The End Of The World – Here We Go Again

Remember how the “sequester” happened? The 2011 deal to avoid default created the “Super Committee” to agree on a fiscal deal, under the Damocles sword of the unthinkable sequester if they failed. And the sword fell. So horrible was this, we were assured that certainly in a few days, or weeks, they’d work something out. They didn’t. Nine months later, the whole thing seems forgotten.

Now the government is (partially) “shut down,” and we’re assured that certainly in a few days, or weeks, they’ll work something out. But, as with the sequester, we may find that The End Of The World is not quite the end of the world after all. (Wall Street seems to be shrugging it off.)

However, this idea of TEOTW not being TEOTW is very dangerous; because in two weeks, if the debt ceiling isn’t raised, that could be The End Of The Word – full stop. Default on America’s debts would have incalculable global economic consequences.

The roots of the problem are complex, but one thing you have to understand is that for legislators, The End Of The Word doesn’t mean economic meltdown – it means not being re-elected. More pertinently, especially in the House of Representatives with its gerrymandered districts, it means not being renominated, an important distinction. Because, with small turnouts, nominating primaries tend to be dominated by ideological zealots, who demand purity and despise compromise. Intransigence causing economic devastation won’t actually much hurt incumbents electorally – hard to pin it on them – but compromising ideological purity can expose them to primary challenges, requiring at least raising large campaign war chests and enduring negative ads, not to mention the terror of humiliating loss of office.

Now, despite this, majorities in both houses would actually pass all necessary legislation – if they could vote on it – but they can’t. You know how the Senate’s filibuster rules have become perverted so that 60 votes are needed to pass anything except Mother’s Day resolutions. But the House now has a “majority of the majority” rule: nothing can come to a vote unless backed by the majority of Republicans. Thus, in effect, 27% of the whole House has a veto. And those are the Tea Party Republicans most subject to the primal primary fear discussed above. They don’t mainly care about the future of the country or the world or even, for that matter, the Republican party. They care mainly about primary challenges.

I have written much about America’s long-term fiscal problem. In brief, we cannot keep borrowing ever larger sums to pay out ever more government benefits to ever more people with ever fewer working and paying taxes. Especially if – when – interest rates rise from current near-zero levels.

This was what, in the halcyon time of a couple of years ago, the recurring budgetary and debt ceiling crises were actually about. But that was then. Now Republicans seem to have funked that battle; gotten so balled up in their ideological frenzy that they’ve lost the thread of the narrative. In today’s Washington stand-off, the long term fiscal crisis seems forgotten. Maybe Republicans have just given up – after all, in the last deal, they got completely rolled, giving in to the Democrats on taxes while getting nothing in return.

So now instead they’re on this quixotic quest to undo Obamacare – for which they don’t have the votes – yet trying to simply blackmail Democrats into something they can’t possibly agree to. Republicans seem to know they can’t prevail, but to feel they must “fight the good fight” to propitiate their base.

Yet President Obama and the Democrats are far from blameless. Democrats, for all their pious verbiage, love the shut-down – as a stick to beat Republicans and perhaps recapture the House. Further, Obama is supposed to be the national leader, and ultimately the buck stops with him. Meantime, forcing Obamacare through without a single Republican vote was a travesty, and a singular cause of the present crisis. But his bigger sin is his feckless complacency toward the looming fiscal smash-up, that has so worsened during his stewardship. Obama repeatedly blew off opportunities to achieve a “grand bargain” to tackle this long range crisis (starting with the Simpson-Bowles plan). Had he behaved responsibly before, we wouldn’t be in this fix today. The whole thing is really his fault. President Obama will leave office like the engineer jumping off a train rushing toward collision.

Tags: Debt ceiling, government shutdown