Wednesday, July 13, 2011

Republican Attack Dogs Turning On Their Masters

The Republicans have encouraged and benefited from the rise of take-no-prisoners attack politics.  A constant dose of acid news via Fox, Limbaugh, and all the others, has infected a significant minority of the population with nasty anger and a belief in simplistic right or wrong,  good or evil,  ideological narratives about economics, religion, foreign affairs, marriage, and every other topic.  (A Gawker piece on Roger Ailes details how he carried out his plans for shaping the news to suit conservative needs.)

As long as the mob was aimed at Democrats, all was ok.  But in the 2010 primaries, Tea Party candidates began knocking off established Republican politicians.

And now Senate Republican leader McConnell and Republican House Chair Boehner can't call off their attack dogs.

The no-compromise wing of the Republican party is now demanding the debt be cut by cutting-programs-and-no-new-taxes even if their stance causes the United States to default.   Facts, particularly about complex topics, can't compete with ideology and strong emotions.

Mentioning that "the last five Democratic Presidents (Clinton, Carter, LBJ, JFK, and Truman) all reduced public debt as a share of GDP, while the last four Republican Presidents (GW Bush, GHW Bush, Reagan, and Ford) all oversaw an increase in the country’s indebtedness" is brushed aside.  Even if you add that "David Stockman, director of the Office of Management and Budget under President Ronald Reagan, as op-ed contributor to the New York Times, blamed the "ideological tax-cutters" of the Reagan administration for the increase of national debt during the 1980s."

But McConnell and Boehner understand that defaulting will have huge negative impacts on the world economy as well as the US economy.

McConnell says, after blaming everything on the Democrats' desire for bigger government for 2,300 words,
“So Republicans will choose a path that actually reflects the will of the people — which is to do the responsible thing and ensure the government doesn’t default on its obligations.  [emphasis added]
Boehner says,
I agree with the president that the national debt limit must be raised, and I’m glad that he made the case for it today.  But the American people will not accept – and the House cannot pass – a bill that raises taxes on job creators."[emphasis added.]
[I would point out his use of 'job creators' to describe the businesses that are flush with cash, but not spending it on creating jobs.  And earlier in this press release he says the trade off is
"the  administration gets its debt limit increase, and the American people get their spending cuts and their reforms."
As though only the President needed the debt limit increase - which Boehner says must happen - not all of us, and in exchange the Republicans get their cuts.]

To prevent default, Sen. McConnell has proposed a twisted piece of legislation that would move the power to increase the debt ceiling from Congress to the President. As Fred Barnes describes it at Fox News:
To counter Obama, Senate Republican leader Mitch McConnell unveiled legislation requiring the president to submit a series of three requests - now, in the fall, and next summer - to increase the debt ceiling.
Each request would have to include spending cuts in excess of the amount of the increase in the limit on borrowing. If Congress rejected the cuts as insufficient by passing a "resolution of disapproval," the president could send a new package of cuts or veto the resolution. Should his veto be sustained - at least 34 senators would be needed - the debt limit would rise with no cuts attached.
The idea behind the complicated plan is twofold. One, it would avert a tax increase. Two, it would, as a Senate aide said, "put all the onus [of raising the debt limit] on the president." Assuming a bipartisan agreement is impossible - and the Republicans assume it is - "this is the only plan that would prevent a default."

Fox has a bunch of Conservative analyses on this - those supporting McConnell and those opposing him.

The whole point seems to be this.  The Republican leadership knows we need to increase the debt ceiling.  But it also knows it can't get its party members to vote for it.  And it fears Republican primary voters will punish those who do.  So, they are kicking the can into the White House, hoping to blame Obama and the Congressional Democrats.  Even though they know that we need to raise the debt limit.

It seems to me there comes a time when leadership is called for.  When people need to stand up for what is right, even if it means taking risks, like losing the next election.  We ain't seeing any of that happening though. 

Economists seem pretty much in agreement that defaulting on the debt would cause a series of negative consequences that would hurt our national economy, the global economy, and our standing in the world.  From the Wall Street Journal, for example:
The U.S. occupies a special place in global finance. The symbiotic relationship between the U.S. dollar as a reserve currency and the U.S. Treasury market’s monopolistic position as the safest, most liquid bond market in the world has served this country well. This unique position has allowed the U.S. to exercise significant authority in the global economy and enhanced its standing as a world power. Even a temporary default would eliminate the safe and liquid nature of the U.S. Treasury market, harming this country’s ability to exercise its power, to the detriment of the U.S. and the global economy.
But in the black and white world of the Tea Party, the Journal is part of the problem and this is all self serving scare tactics.  Sort of like Global Climate change.  They aren't buying this disaster scenario and they are willing to risk that this is just a bluff.  And McConnell hid his support deep down under anti-Democratic rhetoric. 

I give the media credit for quickly ferreting out the gist of his proposal.  Nice try Mitch. 

Don't get me wrong.  The country is facing serious problems and there are Democrats to blame as well as Republicans.  And I also feel the Tea Party folks' need for extreme measures.  And I feel their frustration about the difficulty of breaking the power of  lobbyists and other structural problems that make it seem like normal people can't have a serious impact. But I can't help noting that it's been Republicans who have fought campaign finance reform and the Republican 'back-to-basics, no-activism' Supreme Court has turned on the money spigot even more.  I understand the temptation to believe that destruction and rebuilding, not remodeling, is the only way out.  But, we're human beings.  We can think.  We can communicate.  We can create solutions that don't require millions, really billions, of people to be severely harmed.

So, now that the Republicans have been breeding attack dogs for the last 20 years, they're finding out that they have lost control over them and they themselves are in danger.  I would say a little Schadenfreude would be justified here, except we're all endangered by their recklessness. 


  1. I would like to challenge these people's leadership and adult status. No way grown-ups vested with the people's power can get away with this. It's unfathomable and unconscionable that they get to create such a dire, reckless economic environment and then hold hostage our country's safety nets to protect the ultra-rich.

    Job Creators. Such a joke, how has George W. Bush's THREE tax cuts served to create jobs since his Administration?

  2. Cantor is the face of the attack dogs. He's a real creep.

  3. dont blame the hack politicians blame the stupid people who elected them.

    and make no mistake about this being all about the racist tea bags who see everything as a means of harming the black recall this attitude about the debt when bush was in office?

    but also remember obama the republicans have a friend and not a foe......................

  4. Steve, been doing some thinking on human anger and its uses. I'm now working pt with a student union here in London. I find myself reading some policy of the union and ask myself, "Why was this written?" It has no useful application, it seems often self-important bluster written for shock and humor.

    You've spent years working in university and while I begin I see the usefulness of rage against the machine. It often helps the rager set boundaries. In the comments above I see an oblique answer to your question, "What do I know?" Perhaps we are saying, ‘I know this’ (as I am not like 'them').

    My time with Quakers here in England has begun to settle things differently. Being aware that one can be wrong is essential, as is the need to listen, to calm both the external and internal reply we so readily employ – to argue yet not to reason. I am growing resistant to anger raised to protect us from contagion others express.

    I seek, and I need, to find how to live with others, not stand apart. Strong belief can take form as concern, compassion and careful words. We can reject verbal warfare with those unlike us.

    I was at a tree care course in London last week. As students walked about, I was talking with a fellow about global warming. At one point, I made a comment that he must have felt a global-warming skeptic would say. He immediately became angry. I had asked if humans were part of nature or not. My questions would have taken us to think if species overpopulation is more the problem than carbon emissions.

    My interest was to apply natural systems thinking to a political ethic. We got no where: boundaries for acceptable like-thinking were breached. We had no common ground and, according to these rules of discourse, we were now at war. He threw insult. I disengaged.

    The attack dogs, so well-trained and ready, were unleashed. We lost the opportunity to talk. And it wasn’t America.

  5. Thanks to the Anons for their comments. And Jay, you know, I've written on anger before and I don't think I can improve on that post. It's a favorite post of mine. I even ran into someone once who I assumed was going to be hostile to me. We'd met briefly before. He surprised me by saying he had anger problems and he'd read that post and it had changed how he thought about anger!

    I think anger serves well for venting, but the emotion of anger (yes, men are allowed in the West to show emotion through anger, but not crying) makes clear reasoning hard. And if you do it in front of the person you are angry at, it only renews the cycle of anger.

    Most people want to be both liked and respected. I know it can be hard to be respectful in the heat of an insult. I used to tell my kids that they were among a selected few put on earth to save it. So they should assume the forces for good were always watching how they responded, checking to see if they prove worthy to be on this select team. It was probably a burden to put on them and if they read this they might say it had no effect, but if you can find a conceit like that which changes how you see the world, you can change how you act. (I didn't pass, by the way.)

    But if your adversary is a sociopath - a person with no conscience - then reason and more compassionate approaches are unlikely to be effective. I don't know enough about how to deal in those situations. (I was pretty sure I had a post on psychopathy, but can't find it. In any case, here's an overview of Robert Hare's book, Without Conscience. This part has his key symptoms of psychopaths.)

  6. Well, unlike in the case of Alaskan issues, I can say that I am not totally amateur about this issue, as it is part of my project. What I am going to write is my personal opinion/knowledge based on what I know, but in this case I don't think it is a disadvantage that I am Hungarian (not American).

    I am old enough to watch political campaigns and understand it to some level and I don't really remember that in Hungary it has been a really serious issue. It has been used as a tool (populism) but this is a different thing. I read a document which examined the importance of external pressure (as EU and IMF conditions) or internal pressure (voters, laws). The writers conclusion was that internal ones can make the government maintain sustainable budget policy.

    I don't want to sound pessimistic, but your country has serious problems as you mentioned. In my opinion the problem is that people don't know what "indebted" means. I also mention in my project that the media or anyone should teach the people that being overly indebted is a bad thing and having a new loan to pay the debt is not the sollution.

    I made my researches about the topic as well (on EU countries). You can improve the budget by cutting expenditures or increasing revenues. I am against increasing the revenues. The main tool of it is raising taxes. Tax system has an automatic stabiliser role so increasing taxes for the sake of the budget is not fortunate. On the other hand tax revenues are changing from year to year, because it is important whether your country is in recession or in expansion. Cutting expenditures can be an unfortunate thing, but unnecessary things should be abolished (for example Greek workers get bonus for washing their hands). It causes loss of popularity but bankruptcy is even worse.

    The third trick is increasing the GDP. It works very nicely in a good economic environment but it can strike back (as we say in Hungarian: the lollipop licks back) in recession when real GDP can decline (for example year 2009).

    The other problem besides the deficit is the debt. You need to pay interest for them and it costs a lot money. The USA is ina lucky situation, because Portugal has quite the same level of debt as a share of GDP but their interest rates are much higher.

    So in my opinion it is inevitable to start reducing public debt and budget deficit shouldn't be around 10% of the GDP, but close to equilibrium or some percent of sufficit should be optimal CONSTANTLY.

    And economic boom shouldn't make decisionmakers 'tipsy'.

    Sorry for the too long comment and I might not be totally understandable, but I study these things in Hungarian.

  7. Ropi, I'm glad you get a chance to put your new economic training to work. But one must get past the basic 'principles' and look at the specifics of how they are being implemented. You offer three basic approaches to indebtedness:
    1. Reducing expenditures and
    2. Raising Taxes
    3. Raising GDP

    These three are all intertwined in complicated ways and you need to understand those connections to address the issues. There are lots of factors to be considered before manipulating any of these.

    For example, you need to know the current rate of taxes and the kinds of expenditures and taxes that can be changed without hurting GDP. If taxes are very high, raising them would not be a good idea. But what if they are very low?

    The last decade in the US has been dedicated to lowering taxes and now the US taxpayers face the lowest tax rate in 60 years. So the wealthy, who have benefited from less regulation and lower taxes, now have considerable excess wealth.

    The wealth distribution in the US is the most skewed it's been in 60 years or more. Eliminating tax loopholes for corporations that are cash rich and not using that to create jobs, looks to me like a good way to increase revenues without hurting GDP. It won't be enough by itself.

    But cutting expenditures that can help strengthen our workforce - schools, job training, health care, and economic stimuli that give more buying power - doesn't make sense either.

    And you also have to get your facts right. The CIA's 2010 list of national indebtedness shows Portugal much higher on the list than the US.

    15th Portugal at 83.2% of GDP.
    37th United States at 58.9.

    Is the US dangerously in debt? How do others rank?

    1. Japan 225% GDP
    9. Singapore 102.4% (the bastion of the free market we are told)
    14. France 83.5
    18. Hungary 79.6
    19. Germany 78.8 (The economic powerhouse of Europe)

    Is the US economically less stable than all of these countries with lower debt/GDP?

    45. India 55.9
    50. Kenya 50.9
    65. Mexico 41.5
    76. Yemen 30.1
    83. Romania 34.4
    84. Cuba 34.8
    100. Moldova 25 (One of the poorest European countries)
    113. China 17.5
    116. Iran 16.2
    132. Libya 3.3 (bottom of the list)
    (One has to be careful with such comparisons because we don't know that countries calculate this the same or that they are honest about their numbers.)

    The situation in the US is nothing like Greece. While some people are hurting severely, most people are still able to pay for lots of small luxuries (things that are not essential) like smart phones, $3 and $4 lattes several times a day, and cars that are $10-40,000 above a 'basic' vehicle.

    Our problem is not so much that we can't pay our debt, but that we'd rather not. Sure, we could cut expenditures, but at this point, the far right Republicans are using the debt ceiling as a hostage to their ideological demands.

    Republicans didn't complain about deficits when Bush took Clinton's budget surpluses and turned them into huge deficits. I think this is really about doing everything possible to make Obama look bad so the Republicans can regain the presidency in 2010.

    Handwashing? Are you serious? This is the best example you can find for cutting costs? I couldn't find anything on the internet about this. What percent of Hungarian business costs are handwashing bonuses for Greek guestworkers? How much is that cost compared to the cost of one small outbreak of food-born disease? And can you explain to me why only Greek employees get such a bonus? (At least that's what you implied by singling them out.) If this is being used as an example of government waste, it sounds more like a racist distraction from more egregious ways money could be saved in Hungary. Who enacted this into law? It's hard to imagine that the Greek guest-workers have enough power to demand such a bonus.

  8. Steve, thanks for your considered reply to my post. I do consider my time learning ways of responding rather than reacting to be time well spent. It's also interesting to note the many Buddhists who attend Quaker meetings. It's a good influence in my life.

    As to our friend Ropi, I will be enrolling on my second course of economics this fall and I would add that I keep my mind alert to unguarded subscription to all economic modelling as fact. Economics is, after all, a social science, not a natural one. Beware one's own bias leading to what one thinks is a deduction.

  9. Steve, forget the CIA, use OECD or Eurostat (In Europe). They are very wrong. I couldn't find data about external debt and their data were wrong so I had to calculate it myself. Here they are much closer, aren't they?

    Well, I study economy rather from the scientific/mathematic way so I have a sollution for your problem. It is called Laffer curve (I hope the translation is right). It is an upside down parabola where on the X axis there is the percentage of the tax what you pay and on the Y Axis there is the tax income and there is an optimal tax where the revenues are maximised.

    Actually the interest rate on state bonds can make situation dangerous. That's why the USA is lucky, because according to S&P, Fitch, Moody's and such institutes the US is much better debtor than actually she is.

    No, washing hand was just a ridiculous example. For example greek workers get 14 month payment for 12 months of work. So counting with 7 million working Greeks where the average monthly wage is 1450 Euro. So in one year they could save 2 x 7 000 000 x 1450 which is 20 300 000 000 Euro if I calculated well. Nice money, eh?

    I am study to be an economic analyst and not a political analyst so I ignore political arguments. The problem to be solved is the same no matter you are Liberal, Green, Conservative, Socialist or Martian. In Hungary the socialist party took the largest part at indebting Hungary but pointing at each other won't solve the problem.

  10. Thanks for the clarifications Ropi. I've put up a new post (or it will be up soon) responding generally to your suggestions about different data sources.

    I would point out that the Laffer curve like any other model has to be used in the right context and there are other factors it doesn't consider that are important. From Wikipedia,

    "The Laffer curve and supply-side economics inspired Reaganomics and the Kemp-Roth Tax Cut of 1981. Supply-side advocates of tax cuts claimed that lower tax rates would generate more tax revenue because the United States government's marginal income tax rates prior to the legislation were on the right-hand side of the curve. As a successful actor, Reagan himself had been subject to marginal tax rates as high as 90% during World War II. During the Reagan presidency, the top marginal rate of tax in the US fell from 70% to 31%, while revenue continued to increase during his tenure.[12] However tax cuts compounded by increases in government spending caused the national debt to rise, obscuring the effects of the Laffer curve. According to the CBO historical tables, income taxes as a percentage of GDP declined from 9.4% in 1981 to a range of 7.8% to 8.4% through 1989.[13]"

    David Stockman, Ronald Reagan's budget director during his first administration and one of the early proponents of supply-side economics, was concerned that the administration did not pay enough attention to cutting government spending. He maintained that the Laffer curve was not to be taken literally — at least not in the economic environment of the 1980s United States. In The Triumph of Politics, he writes: "[T]he whole California gang had taken [the Laffer curve] literally (and primitively). The way they talked, they seemed to expect that once the supply-side tax cut was in effect, additional revenue would start to fall, manna-like, from the heavens. Since January, I had been explaining that there is no literal Laffer curve." Stockman also said that "Laffer wasn't wrong, he just didn't go far enough" (in paying attention to government spending).[14]"

    I still don't understand you Greek worker examples. Maybe one could argue that they get underpaid for 12 months, so they have to add two months more to make it right. How much do 7 million Hungarians get paid similar work?

    Economists like to exclude factors that are hard to measure or that don't support their theories. Understanding olitics is vital to understanding economics.

  11. The problem of the Laffer curve is that you can't know that your are left or right from the maximum value, I admit that so taking it too seriously is risky.

    Well, I read an article in Hungarian which said that the average monthly wage of a Greek worker is approximately equal to 3 Eastern European monthly wages. I have been to Greece and I didn't realise a lot difference in prices. We went to supermarkets a lot, because we weren't in hotel, so I could calculate the food prices. Maybe other things are more expensive, but I can't comment on that.

  12. Ropi, an apology. I totally misread the original Greek worker comment. I thought you were talking about guest workers in other countries, not in Greece. My mistake.

  13. No, I was talking about greek ones in Greece. :P No problem.


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