One of the nice things about being poor is not losing money in the stock market. I almost feel like a lucky ducky.

I take it the media are linking today’s stock market plunge to the S&P downgrade, which makes Professor Krugman crazy —

They really are trying to make my head explode, aren’t they?

Once again: S&P declared that US debt is no longer a safe investment; yet investors are piling into US debt, not out of it, driving the 10-year interest rate below 2.4%. This amounts to a massive market rejection of S&P’s concerns.

The S&P downgrade may be contributing to investor unease, but today’s plunge was more likely caused by “investors suddenly noticing just how weak the fundamentals are. Also, the mess in Europe,” Professor Krugman says.

The last rational Republican?

In a rare moment of reduced fog, Ross Douthat comes within a few hundred yards of a clue today. Yes, 10,000 monkeys in a room full of typewriters, etc. But let’s take a look.

Douthat dutifully concedes that American government has become, in S&P’s words, “less stable, less effective, and less predictable.” He says this has happened because with each election, politicians of both parties (ahem) are trying to force a transformative realignment of power that will establish their overwhelming dominance over the nation’s policy.

Both parties, you say? We know that’s what Republicans have been doing. Karl Rove openly admitted he was working for a “permanent Republican majority.” However, Douthat writes,

The dream of realignment has become the enemy of such compromises. It inspires politicians to claim sweeping mandates from highly contingent victories: think of Dick Cheney insisting on another round of deficit-financed tax cuts in 2003 because “we won the midterm elections” and “this is our due,” or the near-identical rebukes that President Obama delivered to Eric Cantor (“Elections have consequences — and Eric, I won”) and to John McCain (“the election’s over”) during the debates over the stimulus and health care.

So, to Douthat, the President asking the minority members of Congress to stop obstructing his policies is the equivalent of Karl Rove’s permanent Republican majority. I don’t think so.

The losers, meanwhile, wax intransigent, while hoping for a realignment of their own. After all, why cut a deal today if tomorrow you might overthrow your rivals permanently? Better to just say “no” flat out, as the Bush-era Democrats did with Social Security reform and the Republicans did with health care, and hope that the next election will deliver you the once-in-a-generation victory.

Certainly, members of the minority party do not have to roll over and vote to pass bills they don’t like just because the President wants them passed. But there is a huge difference between opposing and obstructing, just as there is a huge difference between making factual arguments against policies you don’t like and whipping up public hysteria by screaming that President Obama wants to kill your grandma.

A criticism I see cropping up a lot lately is that Republicans act as if they are the majority in a parliamentary system, not a presidential system. Tom Moran writes in the Newark Star-Ledger,

The problem is these guys won’t compromise. That might be OK for a minority party in a country like Britain, where a parliamentary system gives all the power to the majority party. But our democracy splits political power into pieces. And it can’t work without compromise.

Parliaments function by building consensus coalitions, sometimes made up of representatives from several parties. And, of course, usually the prime minister serves at the pleasure of the majority in parliament. Parliamentary majorities usually can pass whatever legislation they want and don’t have to compromise with the minority.

But in the U.S. the government has always functioned, when it functions, through compromise. Even a majority can’t enact whatever it wants without limit.

Moran interviewed Norman Ornstein, a political scientist and fellow at the conservative American Enterprise Institute who is generally regarded as a moderate. Ornstein said the last time Congress was this unable to compromise was right before the Civil War. Ornstein continues,

“First of all, it’s not just the Tea Party. The most significant element is this: Back in 1973 they created the Republican Study Committee as the right-wing caucus of the Republican Party. It was a tiny group, like 10 percent of Republicans. This year it’s close to 80 percent. This isn’t just the Tea Party, or just freshman. It’s many others. And with them, it’s a hard-line my way or the highway, even within their own party. Just being ideologically strong doesn’t mean you have to throw pragmatism out the window like this. They are behaving like a parliamentary party. …

… “We live in a country where the Framers had the genius to see that in an extended republic like ours, with very different geographies and viewpoints, that you’d need deliberation and debate so that when you came to a decision it would be accepted as legitimate. When you erode that, you start to erode the legitimacy of the whole system. …”

Making the whole system illegitimate means voters blame all politicians indiscriminately and go on binges of throwing all the bums out. And since the disgusted electorate is attracted to candidates spouting inflammatory rhetoric that reflects its disgust, often the new elected bums are worse than the old bums, which in turn makes the whole system “less stable, less effective, and less predictable.”

“Republicans in Congress aren’t listening to broader public opinion, or even Republican opinion. They’re looking at a sliver of it. What they’re looking at is whether they can get through a primary.”

In fact, a small and well-funded minority has hijacked the legislative process, and neither the voters nor the opposition party seem to know how to stop it.

At The Guardian, Michael A. Cohen writes,

The American political system discourages radicalism and relies on compromise. Yet the violation of even the most customary rules of governance has made such deal-making now nearly impossible. It was once considered a given that, with the rarest of exceptions, a president would be able to appoint his own charges to key policy-making positions; and the debt ceiling was considered an occasionally politicised but generally pro forma exercise. No longer. In a system designed around collegiality, Democrats have few tools in their arsenal to combat the GOP’s political obstinacy.

As a result, America is increasingly moving toward a parliamentary system in which politicians, rather than voting along regional lines or in pursuit of parochial interests, cast their ballot solely based on whether there is a D or R next to their name. Such a system might work well in the UK, but in the US, with its institutional focus on checks and balances and the many tools available for stopping legislation, a parliamentary-style system is a recipe for inaction.

But a confused, estranged, and often angry electorate irrationally rewards the obstructionists in elections, even when polls show they generally favor Democratic policy ideas (keeping Medicare, for example). I think even few progressives fully appreciate how much the system is broken, and they are angry at Democrats for not doing a better job at getting around the Republicans. And, certainly, there is room for criticism. But I still say that much of the anger from the Left toward the Obama Administration began with unrealistically high expectations. And anyone who thinks that merely electing someone “toughter” will take care of the problem is still clueless.

John Harwood:

“It’s a problem for everybody in office,” said Tom Davis, a former chairman of the National Republican Congressional Committee who describes himself as happily retired from the House.

“The political system, Republican or Democrat, over the last decade has delivered two failed wars, an economic meltdown, 20 percent of homes underwater, stagnant wages,” he said. “Voters look at the political system as a whole as just not giving them anything.”

The stuff insurrection is made of. Let’s hope Wisconsin hands the Tea Party its ass on a plate this Tuesday.

If you have any right-wing friends who send you propaganda cut-and-pasted from right-wing sources, return the favor by sending them this Steve Benen post. Recent history in a nutshell.

See also “As Corporate Profits Rise, Workers’ Income Declines” and “Race to the Right.”

My son Sean and his bride Amanda.

The more I read about the S&P downgrade, the more screwy it seems. Paul Krugman:

Just to make it perfect, it turns out that S&P got the math wrong by $2 trillion, and after much discussion conceded the point — then went ahead with the downgrade.

More than that, everything I’ve heard about S&P’s demands suggests that it’s talking nonsense about the US fiscal situation. The agency has suggested that the downgrade depended on the size of agreed deficit reduction over the next decade, with $4 trillion apparently the magic number. Yet US solvency depends hardly at all on what happens in the near or even medium term: an extra trillion in debt adds only a fraction of a percent of GDP to future interest costs, so a couple of trillion more or less barely signifies in the long term. What matters is the longer-term prospect, which in turn mainly depends on health care costs.

Steve Benen:

S&P prepared an analysis to justify a specific conclusion. The analysis was off by $2 trillion. Treasury explained to S&P that the analysis wasn’t even close to being accurate, which led the ratings agency to concede they’d made a mistake.

And a few hours later, S&P decided to reach the same conclusion anyway. The agency wanted to proceed with a downgrade; whether its numbers added up was irrelevant.

That certainly inspires confidence in the integrity of Standard & Poor’s decision making, doesn’t it?

The press release issued by S&P reeks of some attempt at manipulation. For example –

The outlook on the long-term rating is negative. We could lower the long-term rating to ‘AA’ within the next two years if we see that less reduction in spending than agreed to, higher interest rates, or new fiscal pressures during the period result in a higher general government debt trajectory than we currently assume in our base case.

Ezra says the downgrade is defensible, citing a statement from S&P about our political dysfunction –

“The downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges,” they explained in the statement accompanying Friday’s decision. After Republicans in Congress spent three months weighing whether or not to default on our debt and Senate Minority Leader Mitch McConnell said that paying our bills would never again be a foregone conclusion, can anyone really argue with that?

I can’t argue with that, and if S&P had given that as its primary reason for the downgrade I would be much less suspicious. But it goes on and on about other things, including “entitlements” and “discretionary spending,” that make it sound as if they are more interested in imposing more austerity. They do mention revenue increases also as a desirable thing, but more or less in passing. It almost reads as if they threw in a couple of mentions of revenue to make it seem less like dictation from the Tea Party.

Not long ago S&P, along with the other major credit agencies, gave their approval to what they must have known were worthless mortgage-backed securities, thus playing a role in the financial meltdown of 2008. In that case, S&P was being paid by the firms issuing the securities, which makes it clear that their primary focus is on pleasing their customers. So who is the customer now?

I’m sure you’ve heard about it. I’m too sleepy to write much about it now. Discuss among yourselves.

[I had written this as an update to the last post, but I've decided to make it a separate post.]

See Steve M., “There Is More to Politics Than Elections.”

I’ve said this before — repeatedly, I think — but I’ll say it again: the most successful progressive movement of the last 60 years was the civil rights movement, and it didn’t focus obsessively on elections. Get JFK elected and we’ll be free! Primary JFK because he’s not moving fast enough! That’s not what the civil rights movement did. The civil rights movement focused on issues — voting rights, desegregation of schools and lunch counters and buses and bus terminals, and on and on. Any interest in elections was in the service of the movement’s goals; it wasn’t the other way around, the way it always seems to be with lefties today. And there were great successes.

There’s an attitude that all we need to do is elect the Magic Politician, and then we can sit back and relax and everything will be fine. You see the attitude across the political spectrum. On the Right, you see them falling passionately in love with this or that politician — Sarah Palin, for example. They were passionately in love with George W. Bush for a long time, although now they like to pretend they weren’t. Sort of the way you might have felt about that jerk of a boyfriend once you got over him.

Over the past few days on one leftie site after another I’ve seen people claim that if only we had elected Hillary Clinton to the White House things would be so much better, because she is tougher and more progressive. People who think that are clueless about her Senate record, but never mind. The less you know about a politician, the easier to turn him or her into a blank slate to project your hopes on.

Believing the President should be able to fix everything if he really wants to is magical thinking. It’s as if Congress doesn’t exist at all, or else Congress is only a slight inconvenience to a president’s using his unlimited authority to do anything he wants. (Read Kevin Drum’s “Presidential Power” if you haven’t already.)

I’m not saying that President Obama hasn’t made mistakes. But I’m saying that progressives aren’t helping their own cause when they spend all their energy whining about President Obama. Where were we during the stimulus fight? Where were we during the debt ceiling battles?

Sitting on our butts whining about Obama, that’s what.

At the very least, we ought to be doing everything we can do to move public opinion, because ultimately public opinion is the real obstacle to progressive policies. People are getting all of their “education” about political issues from the Right. They’ve been sold on the idea that deficits and government over-spending are the problem, which makes it just about impossible for a President or any other politician to lead them in a different direction.

Progressives ought to be waging an all-out information war to get the public to understand why progressive policies are in their best interest. Instead, we mostly just talk to ourselves.

I’d say these are musts –

First off, if you are anywhere around a newsstand or bookstore, do buy the August issue of Harper’s. This is a really outstanding issue. Petra Bartosiewicz’s account of FBI terrorism investigations post 9/11 contains a lot of detail I hadn’t heard before that is genuinely jaw-dropping. Thomas Franks’s “The Age of Enron” also is worth the price of the magazine. There’s a lot of other stuff that looks interesting I haven’t gotten to yet.

On the Web:

Jonathan Chait, “What Caused the Deficit? A Reply to Megan McArdle.” And why does the Atlantic continue to embarrass itself by keeping that peabrain McArdle on its staff?

Kevin Drum writes about Presidential Power. Kevin is a bit more of a Pollyanna than I am, but I agree with his basic point about the limits of presidential power. He also makes the case that George W. Bush was a weaker president than he is remembered to have been. In his second term he actually didn’t get anything significant passed, I don’t think. But the stuff he he sold to Congress in his first term did enough damage to hobble the country for generations to come. And while you’re at Kevin’s place, also read “The Story of the Economy” (short) and “Why Unions Matter.”

More “toldjah so” from Krugman.

Andrew Leonard, “The Roots of Thursday’s Market Meltdown.” And what will the markets do today, I wonder? Job growth is up a bit, which might reduce the panic a little. We’ll see.