A Loss of Will

Does anyone else have a sense of national hopelessness?  It seems we have lost our will to, as Barack Obama put it, "do big things."  For that matter, it seems that we have lost the will to do anything.

The list of things we can't seem to do grows almost daily, although to be honest, the list is not universally agreed upon.  Can we explore space?  No shuttles, renting space from the Russians, abandoning planned missions, postponing others indefinitely, and some wonder if there is even a place for NASA in our future.  Want a satellite?  Build and launch it yourself.

Welfare, Medicaid, food stamps, heating assistance, homeless shelters and unemployment insurance are being slowly defunded or dismantled even as more and more Americans are in need of this kind of assistance.

Even the major safety nets for our elderly are under attack in ways that would leave millions of the elderly destitute.

For all the talk about "crumbling infrastructure", there is little effort to actually engage in major public works programs that would be required to even maintain the infrastructure we have in place now, much less build new systems of transportation.

Public education, which has enabled us to compete in the world's economy, create medical breakthroughs, and create innovations that can transform the future is withering on the vine.  Decreased funding federally and by states leaves major institutions unable to fulfill their educational responsibilities, and the dearth of financing trickles down to local school districts that are not only laying off educators, but allowing the literal disintegration of the schools.

There are even indices of hopelessness that show this.  "Consumer confidence" and "manufacturing confidence" mirror "economic uncertainty."  Measures of inventory, purchases, capitalization and other similar measures of economic activity all seem to be lagging, and our trade deficit continues to climb.  The big number that everyone knows is the "unemployment index" which everyone seems to acknowledge is improving so slowly that some think that if we are not in a recession, we might be close to one.

Perhaps the picture is even bleaker than this.  One blogger wrote, "The bottom line is that it's not "uncertainty" that's causing these problems at all. Precisely the opposite: banks aren't lending because, while they don't dare admit it, they are quite certain that they are fucked."

And it appears that the jobs are not coming back; at least the ones that have been shipped overseas or replaced with automation.

On top of that, our credit has been downgraded.  This is perhaps a meaningless gesture, and it certainly hasn't hurt bond purchases, but psychologically it is devastating.

Of course, there is good reason to think that we cannot afford to fix things, or do things, or buy things.  We are borrowing 44 cents on every dollar that our government spends.  Not only does that not inspire confidence, it suggests that we are living beyond our means, and we can't afford all of the "extras" of civilization, like clean water, breathable air, a functioning electrical grid, streets that don't have potholes, sewage, police, firemen or teachers.

If we don't fix the aqueducts, they will stop functioning.  If we don't repair the buildings, they will crumble.  If we don't clean up after fires, tornadoes or earthquakes, we lose everything damaged. 

How do we dig ourselves out of this economic and psychological rut?  Keynesian economists think government spending is the answer to stimulate the economy.  Conservatives think that tax breaks for the rich are the answer. 

Personally, I think that government spending is like beating a dying horse.  The effects are short-lasting, and everyone knows that it can’t go on forever, so we don’t take any measures for the long term based on the temporary uplift offered by a government stimulus or work program.  This is especially true as we attempt to deal with a growing debt and deficits that are alarming in themselves.  Tax breaks for the rich are already proven to be ineffective because the rich simply put the money away for a rainy day that they can tell is coming.

No, it will take something drastic.  I am neither a government employee nor an economist, but I do read.  It seems we need jobs.  We need them here in the United States. 

It can be done but it will take a literal “act of Congress” to move the country in the direction of employing US citizens.  Tariffs are not the answer, but incentives and disincentives are.

For the time being, it looks like we have curled up against the cold winter.  This provides a temporary respite, but we can’t avoid freezing to death by simply curling up.  The cold is paralyzing, and we don’t have long before we will be unable to act, but we will have to take risks again, as a nation and as individuals.  

We either get moving, or we die.

A House Divided

We have a house divided against itself.  Disagreements on policy may be commonplace, but the level of animosity and the strategies being used in the struggle for control of this country are harmful, and unnecessarily so.

Although it makes a good story to call both parties equally responsible, it should be clear that the party known for saying “No” deserves it’s reputation.  They have vowed to pass no major legislation, and they are doing what they threatened.  Their actions have deliberately blocked trade agreements, appointments to the executive branch, and infrastructure projects.

By keeping the United States from doing things that both parties agree need to be done, the Republicans have harmed the economy of the United States.  It is no coincidence that their intransigence and the difficulty they have in achieving compromise has contributed to the recent downgrade of the credit of US Treasury debt.

Just one example is necessary, but there are numerous others.  The best example is the recent standoff regarding raising the debt ceiling.  Both parties agreed that it was necessary (except for some Republicans that refused to understand that the reason for raising the debt ceiling is to pay the debts that Congress has already authorized), but the Republicans decided to use the debt ceiling as “leverage” to accomplish their political agenda.

In order to do this, it was necessary to threaten not to raise the debt ceiling and cause the Treasury to not be able to pay all of the obligations that this country has.  Is there any doubt that the refusal was because of the Republicans?  No, and this was clearly stated by the Standard and Poors in their statement regarding lowering our credit rating.

“The political brinksmanship of recent months highlights what we see as America's governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed. The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy.”

And they have said that, given the opportunity, they will do it again.  Mitch McConnell, the Senate minority leader, said this about the actions and intent of his own party:

“I think some of our members may have thought the default issue was a hostage you might take a chance at shooting. Most of us didn’t think that. What we did learn is this — it’s a hostage that’s worth ransoming.”

“Taking the country’s debt limit hostage” is not just a metaphor, it is a description that fits, and McConnell has embraced.

From the debt-ceiling crisis, to the FAA shutdown, to the refusal to vote on appointments to executive branch departments, and the efforts to make enforcement of the laws passed by Congress impossible, the Republican Party has adopted a policy of intransigence.  We have had trade agreements with several countries, South Korea, Columbia and Panama, that the Republicans have attached strings to in order to pass.  Even the Heritage Foundation has objected to this tactic for these agreements.

“The Obama Administration—after allowing U.S. free trade agreements (FTAs) with South Korea, Colombia, and Panama to languish unapproved for nearly four years—lately appears eager to push Congress to ratify all three soon. The problem now is that some in Congress are trying to make their approval contingent upon an extension of the Trade Adjustment Act (TAA).
 That would be a mistake. The three FTAs are intrinsically worth passing without any strings. Congress should act on them without further delay.”

Domestic projects that could at least stabilize the job market are also languishing because Republicans refuse to consider them or seek to defund them.  Their whole agenda has been to do nothing about anything, or to undo things that have already passed.  They are earning their reputation as a “do-nothing congress.”

As a strategy, it has been effective.  It is a morally bankrupt strategy however.  When there are things that both parties agree in principle could be done to help the economy, but one party (lest anyone forget, the Republican Party) steadfastly refuses to do (and takes steps to deliberately block), that party is clearly acting not only irresponsibly, but contrary to the best interests of the United States.  And they know it.

It is therefore not surprising that Standard & Poors chose to downgrade the credit of the United States regardless of the ability to pay the outstanding debts owed.  Whether it was the right thing to do is another question, and, according to Robert Reich, they got it wrong.

“If we pay our bills, we're a good credit risk. If we don't, or aren't likely to, we're a bad credit risk. When, how, and by how much we bring down the long term debt -- or, more accurately, the ratio of debt to GDP -- is none of S&P's business.”

When there is legitimate concern about whether a policy will be beneficial or harmful, virtually any strategy might be condoned – even obstructionism – but when there is uniform agreement regarding the necessity of legislation, legislation that must pass or legislation that will clearly assist the function of government, it is insanity to block said legislation or to even threaten to vote against it solely for political gain.

Republicans have been relatively transparent about their ultimate political goals, but we must question their methods.  Is the goal of the Republican Party to damage the economy in the hope that a damaged economy will assist in the defeat of President Obama in the next election?

That would be beyond the pale. Self-inflicted wounds should not risk economic suicide.  It is pure insanity. 

This democracy can certainly withstand political shenanigans when the stakes are high, but there should be some common sense involved.  If the results of political brinksmanship are harmful to the economy, it’s time to stop and reassess the risks and benefits.  Congress should be united in their efforts to improve the economy if both sides are already in agreement that a particular measure will be helpful. 

The economy has had enough problems without having Congress poking holes in our delicate boat.  Staying afloat should be the first priority even if steering the boat is the ambition of both parties.

In my humble opinion, changes in how congress operates are necessary, and these changes have been necessitated by the actions (and inactions) of the Republican Party.  It’s time to take the knives away from the minority party (be they Democrats or Republicans) before they injure the institution of government itself.

Failing that, we can only hope that the serious threats currently faced by the economy will be addressed seriously and logically.  If politician says “I will not compromise”, he or she should be placed in a metaphorical penalty box for the remainder of his or her term in office.

Invoking the 14th

The recent downgrade of the United States credit rating by Standard & Poors is not based on the actual ability of the United States to pay its debts, but rather mostly on political calculations and the nature of the fiscal crisis as their report admits.  In fact, the concerns expressed relate to the ability of the US political system to effectively deal with the fiscal crisis, so the downgrade was almost entirely an indictment of the political uncertainty as it might affect stability.

“[W]e see the path to agreement as challenging because the gap between the parties remains wide. We believe there is a significant risk that Congressional negotiations could result in no agreement on a medium-term fiscal strategy until after the fall 2012 Congressional and Presidential elections.”

There is no specific mention of the debt-ceiling negotiations, but with a system so dysfunctional that there was a significant risk of some form of “default” on our credit, this crisis does illustrate the difficulties in reaching agreements.  This strategy of “holding the country hostage” in order to achieve political goals has meant that a number of self-inflicted wounds have been made and are continuing to be made that can and will affect our economy.  Furthermore, it seems reasonable to assume that this “standoff” will likely rear it’s head yet again at the next opportunity.  Mitch McConnell has virtually promised this in this statement:

“I think some of our members may have thought the default issue was a hostage you might take a chance at shooting. Most of us didn’t think that. What we did learn is this — it’s a hostage that’s worth ransoming.”

With the debt-ceiling crisis behind us, discussions about whether the President should have invoked the 14^th amendment in order to raise the debt ceiling without congressional authorization have devolved into accusations that he is a wimp, spineless or a bad negotiator.  Most people seem to think this action would have been virtually unchallenged, or that any challenges could have been met relatively easily without any “unintended consequences.”  A few have considered some of the potential problems, mostly for the President, but the possible scenarios carry significant risks to our economy, the world economy, and our system of government.

For anyone familiar with the debt ceiling, skip this paragraph.  The debt ceiling is a law enacted by congress in 1917 that was intended to limit the amount of debt the country could accumulate.  All debt incurred by the United States is through legislation enacted in the House of Representatives and approved by the Senate and signed by the President, so the law is intended by congress to enforce fiscal discipline on congress itself.  It has been viewed as a signpost for the future to tell them to cut back spending.  Whether it had the intended effect is debatable, and it has been raised a total of 74 times since the law was enacted.

It wasn’t until this House of Representatives decided to use the debt ceiling against itself that a crisis was created.  The threat was that if a budget could not be passed that met certain criteria (which changed a few times), then the House (and possibly the Senate) would not vote to raise the debt ceiling, and, given that the debts are appropriations already made, that would mean a credit default.  (For now, we’ll ignore the congressmen that claimed there was no need to raise the debt ceiling.)

The 14^th amendment has a long history and dates to the end of the Civil War.  Congress did not want to be responsible for any debts incurred by the Southern States, but wanted to be clear that it would pay any debts owed by the North.  Only sections 4 and 5 apply to the public debt.  They read as follows:

Section 4. The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.

Section 5. The Congress shall have power to enforce, by appropriate legislation, the provisions of this article.

Those advocating that the President invoke the 14^th amendment in order to raise the debt ceiling, borrow money by issuing treasury bonds, and pay outstanding debts focus on the first sentence of section 4 and claim that, since the debts of the US shall not be questioned, the congress does not have the authority to refuse to pay those debts.  In effect, they are saying that the debt ceiling law is unconstitutional.

While the debt ceiling law is possibly schizophrenic, it is not necessarily unconstitutional, and there has been no ruling to that effect.

In any case, there are several potential problems with having the President override Congress in order to issue Treasury bonds for the payment of our debt.

It’s Illegal

Regardless of whether it would be good, bad or indifferent, it is a standing law.  It has not yet been ruled unconstitutional, and it is unclear who has standing to have it ruled so.  As the law stands, only Congress has the authority to order the issuance of bonds for the payment of the public debt just as they alone have the authority to apportion money and levy taxes under Article 1, Section 8, and this includes specific references to “pay the Debts.”

Even if you think it would be a good idea to bypass congress and raise the debt ceiling, the law as it stands prohibits that.

Impeachment and Conviction

A simple majority of the House of Representatives is required to impeach a President, and they have done it twice before.  The grounds for impeachment would be that President Obama would have broken the law and therefore committed a “High Crime.”  This would not necessarily even include the High Crime of violating the separation of powers and usurping the authority of congress, although I’m sure a case could be made for that, particularly since Section 5 of the 14^th amendment specifically appoints congress to enforce the provisions of the amendment.

The Senate would be given the task of trying the President.  The question before them would be the simple one:  Did the President disobey a law?  It is not the Senate's prerogative to question the validity of the law (they alone cannot invalidate a law passed by both houses and signed by a previous president), and in any case the law has been observed 74 times before. 

Unless the Senate abdicates its responsibility, the only reasonable conclusion is that President Obama would have, in fact, disobeyed a law.  A vote otherwise would be an admission of partisanship, and it would be a lie.  It is unclear what punishment would be chosen, but certainly removal from office would not be impossible.

Fate of the Bonds

What would the world make of bonds that were issued by order of a discredited President of the United States?  Would this country even honor them?  If Congress proceeded to honor those bonds, it would de facto validate the President’s actions and invalidate their own impeachment proceedings.  To do otherwise would destroy the full faith and credit of the United States, and might even throw into question the validity of any US Treasury bonds.  This puts congress into an impossible situation of making one of two really bad choices.  A Hobson’s choice of their own.

Imagine for a moment what that would do to the prices of our bonds, the bond market, the stock market, and the world economy?

Setting a Precedent

Even if the President “got away with” invoking the 14^th amendment and congress did nothing, the specter of this President or a future President using this precedent in other ways might alter the separation of powers indelibly and permanently. 

Not only could he have avoided future problems with the debt ceiling, but a President might also use the precedent to authorize payment of other debts despite a need for congressional authorization.  At this time, for example, Congress has not been able to reauthorize the Federal Aviation Administration, thus idling around 74,000 government employees and private contractors.  Are their contracts legitimate debts owed because of appropriations of congress?  Would the President then honor those debts by authorizing the work that they have been contracted to do?

Could congress “defund” a program that has been funded by legitimate appropriations, or could the President “invoke the 14^th amendment” in order to continue funding?

There is a concern that the President might take this success as grounds to authorize any funding that congress has been unable to accomplish legislatively.

It could even be taken further.  If the President can disregard a law passed by Congress with impunity, what further limits to his power would there be?  The wisdom of the separation of powers has been validated many times over, and unrestrained executive power would eat away at our system of government.

It is not these specific scenarios that should worry us necessarily, but the uncertainty regarding everything relating to relations between the executive and legislative branch.

Unforeseen Consequences

As Donald Rumsfeld so eloquently stated:

[T]here are known knowns; there are things we know we know.

We also know there are known unknowns; that is to say we know there are some things we do not know.

But there are also unknown unknowns – the ones we don't know we don't know.

That is a pretty good description of uncertainty.

Conclusions

For every scenario I have described, there are smart people who would say that there is some way around each of them.  Even in the best scenario, there would be confusion and uncertainty in both the government and the economy (if not outright breakdown).  Anyone who claims to know the outcome of this grave course of action suffers from hubris, overconfidence, ignorance, or unsupported hopefulness.

Layering a constitutional crisis on top of the debt-ceiling crisis on top of an existing economic crisis is not a recipe for a good outcome.  Economies are fragile things that run on trust and trust alone; a fact that has been overlooked recently by the political establishment (and most particularly the Republican Party).

Perhaps one could imagine that the self-destructive actions of congress might lead to catastrophe some day, and the actions of a President could save the nation from disaster (or at least reduce the impact of their actions), but if that day comes, we will no longer have a representative democracy. 

A failure of the system that unimaginable would be a failure of democracy itself.  If that is even conceivable, then the downgrade of our credit rating would not only be justified, it would be prescient.

Shock Doctrine, Part Deux

Naomi  Klein’s book, The Shock Doctrine, examines how American policies have taken advantage of moments of crisis to exploit “disaster shocked people and countries.”  She refers to this tactic as “disaster capitalism – the rapid-fire corporate reengineering of societies still reeling from shock.”

In the United States since 2001, the American government, and particularly the Republican political party, has continued to take advantage of various crises in an effort to shape our government into an image they had envisioned.  The major difference now is that instead of taking advantage of existing crises as described in Klein’s book, they are manufacturing crises in order to create the circumstances that drive dramatic shifts in policy.

Federal budgets may be mundane affairs to create, but they do speak to our national priorities – our soul, if you will.  Debate has generally taken place calmly in the halls of Congress, and through legislation passed by a majority of the House of Representatives and the Senate, policies that are primarily directed by the majority have been enacted.  The Drama of the Filibuster has been a rarity and utilized by the Senate minority to either stop legislation or to modify it by compromise.  House and Senate rules have also been used to block legislation, appointments and budgets when these were important enough to the minority to jeopardize their ability to compromise or when compromise was impossible.

The use of cloture has become routine recently to the point that, in order to vote on virtually anything in the Senate, a 60 vote majority is required which virtually guarantees that the minority will have control of the agenda and the legislation passed.  This in itself is a new trend, but layered on top of the minority control of the Senate is the use of “leverage moments” when the minority uses a deadline that carries significant consequences in order to modify budgets or legislation.

The result has been what many are calling “dysfunctional government.”  A “government shutdown” would seem to be the last thing a government wants, but when steadfast obstinacy is your only tool, you see a solution to every problem by threatening to not pass critical legislation without certain demands being met.

As a strategy, it has been used by both parties with increasing frequency, but as you can tell from the graph, it seems to have taken off with the 92^nd congress – when Democrats held the majority.  It is also notable that the 110^th congress has had a number of cloture votes that exceeds previous congresses by a 2 to 1 margin.

Government shutdowns have generally been brief and have been used to indicate that the party refusing to negotiate was “serious” about their particular demands.  In 1980, a judicial interpretation of the “Anti-Deficiency Act” made operation of government functions limited to those necessary for protection of life or property during the shutdown.  The stakes got a bit higher with that ruling.

In each of these cases, the shutdown, or in some cases blocking legislation deemed important or even crucial to the functioning of government, was used in much the same way as the crises that Naomi Klein wrote about.  A sense of urgency was created (and that word is the correct one) and the solution required adoption of the minority party’s policies in order to continue.

Except for the government shutdown of 1995 which lasted 21 days, most government shutdowns have been relatively uneventful.  In the end, the Republicans received considerable criticism for the consequences of shutting down the government at that time, but they have continued to use the threat of shutdown as a means of getting their policies enacted (or blocking Democratic policies).

The most recent use of a deadline to pressure the majority into ceding to demands of the minority is, of course, the “debt ceiling” crisis.  It is, as all of the other government “crises”, manufactured.  Artificial.  Arbitrary.  But this time, also potentially devastating to the economy of the US and the world.

One wonders if the Republicans were serious that they would not raise the debt ceiling if their demands were not met.  If one takes hostages and threatens their lives, the threat must be credible in order to use that threat as a bargaining tool.  Given the consequences of failing to raise the debt ceiling, I doubt that any responsible person would have followed through on that threat, but then there is the TEA party.

The difference between politics of government shutdown and politics of possible US credit default are miniscule, and most of it was probably “political theater”, but the Republican TEA party faction and the Democratic Progressive faction are both so ideologically driven that compromise is all but impossible.  I truly feared that there could be no compromise in part because the Republican party is being threatened from within by the TEA party.  The rhetoric was clearly inflexible from even the leadership of the Republicans, and there was a real possibility that some Republicans might have been locked into their positions.  Many Republicans will face primary challenges for failing to adhere to the rigid stance of the TEA party and their own extreme rhetoric.

Fortunately, reason and consideration of the consequences of failing to act prevailed and a compromise was reached, but many agree that the compromise favors the minority party’s policies.

Governance by crisis creates three problems.  First, it essentially creates the conditions for minority rule.  Second, it risks undermining the credibility of the United States even when a compromise is ultimately reached.  Third, the most reckless and irresponsible party is rewarded for their dangerous actions.

The rules haven’t changed, but the game somehow changed.  It is as though the Republicans have exploited a flawed rule in order to ensure their victory in every confrontation.  It’s like a gambler that has found a way to win every hand of cards, a stock broker that has inside information, or a mobster who can make offers that no one could refuse.

This, I believe, is a threat to democracy.  There is a reason that the majority party is in the majority, and it is to reflect the will of the American people.  When the interests of the people are subverted by legislative maneuvers, the majority loses.  And in the end, we all lose.

Whether the government is described as dysfunctional or not, it is clearly not functioning the way it was intended by the Founding Fathers to function.  There is sufficient opportunity to force compromise when the government functions as it should without making majority rule impossible. 

It’s time for a change.  There should not be a way to create a crisis in order to bend the will of the majority to the will of the minority.   That is not representative democracy.