Winning No Matter What

The public strategy seems straightforward – the minority party holds the national debt hostage in an attempt to force the majority party to voluntarily undo three generations of their own progressive policy. On face value, it seems brilliant.

The Republicans, after all, are largely responsible for deficit and the worst depression since Prozac. When they took power under Bush, there was a $235 billion surplus. When Bush left office, the national debt stood at $10.6 trillion and deficits, based on Bush/Republican approved spending, were projected to increase by $9 trillion in the next 10 years. Of course, those estimates didn’t include 9% unemployment continuing to depress tax collections and increasing unemployment benefits, or Obama’s increased war spending. The national debt is now $14.3 trillion (41.8% of which is owed to the Fed and Government agencies) and the Republicans are using this hostage situation to provide political cover for their responsibility and to push the blame on President Obama.

John Boehner Machiavelli by Santi di Tito

John Boehner Machiavelli by Santi di Tito

Our democratically elected leaders, Republican and Democrat, constitutionally authorized the spending, but not taxes to pay for it, which requires the Federal Government to borrow the money to pay for what Congress has spent. Not allowing our government to borrow the money needed, sounds an awful lot like fraud. Conspiracy to commit fraud.

The Federal Reserve, Treasury Secretary, head of the IMF, Moody’s and the US Chamber of Commerce have suggested that forcing a government default is nuts and will cause havoc in the markets. Surely they won’t go through with it.

Of course, there’s that other issue. Two months ago, the House Republicans voted in lockstep to turn Medicare and Medicaid in to state voucher programs. Republicans have caught a lot of flack from seriously pissed off voters since they did. Ryan’s bill was DOA in the Senate. But, now, all they have to do is get the Democrat in the White House and at least four Democrats in the Senate to vote with them on a variation of the Ryan plan. They’ll get what they want and, perhaps, have an unelectable Democrat to run against in 2012.

It’s not that the Republicans want Grandma thrown out on the street, starve or to die from lack of health care (collateral damage)*. They just don’t want to have to listen to lobbyists and their campaign contributers complain about employers being forced to pay a share of payroll taxes. Republicans would much prefer Medicare be privatized so their health insurance buddies could keep their hands in the Federal wallet. Republicans would much prefer Social Security be privatized so they could enable their Wall Street buddies to gamble Grandma’s money. Republicans would also much prefer both Social Security and Medicare become voluntary voluntary so their rich pals could opt out.

On the other hand, Republican leaders would prefer poor people and their children be thrown out on the street, starve or die from lack of health care (that’s what prisons are for). Republicans are anxious to do away with federally required Medicaid believing that until our poor are paid wages competitive with the third world, there will be no new jobs.

Their brilliant strategy is not really just about the policy. The real plot is more sinister. Should the Dems not cave, the Republicans will get what they really want – a government, at least until the next election of a Republican or they lose the House, without enough money, but with seriously higher interest rates on the deficit. The problem for Republicans is that current average interest rates on the national debt are only about three percent (3%), costing about the Treasury only about $30 billion a month. Debt is not starving the government enough. Short-term default will cause rates to double or better – benefiting rich Republican campaign contributers while also starving the government of the money needed for social programs.

So what’s gonna happen? Will Obama read section 4 of the 14th Amendment and the Perry V US court case to Boehner – “The validity of the public debt of the United States, authorized by law… shall not be questioned.”? Will the Fed just forgive their part of the debt (theoretically, they could) so there isn’t a need for debt extension? Will there be a run on Treasury debt with China and the Saudis cashing in, causing rates to skyrocket and the Fed to intervene? Will the Tea-Party Congresspeople suddenly decide what they are doing is un-American(perhaps, Michelle Bachmann will say so)? Will the business lobby (aka: the Chamber) start calling Republicans and threatening something worse then death to get the needed debt increase passed? Will the Senate pass a version of whatever comes out of the House – hoping members of a conference committee could turn it into something tolerable? Will Obama blink – hoping that voters will be so outraged that Republicans are voted out of office in 2012 and the law can be overturned? Stay tuned. Whatever happens, the Republicans are risking the world and they plan to win – no matter what.

 

* Grandmas who practice personal responsibility and free-market capitalism, don’t have to worry. Unless she gets cancer. Or helps her unemployed children. Or worked for a firm that underfunded her pension. Or her job was off-shored. Or her children grow up to be Republicans.

6 thoughts on “Winning No Matter What

  1. glenn overman

    It’s too bad the RICO laws can’t be used here. There’s conspiracy. It’s illegal. Sounds like crime to me. Florida used to use the ad slogan “The rules are different here”. Certainly, DC took a lesson from that.

    Reply
  2. T M Copeland

    Lee,

    The Republican Party is everything, explicitly and implicitly, you say they are. They have loyalty to a class of people not to the nation as a whole. However, everyone has known that for a long time. Getting mad at Republicans for being tools of international capital is like being mad at a predatory reptile for eating bunnies and small dogs, it is pointless.

    It is true that Bush the Lesser inherited a balanced budget and a declining national debt. (You may recall that Alan Greenspan actually testified to Congress late in Clinton’s last term that paying off the national debt would create problems in the international economy because big money funds would have no safe place to park money.) Bush and his Party’s profligacy will be a well documented and well studied historical folly for generations to come.

    So what?

    When Barack Obama became President he and his Party had super majorities in both Houses of Congress. He had a massive mandate from the electorate. The Republicans were demoralized and in shock and frightened. Likewise, the more conservative and corporate whore-like members of the Democratic Party were in the same boat.

    Obama’s response was to do absolutely nothing during his first year. He did not come to town with any legislation other than stuff the banks wanted and a plan to modestly stimulate the economy. He had no health care plan, no immigration plan, no plan to implement any of the things related to the war on terror he had promised in his campaign. He arrived with a personality, a temperament of cool and nothing else.

    Now, I grant you Obama seems like a nice man. He also has a lovely family. But, he is a very bad President. He continues to “work” with Republicans hoping for compromise. In the process, he has squandered the best hope in a generation for rebuilding the social fabric that has been systematically shreded by the national government’s allegiance to a “New World Order” of big capital. That is, apparently what Poppa Bush was talking about and no one has shifted course yet.

    This New World Order probably is a legitimate way to organize and run the world and it, again, apparently for no one will openly discuss the implications of the nations ongoing globalization policies, is Obama’s policy as much as it was his predecessors. It may be the only way to organize the world and move toward some form of corporate management of nations on behalf on free trade and safe, secure capital formation and investment. I doubt it, but it is the only one on the table at the moment.

    One thing for sure, it will require a great deal of sacrifice on the part of those of us who are not part of the favored class or employees of corporations. This sacrifice is what economists call “economic dislocation” and what military planners call “collateral damage.” The biggest hurtle, politically, to pulling all this off is the middle class of the western world. We have to be dramatically “thinned.” We are the primary collateral damage immediately required.

    Less I come off sounding like a conspiratorial theorist, let me state that I do not think this is so much a well planned strategy as it is an ongoing tactical grab for money and political power. The economic elites of the world are sort of making it up as they go along. They are taking advantage of the opportunities that come along, opportunities like the great financial meltdown of 2008, to push the general agenda along.

    I will even grant that the political leaders pushing this don’t really want to hurt the American middle class. However, they are willing to and it is a requirement of the program as currently envisioned.

    Unfortunately, even after they accomplish their goals, the system they seek will not work. My father told me there is not enough money in the world to make a rich man feel secure. Conversely, neither is there enough threat of unrealized poverty to make a poor man fear poverty until he is trapped in it. So, the current system has no mechanism that will tell the capital class that they have arrived and enough is enough. There is, consequently, no floor of poverty below which those of us not privileged to belong can not go.

    This system creates an entire world of “third world” status with no “blow off valve” to absorb that portion of the down trodden population of poor who will not live like that. The economies of the US, Canada and Western Europe have played the blow out valve roll since the dawn of the industrial revolution. If we don’t change course soon, that pressure release will not longer be available. Without a substitute blow off valve there will be no stabilization upon which a global economy can sit. Without that pressure release, a system of stable wealth and stable poverty will continually and continuously explode.

    The sad fact is that President Obama and the Democratic Party will not provide the leadership necessary to accomplish an alternative vision, much less a change of course. As a life long “yellow dog Democrat” I have come to this realization most reluctantly. If there is no one willing to really fight the Republicans and there is no real vision telling us where we are headed, there can be no effective fight. Neither the Democratic Party, generally, nor President Obama, specifically, seem to stand for anything.

    I disagree with the Republicans but they want power for a reason. Meanwhile, it is the Democrats who will say or do anything to keep office. They don’t know what to do with power and that is the heart of the problem.

    Mike

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  3. Cliff Green

    T.M. is right. Obama and the Democrats have a great story to tell, but they don’t tell it; they have an easy avenue of attack on the right wingers, yet they stay in the barracks. Just what good are they in their current state of mind?

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  4. Lee Leslie Post author

    Mike -- I sincerely disagree on a couple of points. I know many Republicans who do not have loyalty to the wealthy class. The are regular everyday lower and middle-class people. While they may serially vote against their self-interest, they believe they are voting for to preserve a what they believe is a rags-to-riches economy. It is their leaders who have sold their loyalty to the most wealthy among us.

    Secondly, Obama did not have a super majority without counting Bernie Sanders (Independent), Joe Lieberman (Independent), Arlen Specter (switched to the Dems in April) and Ben Nelson (Dem in name only). Al Franken wasn’t seated June, but Ted Kennedy was so sick he wasn’t voting and wasn’t replaced with Paul Kirk until late September. Kirk was replaced in January by Republican, Scott Brown. So even counting the independents, at best, the Dems had the super majority (I don’t believe they ever voted as one) for less than four months at the very end of the year.

    As for the making this up as they go along, maybe so. But to starve the Federal government of money to fund programs and people to implement them seems oddly similar to the tactic employed since days of Newt to starve state governments and make sure no regulatory agency (FDA, FTC, etc.) has enough employees to do their jobs. Their goal for so long has been to make sure government was incompetent. The high water for that was, of course, under GW Bush.

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  5. Mike

    @Lee Leslie -- With respect, how could you possibly know whether I am voting against my self-interest? Arrogant social engineering tactics and intellectual dishonesty have soured my affinity for the left.

    Reply
    1. Lee Leslie Post author

      Your points are well taken. We all have reason to consider carefully the motivations, causes and estimate the effects before taking a position. Society does not evolve naturally in politics or government -- it is all engineered. I suggest that our leaders should vote to do what is both best for the common good and what is consistent with their values -- not in their self-interest, but ours.

      I suggest any “social engineering” is best applied conservatively to right wrongs, preserve self-determination, justice, etc. for all of us, balanced by a humble and honest realization that we cannot possibly know how those decisions will play out -- so our leaders must also be willing to conservatively correct or adjust policies that aren’t working as intended, or end those that are no longer needed. Our government doesn’t work very well in implementing dramatic change. It more often works best when it works incrementally and with consensus or compromise.

      Like you, arrogance and dishonesty has soured by affinity for many on both sides of the aisle. At this moment, the majority party in the House is threatening to prevent our government from paying the bills that were authorized by Congress and spent as they directed by the executive branch. I do not believe that threats with potentially devastating and unknown consequences to all of us, to achieve partisan political goals and dramatic social change, are the best practice of our Republic.

      Were a debt extension passed tomorrow, nothing would happen. If it is not passed in time, way too much could, most of it bad. Our economy and the world’s is at great risk. We should be careful and conservative that we do not make things worse.

      I’m all for getting back to a balance budget. I hope we get there by prudent decisions -- each debated, negotiated and passed.

      As for voting self-interest, I realize that there are plenty of people who voted their self-interest by voting Republican (especially if those in the top 1% in income or work for a hedge fund or a defense contractor). However, I suggest that many did not and hyperbole got the best of me.

      Thank you for reading and for your comment.

      Reply

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