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One of the most critical political issues confronting the U.S. Congress right now is something that has never been a political issue before, is universally recognized by every economically literate member of our society to be something that should never be made into a political issue, and yet has become one due the willingness of one ideologically fanatical faction that is gaining increasing political control in this country to blackmail the non-fanatical majority with complete self-destruction unless the latter gives in to the former’s demands. That is the current state of our country.
The issue to which I’m referring is whether to raise the debt ceiling. In fact, the United States is alone among developed nations to have such a provision, the existence of a debt ceiling and the necessity to vote to raise it, because it would be inconceivable not to, and as a result default on the nation’s financial obligations and destroy the nation’s credit ranking. One frequent poster on Colorado Pols offered some historical insight into this “archaic and useless” bit of legislative baggage: http://coloradopols.com/diary/15729/the-debt-ceiling-is-archaic-and-useless.
It is worthwhile to read and listen to some summaries of what the actual effects of failing to raise the debt ceiling would be. Here is Tresury Secretary Timothy Geithner’s response to Senator Michael Bennet’s query on that subject: http://www.denverpost.com/politics/ci_18066294. And here is a particularly cogent round table discussion, in which all experts from all ideological camps agree with Giethner’s assessment: http://abcnews.go.com/ThisWeek/video/roundtable-economic-outlook-13607093. Notice, despire the universal agreement among all economic experts, from all ideological camps, concerning how devasting this would be to the U.S., that Congressman Doug Lamborn (R-Colorado Springs, CO), quoted in the first article linked to above, said, defending the fact that he has never voted to raise the debt ceiling and never will, “These proclamations and threats mean nothing to me.”
It is a tragic irony that the worst of our catastrophes, the greater part of humanity’s suffering, is inflicted on humanity by humanity itself. The genocides are what underscore this point most emphatically, but the political blackmail that the far-right is now engaged in, while a subtler example, is perhaps a more salient one, for it underscores how ordinary our self-inflicted suffering really is, how easy to avoid, and how easy not to. We have just seen in America the sudden effervensence of a political movement that is based on reducing everything to a few populist platitudes, and the introduction to Congress of some phenomenally unprepared and incompetent representatives who have promised to remain completely faithful to this increasingly institutionalized ignorance.
Now, despite absolute certainty that it would destroy us fiscally and economically, propelling us and the rest of the world into an economic crisis possibly as deep and sustained as The Great Depression itself, these agents of self-destructive stupidity are blackmailing everyone who has an ounce of sense or responsibility that unless they cave in to the economically and socially illiterate demands of this new movement, their newly elected agents will destroy the nation’s economy completely.
Okay, folks. You’ve had your fun. Enough’s enough. Give us our moderately rational, somewhat pragmatic, not entirely insane nation back again. Okay?
There is one useful thing that the debt ceiling does.
It forces us to pay attention to the debt That’s a good thing.
The problem is, the consequences are entirely inappropriate.
I propose that the debt continue to pile up, based on whatever our elected elected officials have authorized.
But that they not be allowed to conduct other business, until they have formulated, debated, and signed off on a report to the American Public outlining the justification for the debt, it’s costs, payment terms, consequences on future generations, and plan for retiring it.
Further, that all salaries and benefits are eliminated, from the time the report is due (i.e. the limit is reached) until the final vote.
Then we can continue to have the high drama and theater, if they so choose, to entertain us, keep news reporters employed, and to engage us in the issues.
But we need not worry about them destroying our economy via this “nuclear option”.
Or, they could take the high road, prepare the document with plenty of time, have a rational discussion, and make us proud to have such a fine and efficient form of government.
I’d kind of like to leave less debt for my children to pay off. It’s kind of unfair for them to pay the taxes we’re not willing to pay.
But I’d kind of like to not destroy the economy, so they’re not too broke to pay their own tax bills!
Just to clarify — all THEIR salaries and benefits would be eliminated under my plan. They’re welcome to blackmail each other; that’s a risk they’d assume by running for the office.
Bob, as with most things in the economic and political spheres, there is more non-linearity than you capture here. For instance, how much debt we leave to our children is not a linear function of our current degree of deficit spending, in much the same way that tax revenues collected are not a linear function of the tax rate. Under current economic conditions, the best argument probably is that this is exactly the wrong moment for austerity. I agree that we need to get serious about austerity in the right moment, when the economy is booming. Also, increasing the disincentives to go into public office, which are already formidable, will continue to dissuade many of the most competent from choosing to do so, as, I believe, is happening in increasing numbers. In general, we need a subtler, more analytical, more systemic approach to these issues.
Indeed. (That often seems to be my response to your responses to my comments!)
It’s important to recognize that we cannot capture all the nonlinearities, all the subtleties. We must always be open to examine new information, consequences, concerns, and modify our positions. This whole “flip-flop on the issues” charge drives me crazy; the current hotspot for this is the tea party purity tests that Republican candidates are subjected to.
And that confounded Norquist no-tax pledge. A pact with the devil, that.
I believe you and I are both on a crusade to counter the over-simplified, sloganeering approach to politics and public policy. You, perhaps, more successfully than I.
To have a more analytical, systematic approach to these issues, I believe we first have to start listening to each other — instead of trying to destroy each other. That’s what this blackmail is about.
I don’t see what I propose as being a disincentive to going into public office! The pay is pretty good, and the prestige is outstanding. So if you don’t actually do the job, you might get docked some of your pay. That happens in private industry — in some cases. More commonly, you’d be fired. Even if it was someone else on the project that caused the project to fail — you’d still be looking for a new job.
The present incentives are to NOT work together. To make the other party appear to be evil. And — in the process, often to BECOME evil themselves.
As for when to be serious about austerity — that’s a subtle question. I would claim, when we’re broke, we should be MORE careful about how we spend money. That doesn’t mean we should spend it — but we should expend every effort on making sure we get value.
A down economy is a great time to negotiate a contract for new construction, for example. But not for construction we don’t really need. But if we do need it — we’ll save money in the long run, and get people to work.
The Stimulus funding was done in a very ad hoc way, resulting in a gold-rush atmosphere among local governments and agencies. I suspect it would have been more successful at its primary goal, if it had been taken a bit more slowly and deliberately. But I don’t think that would have gone over well, politically.
I would be very curious to know, how much of the debt we ran up with the stimulus spending at the federal level, went to substitute for deficit spending at the local level, where they’re typically forbidden to run deficits?
But the deficit isn’t mainly due to the down economy nor the stimulus spending. The combination of the Bush tax cuts and the Bush (and now Obama) wars accounts for most of it.
The Republicans cry that eliminating those tax cuts would stall the stimulus, but I see little evidence of that. They money they save doesn’t have as much impact on the economy as the money that a minimum-wage worker spends.
Cutting war spending would have an impact on the economy. Returning soldiers competing for jobs, fewer orders in the defense sector. You can avoid secondary effects.
But does that mean we should continue to run up these war debts?
No. We could spend that money more wisely. We could fix up our infrastructure, for example. We could invest in our electric grid, and reduce our dependence on foreign oil. We could do a lot of things with it, that would get the dollars into the economy, while reducing what our children have to spend in the future.
So I think this ‘deal with the deficit now’ vs ‘deal with the deficit later’ argument we’re having now in DC is really rather confused. Our decisions now have consequences, and we should always consider them.
Neither side much likes to do that. Except it seems that some Republicans actually relish some of the consequences that most of us would find appalling.
Typo above: “You CAN’T avoid secondary effects”.