How Screwed Are We?

Yesterday it appeared that John Boehner and congressional Democrats were close to a deal on the debt ceiling. But Boehner caved under pressure from his Right.

House Speaker John A. Boehner abandoned efforts Saturday night to cut a far-reaching debt-reduction deal, telling President Obama that a more modest package offers the only politically realistic path to avoiding a default on the mounting national debt.

The negotiators were close to an agreement on a deal that would have included significant cuts to sending plus substantial tax increases. But the ultra-Right among the congressional GOP let Boehner know they would not support tax cuts increases.

The sweeping deal Obama and Boehner had been discussing would have required both parties to take a bold leap into the political abyss. Democrats were demanding more than $800 billion in new tax revenue, causing heartburn among the hard-line fiscal conservatives who dominate the House Republican caucus. Republicans, meanwhile, were demanding sharp cuts to Medicare and Social Security, popular safety net programs that congressional Democrats have vowed to protect.

Obama, at least, was willing to make that leap and had put significant reductions to entitlement programs on the table. But on Saturday, Boehner blinked: Republican aides said he could not, in the end, reach agreement with the White House on a strategy to permit the Bush-era tax cuts for the nation’s wealthiest households to expire next year, as lawmakers undertook a thorough rewrite of the tax code.

Steve Benen explains what happened in a little more detail, adding,

As a substantive matter, the anti-tax extremism that dominates Republican politics is well past the point of being farcical. Given a chance to cut the debt by $4 trillion, GOP leaders who claim to be frantic about a non-existent debt crisis have been exposed as frauds

Do read “Playing Chicken With History” by Paul Glastris. Glastris is making a point I know I’ve tried to make in the past, which is that the extremely wealthy who game the system in their own favor are ultimately just hurting themselves by cutting the legs out from under the economy.

Conservatives say, incessantly, that “a rising tide raises all boats.” By this they seem to mean that if the wealthy get wealthier it benefits everybody. History is full of examples that say otherwise, however, as Glastris says. To stick to the boats and tides analogy, boats that are not properly maintained will fall apart and sink.

What the righties need to understand that while a rising tide might not raise all boars, but an ebbing tide will sure as bleep lower all boats.

See also Susan Mettler, “$20,000 Leagues Under the State.” It’s a stupid title but a good article.

32 thoughts on “How Screwed Are We?

  1. “But the ultra-Right among the congressional GOP let Boehner know they would not support tax cuts.”

    Am I misreading this or not understanding it, because I thought that’s what the GOP wanted.

  2. Do see Bill Maher, New Rule:

    …And finally, New Rule. If you can look at a crime where everything points to one answer and not see it, you’re a dumbass. And if you can look at the deficit and not see that the problem is that the rich stopped paying taxes, you’re a Republican. And before you accuse me of equating the Casey Anthony verdict with Republican thinking, save your breath. I am. I am. I’m equating them….

  3. Look at what that rising of tides did to lift all of the little boats in Japan!
    That worked out well…

    I read Glastris’ article a few days ago. And it’s amazing how short sighted the rich and powerful can be – to the point where they had their heads lopped off in the French Revolution, and learned nothing across the world – with a few exceptions..
    And how many empires fell because the greedy rich decided to hoard money? Pretty much every one. And all of the countries felt “exceptional,” too.

    America is a doomed empire.
    Very soon.
    And future generations will laugh at us.
    If there are any – when you have a desperate Christian Fascist nation that’s armed to the teeth, and denies global warming, there’s no guarantees of any future for the rest of the people of the world.
    And that may be the final “gift” to the world from “American Exceptionalism.”

  4. A rising tide will lift all boats, but the rich getting richer does not in and of itself constitute a tide.

  5. This is the very first time I’ve ever linked to a David Brooks opinion piece. Even he gets it:

    …If the Republican Party were a normal party, it would take advantage of this amazing moment. It is being offered the deal of the century: trillions of dollars in spending cuts in exchange for a few hundred billion dollars of revenue increases….

    But we can have no confidence that the Republicans will seize this opportunity. That’s because the Republican Party may no longer be a normal party. Over the past few years, it has been infected by a faction that is more of a psychological protest than a practical, governing alternative.

    The members of this movement do not accept the logic of compromise, no matter how sweet the terms…

    The members of this movement do not accept the legitimacy of scholars and intellectual authorities. A thousand impartial experts may tell them that a default on the debt would have calamitous effects, far worse than raising tax revenues a bit. But the members of this movement refuse to believe it.

    The members of this movement have no sense of moral decency. A nation makes a sacred pledge to pay the money back when it borrows money. But the members of this movement talk blandly of default and are willing to stain their nation’s honor.

    The members of this movement have no economic theory worthy of the name…

    I’m speechless.

  6. Remember how we all grew up with promises of a great future, better than what our parents had? You know, the American dream. My parents, who couldn’t afford toilet paper during the Great Depression, wound up with a house in the suburbs and two cars in the garage. So of course my generation was expecting that some day we’d all have tons of free time because the worker/robots would do all the heavy lifting, allowing us 3-day work weeks, 2-month vacations, 2-hour flights (Los Angeles to Tokyo) in a supersonic aircraft, perhaps vacations on Mars, etc.

    Who would have thought we’d have to settle for a cardboard box beneath a freeway overpass?

    Although I’m really not into poetry, there is one sentence of a poem that sticks in mind because it does such an excellent job of summing up the world today…

    For of all sad words of tongue or pen, the saddest are these: “It might have been!”
    – John Greenleaf Whittier

    At least when the collapse comes, it will be comforting if the rich lose everything too. It may not do me any good, but I dream of the day when the Koch boys find themselves on the guillotines. I’d gladly pay (in whatever currency we are using then, maybe bags of salt) for a front-row seat.

    Maha, found two typos:
    significant cuts to sending (spending)
    rising tide might not raise all boars (boats)

  7. Did Boehner bite off more than he can chew? I hope the Bachmann farm subsidy isn’t in jeopardy.

  8. I can’t help but think of T.S. Eliot’s The Hollow Men.

    This is the way the world ends
    This is the way the world ends
    This is the way the world ends
    Not with a bang but a whimper.

    The epitaph of the American Empire.

  9. There’s a classic joke about the guy who approaches a beautiful woman sitting at a bar and asks, ” Would you make love with me for a million dollars?”. She says, “Let’s go.”. He responds, “Would you make love with me for $20?”. Indignant, she asks, “What do you think I am?”. Correctly he observes, “We already settled that – we’re just. haggling over the price.”

    I have no idea what discussions happen in the Oval Office. If Obama offered cuts to Medicare & Social

  10. Security, its offering the GOP the Holy Grail. Had they negotiated, they would have budged from the no-raises-on-revenue absolute position. It’s also predictable that Nancy Pepsi would have rallied opposition. But had the GOP *negotiated* tax increases, a deal which did not include entitlement cuts and did include revenue increases might have emerged. It didn’t.

    We are dealing with positions so deeply entrenched, comprise is impossible. Before the Civil War broke out, Lincoln was open to a variety of compromises which would have eventually led to the end of slavery, which was not what the abolitionists wanted any more than the slaveowners. I am convinced compromise is just as impossible now.

  11. Doug, I am just a self-educated farmer, but, when Lincoln took office in March of 1861, (inauguration day was later in the year back then) several states had already seceded. So, please elaborate on the variety of compromises that were available. I know that Lincoln considered compensation, i.e. buying the slaves from the South, and rejected it. As we look back on it, it would have recognized the validity of kidnapping someone halfway across the globe, bringing them home and then screaming about the violation of property rights if someone raises an objection. Additionally , it would have cost about 15 billion in unadjusted 1861 US dollars to buy back the slaves, and of course, that would be without providing a reasonable substitute for the “means of production” . I would truly appreciate some more specific list of the alternative compromises, because I would really like to read more about them.

    I fully agree, “we are dealing with positions so deeply entrenched, compromise is impossible”, and the closest analogy we can find is the Civil War.

    • So, please elaborate on the variety of compromises that were available.

      Lincoln made a very explicit offer to protect the institution of slavery in the slave states to placate the secessionists. He even floated the idea of a Constitutional Amendment that would have done that. He would not compromise on the issue of allowing slavery into the territories, however. Keeping the territories “free soil” had been his primary campaign plank, and he felt obligated to stand by it.

      The secessionists by that time were in no mood to compromise and had worked themselves into a frenzy of paranoia about what Lincoln might do to their “property rights.” They wanted war; Lincoln did not. The Confederacy mustered a volunteer army and had begun arming and training the recruits even before Fort Sumter, whereas Lincoln made no war preparations until after Fort Sumter.

      The siege of Fort Sumter forced Lincoln to send ships to re-supply the fort with food before the soldiers there starved to death. An earlier attempt to re-supply the fort had been repulsed by artillery fired by cadets from The Citadel, so Lincoln ordered a small fleet of armed vessels to accompany the supply ship. This was the excuse the South was looking for to start the war, which they did. The South was so eager to start a war that it forced Lincoln into giving them an excuse to do so.

  12. DIffidently, I have to point out your piece seems to me to fall under the rubric of ‘wishful thinking”. Relax. You seem to want to fulfill the Ancient MAriner’s Screed;”When in danger or in doubt.
    Run in circles,scream and shout.

  13. A thousand impartial experts may tell them that a default on the debt would have calamitous effects, far worse than raising tax revenues a bit. But the members of this movement refuse to believe it.

    Yeah, but those members of this movement haven’t told those impartial experts how much far better it is to hang a default around Obama’s neck.

  14. goatherd. I’ve read where Lincoln understood that slavery couldn’t exist as a large economic institution outside of the south. Cotton because of it’s non perishable nature and abundant demand( the market) was the only crop that was economically feasible to support commercial slavery. So Lincoln knew that slavery wouldn’t successfully expand to the rest of the Union for purely economic reasons. Slaves cost money to maintain and if you can’t make money off of won’t own them. One of Lincoln’s quotes is..” I’ll preserve the Union with or without slavery” because he knew that slavery was penned in in the south.

  15. Obama needs to say, at this point, that negotiations are over. And then tell Congress they need to raise the debt ceiling. Then go on national TV and tell the American people why he is doing this. Making it clear that if they do not raise the debt ceiling, the economy will crash. It puts the onus on the Repugs, forcing them to take responsibility for what they will probably produce anyway. Good article by Glastris, people need to remember that countries and empires do fall.

  16. Thanks, I am familiar with the events and circumstances you mention, like the “Clay Compromise”, etc., but it seems they had already failed to stop secession. I fully agree with Doug’s point, Lincoln was open to nearly any way of avoiding the war, but, the secession movement was a runaway train, like the Republicans and the Tea Party.

    I didn’t mean to get this shifted to a Civil War thread. I was just “thinking” Lincoln was in office less than a month before Fort Sumter. There wasn’t a whole lot of time to generate many options, and the few I have read about, seemed like grasping at straws. Anyway thanks for the information and patience. Book and article suggestions are always appreciated.

  17. A Real Eye Opener … WHY is the Mighty USA BANKRUPT?

    [Standard right-wing propaganda blaming the deficit on illegal aliens and welfare, copied and pasted from some right-wing website, snipped. See chart below for real causes of deficit — maha]

  18. I think this also has to do with them taking their belief in the magical powers of the free market to a new extreme. It’s like they now believe the market will just magically shower gifts on us without even requiring any activity on our parts. It’s like they now believe not only that government intervention will necessarily hurt the economy, but that indeed any human intervention of any kind of all will hurt the economy. It’s like a totally bizarre misreading of the whole concept of wu wei.

  19. Assuming that,

    (a) Obama continues to insist on at least SOME tax increases as a part of ANY deal, and (b) Obama has a way in his back pocket to avoid default, like, say, a “14th amendment solution” or something along those lines, I think that the way he’s handled this has been brilliant.

    Of course if either (a) OR (b) ends up not being true, then I’ll agree with the general doom and gloom that seems to have taken over the entire progressive side of the internet … so, a little over three weeks from now, we’ll see …

    Assuming that both (a) and (b) are true, there will be no deal, at all. The Republicans simply cannot afford to budge on taxes, or they’ll lose the entire tea party wing, and the tea party wing is essentially the only advantage they have …. tea party folk have way more enthusiasm than just about any other faction at this point, meaning they can deliver voter turn-out. If Republicans budge on taxes, they lose that enthusiasm … and if Republicans budge on taxes in any really significant way, they may well have the tea party wing fighting AGAINST them, which would end them as a party.

    So, either Republicans essentially commit mass suicide by compromising, or Obama is very visibly seen as the guy who was willing, even eager to work with Congress to fix this thing, even to the point of offering up Social Security, Medicare, and Medicaid. Once again, he looks like the adult in the room.

    AND, you get a bunch of Repuiblicans saying on record that they refuse to budge an inch on taxes, which to everybody EXCEPT the Tea Party types just looks unreasonable and dogmatic, and you get a bunch of Democrats the opportunity to go on record with how they’re willing to fight to the death to prevent cuts to Social Security, Medicare, and Medicaid, which to most people in this country looks like they are standing up for a principal they agree with.

    Wins all around for Democrats, losses all around for Republicans.

    Of course, if (a) or (b) above end up being NOT true, I’ll have to reevaluate.


  20. Stand on a pier on the Pacific Ocean during high tide and note how many sunken boats you see rise to the surface and (sail out to sea.)

    The richest man on the planet lives in Mexico while millions of Mexicans live in abject poverty. My question is can that richest man maintain and even grow his wealth in spite of the fact that he lives in a failed economy. Are the supra-rich negatively affected when the economy of the country they live in hits the skids? I kinda think they can. Case in point – The ’29 Crash left millions poverty stricken BUT

  21. I hit something on this goddamn keyboard which is why I’m continuing HERE….

    BUT some maintained their huge wealth and even increased it exponentially, which leads me to doubt that a failed economy will necessarily even affect the wealth of the supra-wealthy.

  22. Stephen — “It’s like they now believe the market will just magically shower gifts on us without even requiring any activity on our parts. It’s like they now believe not only that government intervention will necessarily hurt the economy”

    The BBC documentary I mentioned the other day really touches on this. Part of it related the science of cybernetics and the concepts of ecosystems and “free market” economics. The common thread being the self-stabilizing system. So in effect, your observation is exactly what the true believers think. They believe that a truly free market is a self stabilizing system and any interference will destroy its magic efficiency. Maybe I can sell them the blueprints for a car motor I invented. It just uses permanent magnets!

    The upshot was not that systems can’t find a new equilibrium, James Lovelock wrote about that, but the new stability can be one that is radically different from the original. Hell a deadzone is a stable system, but it doesn’t have a desirable type of stability. That’s probably what we’ll get out of the Randian miracle, an economic deadzone with few very big fish, living safely outside.

    So how screwed are we? I don’t think we can talk about this in polite company.

  23. Felicity …The super wealthy will be un-phased. I see the people who have Home Equity loans or adjustable rate mortgages as being the big losers…generally home equity loans are tied to the prime which has been keep low in order to stabilize the economy, but if they jack up interest rates as a result of a default then there will be millions of people who essentially will be wiped out.. I know in my situation I’ve been tapping into my home equity since 2008 just to supplement my income, or lack thereof, and to stay current with my bills( deficit spending). So the Repugs with their game playing presents a frightening prospect for the damage they can possibly do…I’ll be wiped out..and I’ve spent 40 years being responsible in financial matters. No $350.00 bottles of wine for me… When I drank wine it was Boone’s Farm for a buck a bottle.

  24. Swami –“Slaves cost money to maintain and if you can’t make money off of won’t own them.”

    I think that’s true, but when people like Rand Paul insist that the “market” can solve anything. I have often thought that slavery would only have ended when the “market” found a group of people that could be exploited more efficiently. When large groups of immigrants arrived, it was probably cheaper to hire an immigrant at horribly low wages and if he or she died or got injured because of a hazardous workplace, you just hired another one. A slave was an expensive “investment” which required a certain amount of maintenance and care. No wonder they call it the “grim science”.

    • Righties speak of “markets” as if it were a thing with independent identity that operates under some internal natural law, but they have no existence apart from human wants and desires. They are no “smarter” than the humans who participate, idiots included, and they are impacted by decisions based on misinformation and false logic.

  25. Audrey, thanks for posting the deficit chart. I laugh every time Jason Linkins posts it in his Sunday morning talk show roundup/livebog, which means he watches them all “so you don’t have to” . And my life is better for it!

    On another topic: I watched the q&a of President Obama’s presser today, and once again he came off like the adult in the room. If Boner can’t get his caucus to go for a 4 Trillion dollar debt reduction instead of 2 Trillion, it shows he/they lack seriousness about he issue. The President made it clear that he would have also had some rough sailing in selling it to his people, but the rough choices have to be made sometime. He called it “eat your peas.” Boner is too afraid he’ll have to drink his tea.

  26. My father used to say that the “world has been called a lot of things, but it’s never been called ‘fair'” (Cundgulag did my father lift this piece of wisdom from some old Slovak saying? Don’t tell me, I am happier not knowing.) I believe so much of our lives is governed by probability, which simpler, but wiser people used to call “luck”. (q.v. “The Drunkard”s Walk, by I am too lazy to walk upstairs and check) But, I was thinking something similar to swami’s last comment. I started saving for college when I was eight years old, I helped farmers take in hay for $1.00 an hour so I could save for an education. I never wanted much, just a decent life and I was “responsible in financial matters” to use swami’s phrase. So far, like everyone I lost a big chunk of my 403B, but mostly I am okay, by dumb luck only. When I hear the hardworking , insightful people who comment here talk about their financial situations, I just just despair for the promise that America once had. That was the promise wasn’t it? You don’t have to be a genius or a rockstar, just learn what you can, work hard and don’t do anything stupid and you’ll be okay. That was the bargain. “America, was somethin’ to see.” But, now the system seems ready for collapse or “reset” to a new Randian program and most of us are SOL. And a lot of us are SOL because we believed too much in the American dream. We worked hard, we saved we invested in Americans future and our own. In a blink, it was all swept away.

    Take heart swami, the old peoples’ communes will always have need of someone who can swing a hammer.

  27. Oh no, Maha. Look at the housing self adjusted naturally and shook out all the dead wood..all 30 million of us non contributing liberal deadbeats.

    You’ve got to forgive me…I’m just being sour grapes.. Once I internalize the truth and come to grips with the fact that I don’t deserve a place in America because I didn’t work hard enough or keep faith with the American dream and its mystical magical markets, I’ll settle down( under a bridge probably) and resign myself to my slothfulness.

  28. “they are impacted by decisions based on misinformation and false logic”
    All that plus they are driven by fear and are often manipulated.
    Last year, I was in a meeting with a man who owns a citrus processing plant that was being dismantled because Brazil now produces orange juice cheaper than we can. He told me how Brazilian companies can control the markets through dumping or withholding product.
    I believe the same happens all the time with securities and currencies also.
    Time to eat my peas……..

  29. Watch as Lawrence O’Donnell explaing what’s happening with the debt ceiling talks. It makes some sense, and he’s pretty politically savvy (much more that my beloved Keith, whose channel, naturally, isn’t shown in my area by Cablevision):

    If that link doesn’t work for some reason, as you can see I got it from Balloon Juices.

  30. Righties speak of “markets” as if it were a thing with independent identity that operates under some internal natural law, but they have no existence apart from human wants and desires. They are no “smarter” than the humans who participate, idiots included, and they are impacted by decisions based on misinformation and false logic.

    The thing is, righties are OK with that – the smart ones understand what you just wrote. Someone upstream talked about equilibrium – it takes a great deal of government intervention to create an equilibrium that allows for a vibrant middle class – everything that came out of the New Deal. This is what the plutocrats have decided they don’t need or want to pay for anymore. They’ve managed to drum all this free market utopian religion – how wonderful it truly will be – into the dumber (and poorer) righties to get their way in Congress, who do not fully understand what you wrote.

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