You may have noted that this insight is massively resisted by the “starve the beast” crowd. They go to long and twisty lengths to explain the Clinton boom, including the assertion that it was caused by Reagan’s tax cuts, 12-15 years before!

There seem to be two kinds of contributors on the “starve the beast” side. There are the true believers, who are emotional and somewhat inarticulate and are rather sparse. Then there are what appear to be public relations hacks hired by the business lobby to flood the comments at political-economic blogs. “Blog comment management,” I call it. They show up in Ezra Klein’s comments — and during elections, there are sudden swarms at Mark Thoma and Brad DeLong and elsewhere — there were some here on Crooked Timber, too. These latter types are a bit too ready with endless reams of carefully chosen facts and figures, to be genuine. I haven’t noticed this on the left.

57

Don 02.22.11 at 8:09 pm

I’m not worried about a government shutdown. I’m worried that the Republicans will win it. Nothing in the last two years leads me to believe that this time, finally, the Democrats will not cave in.

If the White House were playing hardball, a government shutdown would look apocalyptic. No airline service. No imports because Customs has gone home. National Weather Service would keep a skeleton crew around to predict tornados and hurricanes, but everybody who needs to use their data for routine meterology is out of luck. The generals would get actual orders to withdraw from Afghanistan and Iran.

Let them see what they’re playing with.

58

Glen Tomkins 02.22.11 at 9:47 pm

What, me worry?

I think you can sum up the reasons for the lack of talk on the Left about the (perhaps) impending govt shutdown under two main headings.

Most basically, only the Right is comfortable talking Revolution these days. Their thinkers have predicted ten of the last zero Second American Revolutions over the past few decades, most of them within the past two years.

But we on the Left honestly have no idea what to make of Tentherism, or the Gold Bug thing, or the Power of the Purse enthusiasts. We think, we hope that, somehow, the courts have all this in line. State Nullification was, somehow, invalidated by the Civil War. Surely SCOTUS would shut any stab at it in 2011 right down. Surely. Despite the federal judiciary being packed for a generation by the Right with Federalist Society drones, precisely to overturn stare decisis across a wide spectrum, surely the courts will stick with stare decisis.

But recent decisions tell us that we have no idea what moves by the other side the Roberts court will bless, so there doesn’t seem much point speculating about where the blow might fall, if they are up to something. If there is any “they” there to be up to anything.

That’s the second set of reasons we aren’t talking much about shutdown. Everything’s a conspiracy now. Everyone takes it for granted that any administration action or statement is not what it seems, but really a move in some inscrutable game of 11-dimensional chess. As for the opposition, well, we don’t even know who to chalk in at the center of our conspiracy theories, who might be the string-puller calling the shots on their side. We can’t even generate a decent set of seers similar to the Kremlinologists of old to read the govt Kabuki in our own country, because those guys were talking about some foreign govt, they could just make it up whole cloth and no one in this country was the wiser. We know too much to find any of these conspiracy theories quite convincing.

So, will there be a shutdown?

Who knows.

What will it mean if there is one?

Who knows.

If we are to have a shutdown, it will probably be sort of like Bull Run or Shiloh, a battle both sides blunder into, just sort of muddle through, and have no idea what it meant even afterwards. Hopefully all that without any actual gunfire.

I don’t think any sizable faction on either side would want a shutdown in itself. Maybe some teahadists actually would like the govt to just shut down and never get up and running again, but I doubt there numbers are great enough to pull this off. And even these people’s ideals would be better served by not increasing the debt limit. The shutdown just serves the purpose of the car crash in the game of legislative chicken, the bad outcome you try to convince the other side you are less concerned about, so that they will think that you are indeed crazy enough to crash, and swerve instead, leaving you the road.

What does the Right want to gain from winning a game of legislative chicken over the budget?

Again, who knows. But if I were convinced that they actually were engaged in a coordinated strategy (Which I’m not. All this secrecy in political maneuvering right now is engaged in for exactly the same reason we shield our “intelligence” agencies with secrecy. They have no idea what they’re doing, they need to be protected from public scrutiny.), I would expect them to play chicken over a very limited set of budget items. Discretionary funding for the ACA would clearly be in this set of items they want to deny. To escape blame for a shutdown, and to make it harder for our side to credibly threaten a shutdown, they would structure the CRs they allow through the House to include everything but their limited list. They would advance this as an irenic effort to take the shutdown weapon off the table, by getting 99% of the govt safely funded and no longer vulnerable to shutdown.

Why would they do this? We’re not talking about huge budget savings. But while deficit reduction would be their publicly offered rationale, their actual aim would be to create a constitutional crisis. There are several non-discretionary funding streams associated with the ACA the administration could tap if the Rs succeed in denying discretionary funds to it. It’s also true that HHS and IRS workers could be tasked to do the work needed to administer the ACA even if these agencies are not given funds for that purpose. But if the administration does that, the teahadists have their “overt act” (shades of 1861!), the first actually arguable Kenyan Usurpation. Woo hoo!

The problem the teahadists have is that they ran on the idea that the US stands on the brink, and only a Second American Revolution can bring it back from that brink. Well, they won their House, but the House by itself cannot work even a bloodless revolution of the scale of say, the Great Society, much less the New Deal. They have to have some red meat for the revolution fans they cultivated to win the last election, so the next best thing to a revolution would be a constitutional crisis.

Is this what they’re up to?

Who knows?

Who’s “they”?

I offer the scenario only by way of running through an example of the process you need to follow to attribute any sense to any moves you see in the US political scene right now. That process doesn’t end up finding any sense outside of crude conspiracy theories, because we don’t talk politics in this country, just conspiracy theories. At this point, I think that’s all we can say about the coming shutdown. None can say if it will happen, but if it does, none will be able to say until too late whether it is the work of a Confederacy of Dunces, or people who know what they’re doing.

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Lee A. Arnold 02.22.11 at 10:11 pm

Piglet #55: ” It hasn’t “come back” in any meaningful way for the majority of Americans in 10 years. “

Most everyone was pumped-up madly in the mid-aughts. Is that to be entirely ascribed to mortgage inflation? There were no real goods or services produced?

60

stras 02.23.11 at 12:01 am

I’ve always assumed it would go down like on West Wing…

Adam, you should really spend your time watching more highbrow television, like that sexy gay vampire show about the sexy gay vampires who have sexy gay vampire sex with each other.

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