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By Tom Cushing

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About this blog: The Raucous Caucus shares the southpaw perspectives of this Boomer on the state of the nation, the world, and, sometimes, other stuff. I enjoy crafting it to keep current, and occasionally to rant on some issue I care about deeply...  (More)

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Pretending to resolve a make-believe crisis in a way that nobody can understand

Uploaded: Aug 2, 2011
Is everybody happy now? Relieved anyway, because we dodged a bullet, forged a compromise and snatched victory from the jaws of default? Does it make any difference:

- that this was an utterly illusory "crisis" that "we" inflicted on ourselves, or

- that it'll cost the neediest among us a lot, and the most fortunate nothing, again, or

- that the wrong guy gets the blame for it, or

- that it only treats part of the problem, or

- that it's the wrong part, or

- that it continues the trend of burying the electorate in a confusing blizzard of zeros, relating to both dollars and the time over which they accumulate?

The debt ceiling limit law was enacted in 1917, when Congress exercised only loose oversight on government spending. It has been unnecessary since at least the 1970s, and you'd never heard of it before now because it has been used seventy (count 'em) times previously without incident. Nobody ever conceived of using this routine act to hold the world economy hostage – until now. www.newyorker.com/talk/financial

The compromise reached during this make-believe hostage crisis apparently focuses early spending cuts on federal agencies serving the poorest Americans; Defense is untouched, unless the next generation of Congressional wranglers can't agree on more cuts before Christmas. I write 'apparently' because it's quite difficult to tell – even the NY Times threw up its hands and just printed the 74-page bill.

Mr. Obama gets most of the blame for the sorry state of the national debt, when the lion's share of the problem was created by his predecessor: via tax cuts ($1.8T), coincident with two (count 'em!) unfunded wars ($1.5T), TARP and a Wall Street bail-out ($1T). Obama's stimulus and tax cut (together, $1.1T) are kind of chintzy, by comparison. http://graphics8.nytimes.com/images/2011/07/24/opinion/sunday/24editorial_graph2/24editorial_graph2-popup.gif.

The ransom, err, compromise deals only with the spending side of the national accounts. As everybody with a check book knows, there are two components to balancing a budget: spending less And making more – here, in the form of higher taxes. A simple revision of the Bush tax cuts would make a huge dent in the problem. The job-killer counter- argument is cynical nonsense. The Bush cuts have done nothing for American jobs precisely because their benefits flow elsewhere in the now wide-open global economy.

This country's economy is struggling mightily to emerge from the Great Recession. It has a jobs and housing crisis, not a debt crisis -- it has a debt problem. The current economic scuffling is caused by too little demand overall, especially from the deeply troubled middle class. Reducing the spending that flows from both the feds directly, and via the states, will further exacerbate the lagging demand problem. Anybody for a double-dip in the red-ink pool?

Sometime in the last decade, politicians decided that they could maximize the perception of a desired policy by accounting for it over multiple years or budget cycles, thus yielding bigger numbers. The result has been a thoroughly numbed and befuddled public that cannot comprehend or compare actual, relevant impacts without a Cal Tech post-doc. I suspect that the coincidence of that phenomenon with the downfall of solid, investigative journalism is no accident. It is a thoroughly frustrating trend that generates fear without understanding.

They say a good compromise is one where nobody ends up happy. This latest "bargain" demonstrates that the same thing can be said of a lousy one.


Posted by Mike, a resident of Alamo,
on Aug 3, 2011 at 12:26 am

Couldn't agree more Tom.

Posted by RN, a resident of Danville,
on Aug 3, 2011 at 9:30 am

You're right on, Tom - the whole thing was unnecessary and is going to hurt the economy - which is apparently the primary objective of the right-wingers who created the crisis. One minor correction: it should be called the Bush Recession - it wasn't all that great...

Posted by LowcountryJoe, a resident of another community,
on Aug 3, 2011 at 9:37 am

You know, if you feel badly that the federal government won't have enough money to spend on its programs to help the poor, you (and others that want to help indiscriminately via the government) can always write a check as a gift to the U.S. Treasury.

Oh, and if the GOP 'terrorists' held the legislative process hostage, why was it that those on the Left were so reluctant to sit down to try and understand the terrorists' positions => Web Link

Posted by Tom Cushing, a resident of Danville,
on Aug 3, 2011 at 10:08 am

So, LowJoe, let 'em eat cake? I think you just demonstrated why tax increases are required to loosen that two-fisted grip on some folks' personal fiscs. BTW, there are lots of other ways to help others, too, and I have proudly Conservative friends who are remarkably generous with their gains.

That humane instinct does reach across ideological lines, but maybe it doesn't get all the way to you.

Posted by LowcountryJoe, a resident of another community,
on Aug 3, 2011 at 11:05 am

*Apologies if this is a duplicate post*

Yes, FKer's it is a name from **; how do you suppose I found this blog without trolling yours?

Tom, notice I specified giving indiscriminately through government. Personally I have not contributed enough to charity because I haven't been exactly flush with spare resources. I did think it was very big of you to note that you have conservative friends who are generous. And while on that topic, couldn't a case be made that society might just be better off if giving was done with strings attached? I mean, really, wouldn't it send the best signals to the neediest amongst us if giving was done with discrimination [in the most general sense of the word, not narrowly defined like it tends to be today]? In other words, don't expect a handout from me if you're of questionable character or your priorities seem a little out-of-whack with those of typically productive behaviors. I don't think that governments are good at this. It seems they are forbidden to do this yet make eligibility rules that are too easy to skirt around causing abuses.

Also, you should look into the phrase "Let them eat cake." => Web Link

Posted by Ralph N. Shirlet, a resident of another community,
on Aug 3, 2011 at 1:16 pm

Dear Editor,

Among the humorists of our corridor we are welcoming Tom Cushing's new column that focuses all the usual commentary on the Danville Express Town Square Forum. Without defined content, the incongruity of the presentation invites responses by various commentators to the imagined meaning of Tom's interesting humor.

Humorists enjoy such lack of discussion and apply their own subjects to content such as Vince's belief the subject is germs and, by contrast, I quite define it as bluejays. That can be a crisis in itself, don't you think, with birds, even flightless, likely not able to reach the heights of imagination to be explored when the subject is not exactly clear or certainly defined.

It seems to me, after not reading Tom's column, that the subject is ceilings and not likely any debt owed or imagined. Clearly, ceilings only exist when someone builds one or imagines building one. Somewhat like there is no end to space, ceilings are often someone else's floor. Thus, with ceilings the subject and basis for what lies beyond, it could be right to consider Alton Canard's famous quote from The Compleat Tubist, "Even Ronald Reagan got it right as part of his coincidental role as President when he noted the supply side of an economy is the focus."

But considering all that, I did name my horse "Duck" but it is only a rumor that I have a horse.

The ROFL in Ralph N. Shirlet

Posted by Kluge, a resident of Danville,
on Aug 3, 2011 at 2:02 pm

Reasonable people can disagree about the proper amount and nature of government expenditures, and that is an entirely appropriate function of the political process. But Cushing is right: voting to increase the debt "ceiling" is simply an act needed to ensure that debts we have already incurred will be paid for. It has absolutely no part in determining the amount or nature of government revenue and expenditures we want to have from today onward. Failing to approve that action threatened the entire US (and global) economy. Those who held that vote hostage to accomplish their goals are extortionists, plain and simple. It was absolutely a "If you don't do what we say we'll kill your family" course of conduct.

It doesn't matter which side was right-er or wrong-er with regard to the ultimate total of government taxes collected and spent. Any group of ideologues willing to destroy the life savings of millions of Americans to advance their agenda now knows exactly how to get what they want.

Posted by Dirk, a resident of Alamo,
on Aug 3, 2011 at 3:32 pm

It is always amazing to me how little blame GWB gets for the mess this country is in now. He put the United States well on the path to ruin, and I am terrified that Republicans now may be able to complete the process.

Posted by Alan, a resident of Blackhawk,
on Aug 3, 2011 at 5:23 pm

R U kidding me. The current White House residents (including the Mrs.) have a huge hand in the blame game for this mess along with Pelosi and Reid. Obamacare, stimulus, continued handouts to the poor with no morals (i.e. have another baby to get more money), etc. are some of the direct causes of our current mess. BTW many of the other original problems started with Clinton, not Bush - get your history right!

Posted by Tom Cushing, a resident of Danville,
on Aug 3, 2011 at 5:41 pm

@ Ralph: I've read and re-read your comment, and I always end-up open-mouthed, like the AFLAC duck, saying "Whaaa...?" Web Link Do you offer translation services with your postings? Otherwise, would it help my comprehension if I ingested whatever it is you're taking? I'm willing to try.

@ Alan: kind of a scattershot comment, dontcha think? Could you slow down and tell us specifically what Mrs. Obama's role is in 'this mess?' Also, how much has the new health care plan cost you, exactly? And I'm not sure, but I think your welfare info is badly out-of-date -- what program are you referring-to, AFDC?

As to the stimulus, I think its problem was that it was too small to prime-the-demand-pump sufficiently -- we're now learning that the economy was actually in much worse shape than anybody realized at the time Obama took office.

Finally, say what you will about Bill Clinton -- you had to like the budget surplus he left us all with in 2001.

Posted by Tom Cushing, a resident of Danville,
on Aug 3, 2011 at 5:55 pm

@ LowJoe: first, for the Danvillains who may be confused, LowJoe is referring to another website, "FK" (which doesn't abbreviate what you may think it does), where I bragged this AM that my column had actually received a favorable comment (thanks, Mike --don't be a stranger! You too, RN and Dirk).

As to your comment, I guess we could all build our own roads and defend our property (and freedom!) with a private army, but government has been found to be a useful tool in aggregating those services and maintaining them in-common. Our mixed system of safety net and charity is probably better at identifying and filling those kinds of needs than your idea of a totally private system.

Once we acknowledge that there's a need for some government, then we're only talking breadth-of-role and price, right?

Posted by LowcountryJoe, a resident of another community,
on Aug 3, 2011 at 8:07 pm

@Tom: I'm not an anarchist but I do champion for a much more limited federal government than there exists currently. I do think that government has a role in providing public goods that a free market would not provide if left to itself; however, I do think those thing are all that numerous nor do I think the federal level is the most appropriate venue for many of these function -- local legislation could handle much of this stuff and neighboring municipalities could compete with one another for the ideal amount of provided public goods.

@Dirk: there's very few speeches given from our current president that do not blame the previous one. And Bush's record on curbing spending, providing bailouts, and establishing new entitlements doesn't give too many people on the Right warm fuzzies. So, I happen to agree with you here.

@Kluge: If the debt ceiling was not raised, the federal government would have had enough money in tax revenue to fund all Social Security payments, provided all Medicare reimbursements, funded all the military action that's currently going on, AND have paid the creditors holding federal debt. But...BUT, it would have only left it with about $10 billion. And you just know that politicians cannot make painful choices when vote-buying is what the voting public demands/expects. Also, that's politics. If you remember correctly, when Democrats re-took the House in early 2007, they bent Bush over the barrel and threatened to de-fund his military actions in Afghanistan and Iraq unless they got new spending concessions. Democrats were very quick to point out that "Elections have consequences". And that's true. The GOP was just playing the same tired game to get what they wanted [I don't think they got enough, either -- the so-called cuts are only to anticipated automatic spending increases -- I would have much preferred that an increase to the age at which people can get entitlement benefits be raised to 75 (or more) be part of the deal]. So, I ask, why place so much trust in government when half the time the guys you really want at the helm are not there?

Posted by Ralph N. Shirlet, a resident of another community,
on Aug 4, 2011 at 12:51 pm

Dear Editor,

I did send an introduction to Tom Cushing via Dolores that includes a translation of each line of humor I posted in this exchange and shared with the Alamo Towne Fool and All things Alamo & Pop(u)lar e-exchanges. Tom is a refreshing humorist with focus on important issues. As towns named Alamo and Poplar in North America now track the Express Forum in humorous delight, Tom's raising the bar on discussions will hopefully raise the overall quality of the forum for your out-of-town guests.

Applause for Tom,

Ralph without ROFL

Posted by Tom Cushing, a resident of Danville,
on Aug 4, 2011 at 8:03 pm

Apparently Wall Street read my blog -- ouch!

Posted by [removed], a resident of Alamo,
on Aug 5, 2011 at 7:14 am

Dear Editor,

Subscriber news services are illustrating the realities of global economic impact on its international currency, USDollars, and the associated impact on USAmerican markets. Wall Street is not the center of this global response and simply an affect of global focus on an amateur US Congress. Tom introduced this reality in his column and now should be invited to explain the obligations of the US Congress to be fully part of global community and its economy.

Congress in its isolated ignorance took a risk in challenging the global holders of US Debt and now WE, the people, are paying the consequences in the value of our domestic economy.

Posted by Kluge, a resident of Danville,
on Aug 5, 2011 at 6:53 pm

"If the debt ceiling was not raised, the federal government would have had enough money in tax revenue to fund all Social Security payments, provided all Medicare reimbursements, funded all the military action that's currently going on, AND have paid the creditors holding federal debt. . But...BUT, it would have only left it with about $10 billion. And you just know that politicians cannot make painful choices..."

---You've just listed 69% of the federal budget and ignored significant other, non-discretionary obligations of the U.S. Government. Apparently you consider eliminating all discretionary budget items and figuring out how to pay $500B in non-discretionary expenses with $10B to be nothing more than a "painful choice." I call it "budgeting with magic."

Posted by Tom Cushing, a resident of Danville,
on Aug 6, 2011 at 4:44 pm

A bit of an update: 'twould appear that Standard & Poors has seen fit to lower their rating of United States obligations. While it is unclear, as yet, how great the economic damage will be, it's likely that US borrowing costs will rise.

That would be ironic for (at least) two reasons:

First, the folks who created this pretend crisis, and whose intransigence carried it to the 11th-hour and 45-minutes, say that they did so out of concern for the size of the deficit and spending habits of the government. By their efforts, they will have unnecessarily increased that deficit, causing more of our tax dollars to go for debt-service -- leaving less for services to people, or even for ammunition, the better to shoot themselves in the foot sooner next time.

Second, Standard & Poors is the same agency that gave worthless mortgage-backed securities their highest rating a few years back. Their failure to recognize the systemic risk posed by those instruments inflated the real estate bubble and helped guide the world economy to the brink of disaster. The effects of that blunder continue to be felt. We can only hope that their credibility has tanked sufficiently that investors remain unimpressed with their work.

Posted by spcwt, a resident of Danville,
on Aug 7, 2011 at 11:29 am

The children running Washington thought they could borrow & spend endlessly. Mom & Dad Taxpayer are finally trying to stop it.

Posted by Tom Cushing, a resident of Danville,
on Aug 7, 2011 at 1:21 pm

Couple things:

First, I believe there's a role for increased spending by government in times of Recession, offset by lower levels during better times. That counter-cyclical approach tends to exert a leavening influence, attenuating the downside and discouraging inflation on the upside.

Second, I think the debt, and spending, are important primarily in relation to the size of the economy, per GDP. After WW2 when the debt exceeded GDP for obvious and important reasons, it was pretty steadily paid-down under 1980, when it represented 32.5% of GDP.

Reagan and Bush/elder more than Doubled it to 66% by 1992.

Clinton reduced it to 56.4% by 2001 in relatively prosperous times, later in his Administration (tech bubble).

Bush/younger then grew it almost 30 percentage points, to 84% by 2009 -- during times of prosperity!

Obama, in severe recession, has grown it further to 93%+.

I conclude that Reagan/Bush1 were huge Keynesians, and that Bush2 was simply out-of-control. Where were the adults then? I do not fault Obama's attempts to pump-prime, as they are needed, and arguably have been not enough to help bootstrap ailing demand in the economy. In a very real sense, he's absorbing punishment for the Bush2 profligacy.

Posted by spcwt, a resident of Danville,
on Aug 7, 2011 at 3:02 pm

I don't disagree with anything you've said about Bush, or debt/GDP ratios, or Keynesian economics, etc. And I agree the timing couldn't be worse. But Washington is incapable of mustering the political will to fix things during good times.

Sorry to break up your kegger, kids. But this party's over

Posted by Tom Cushing, a resident of Danville,
on Aug 7, 2011 at 4:22 pm

I guess we'll find out tomorrow whether M&D burned down the house to make their point.

Posted by spcwt, a resident of Danville,
on Aug 7, 2011 at 6:42 pm

Oh sure, blame the parents. It's always their fault....

Posted by Tom Cushing, a resident of Danville,
on Aug 7, 2011 at 8:06 pm

HA! I knew there SOMEthing out there we could agree-on -- ah, the tribulations of cultivating offspring.

Posted by Tom Cushing, a resident of Danville,
on Aug 8, 2011 at 12:56 pm

Ouch, chapter two in the markets today.

And spcwc -- I think Robert Reich has been eavesdropping on our conversation based on his blog entry "Slouching toward a double-dip for no good reason," right down to the 'burning down the house' image, here: Web Link.

Posted by Tom Cushing, a resident of Danville,
on Aug 8, 2011 at 12:57 pm

Rats -- link won't work -- here's another: Web Link

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