Maybe Yeats had it right:
Speech after long silence; it is right,
All other lovers being estranged or dead,
Unfriendly lamplight hid under its shade,
The curtains drawn upon unfriendly night,
That we descant and yet again descant
Upon the supreme theme of Art and Song:
Bodily decrepitude is wisdom; young
We loved each other and were ignorant.
Yes, Yeats was an unhappy Irishman – the worst kind – but he was onto something. After the madness of the present, where you hardly know what you’re talking about – no one does, really – there comes a time when the dust settles and you can get to the essence of the matter. And maybe bodily decrepitude is wisdom. That sounds about right. And yes, the daily columns paused here late last week, as there was that surgery last Friday morning. And the last words to the surgeon, as the mask came down, was wake me when the guys in Washington settle the debt-ceiling default thing. The young surgeon laughed. And the rest was silence.
But the guys in Washington settled nothing that day, or in the following days. And here at home it was the slow recovery, the stiffness and odd ripping pains, and the little white happy-happy pills, and moving very, very slowly. Maybe bodily decrepitude is wisdom, but it didn’t seem so. CNN and Fox and MSNBC flickered away with updates, but the issues and the debate seemed like nonsense. Bodily decrepitude wasn’t delivering any cool wisdom. Of course the label on the box of little white happy-happy pills said those pills could impair thought, but the politicians and pundits on television weren’t taking those, were they?
It seemed best to watch and wait. There was nothing to say really, as what was going on in this, the biggest political crisis of the year, was all complex ploys and even more complex counter-ploys – reversals and reversals of reversals – with a lot of posturing and positioning. But it just wouldn’t do. When you’re feeling chipper and alert and healthy that sort of thing is endlessly fascinating. When you feel like crap it’s just tedious nonsense. That’s what Yeats was getting at – when the body fails you wise up.
And all you had to do was to wait for a bit. After the House passed the third and final version of John Boehner’s bill – revised again and again to make the Tea Party folks happy as clams – the Senate immediately killed that bill and eventually came up with a sort of compromise – Obama gets authority to pay our creditors for the rest of his first term, and there will be massive cuts in spending, some now, more later, and a special panel to list more cuts, and if no one agrees to those that triggers massive overall cuts in all federal spending, even defense. And millionaires and billionaires will keep the special historically low tax rates, and keep all their special loopholes and exemptions and whatnot. All that was off the table. There will be no new revenue – period.
No one liked it much, but it would do. The House passed the compromise bill Monday, and the Senate passed it Tuesday, and Obama signed it into law an hour later. Done – the crisis was over. And all the complex ploys and even more complex counter-ploys became quaint – the stuff only political junkies remember. And the hypothetical columns that might have been written here in the last four or five days, about those odd maneuvers, will remain hypothetical, as they should be.
And now comes the hard part. What was solved here? Are we on better footing? It seems that Wall Street doesn’t think so:
A Senate vote to pass the debt ceiling plan on Tuesday may have averted the potential for the United States to default on its obligations, but it failed to lift investors’ spirits. The Dow Jones industrial average declined 266 points by the close of trading, and all of the major Wall Street indexes shed more than 2 percent.
Stocks had slumped since the morning opening as investors weighed recent data that drove home the challenges the economy faced. Their next step: assessing the debt limit agreement’s impact on the economy and whether it could slow growth.
These guys decided this actually made things worse:
“As the macro data comes out, it seems like we may have more on our hands than just getting the debt ceiling raised,” said Myles Zyblock, chief institutional strategist and managing director of capital markets research at RBC Capital Markets. “We get no default, but the bad news is there is a growth trade-off,” he said. “They had to agree on fiscal contraction that would weigh on growth.”
The market spoke. This was the wrong time to slash spending. The Standard & Poor’s index lost all of the gains it had made this year. And this item quotes all sort of folks saying earnings are looking poor and will get worse – the debt deal was fine, and a default would have been beyond catastrophic, but that’s old news now, as other things now can be assessed:
The most recent indicators were released Tuesday, when the Commerce Department said personal spending fell 0.2 percent in June, the first time it had declined since September 2009. Nominal personal income inched up by 0.1 percent in June, and wage and salary income, central to the ability of consumers to open their wallets, was unchanged in June from 0.2 percent in May, its smallest rise this year.
“With consumers still facing serious headwinds from a deteriorating housing sector, considerable debt burdens, and high costs for food and energy, the income generated by labor market recovery is absolutely critical,” said Joshua Shapiro, the chief United States economist for MFR, in a research note. “Without significant improvement in the labor market, consumer spending and hence overall real GDP growth will prove disappointing in coming quarters.”
Jobs – getting people working, and thus actually buying things, even if it’s only what they need at the moment, and paying taxes too – was always the real issue. The rest was political theater, a resolution to a budgetary impasse but not the essence of things. It seems we have what one portfolio manager calls a single-variable economy. Businesses need, you know, customers. So the Wall Street guys are all watching the jobs data. They always were. They weren’t distracted.
Could the Republicans have misjudged one of their core constituencies? John Boehner said he got ninety-eight percent of what he wanted – and thus we’re well on our way to a full-austerity budget, with the eventual aim of ending the federal government itself, because no one likes it.
You’d think those guys on Wall Street would love the implications of what had just happened – full freedom and no regulations and no taxes on them much at all. But that seems to come with no consumers and no demand too – millions more with no jobs and of course no money to spend. Well, you can’t have everything. But Fox News keeps telling us that investors and the business community would be IMPRESSED with full austerity and next to no government – shut the damned thing down. And now there was this selloff. What’s with that? They don’t like austerity and, soon, no effective government helping smooth out the rough spots? What are they, damned hippies?
But as mentioned before those corporations and banks don’t need you working and spending money and paying taxes and being all middle-class happy to do well. Consider this hypothetical business model – you’re an American company, you have a French team design a snazzy new product, and have a German team prototype and test it, then you have it built in Malaysia at super-low cost, and sell ten million units a month in China and Brazil – and you make a ton of money you can spend at home in Peoria. You can hire Hispanic servants. Yeah, it might be “nice” to sell something to American consumers, but they are hardly necessary. And they’re tapped out – deep in debt or underwater on the mortgages, or both – buying the few meager things they need at Wal-Mart, the shoddy stuff made in China or whatever – tube socks or t-shirts – which they charge on plastic, hoping one day they’ll pay down the card, but knowing they really won’t. You really don’t need these folks. Others will buy your snazzy product. At least that was the plan.
So why DID the markets tank? They’re getting the third-world America the Republicans assumed they wanted – shutdowns and massive unemployment, to keep labor costs down. Soon you’ll be about the hire a guy with two PhD’s willing to work for a sandwich next Tuesday. And no unions – no worker rights at all. And no EPA or FDA or FAA or any of that. What’s not to like? And still they flooded the market with sell orders. Of course LIBOR doubled during the day. Credit is seizing up again. You might not be able to meet your payroll or stock your inventory. Those revolving lines of credit will be gone soon. Maybe that had something to do with it.
But these guys do love them their Republicans. But you sell anyway. Face it – the economy may be in a death spiral now. And Rick, the News Guy in Atlanta, puts it this way in an email:
The main agreement between Republicans and Democrats, that they would have us all commit economic hara-kiri, was decided months ago – all they’ve been doing since is haggling over the size of the blade.
His point is that both sides have, for months, favored cutting spending at a time when the economy desperately needs more, not less spending:
Cutting spending, especially doing it before jobs come back, takes money out of an already money-strapped economy, and that has a multiplier effect – that is, reducing spending eliminates jobs, meaning there will be fewer people spending less money on, say, food, which means the guy who sells the food will sell less of it, meaning he may have to lay off some of his workers, who themselves will be cutting back on their spending, meaning they’ll buy less food, and so on.
So my point was, both parties had already agreed on the need to do tremendous harm to our economy, but last night, they finally agreed on a bipartisan way to do it.
And he is not impressed with all the talk about the long-range prospects for any government that requires constant borrowing to keep up with its spending:
Even if that is a problem – and I’ll concede, for argument’s sake, there might be something to it – I am particularly annoyed that the Tea Party, a nutcase minority contingent of a minority party, has the ability within our political system get its way by threatening to destroy the economy by not raising the debt limit – especially since “getting its way” is also harmful to the country.
So maybe the borrowing, spending forty cents on the dollar, forty cents we don’t have, does not have to stop:
The American people as a whole have already decided they want Social Security and Medicare, not to mention a strong military and the FAA and protection of our environment and food supply and other services that our government supplies us. But can we afford all these things? Yes, I think we can. Our population is growing, and with it, the tax base to pay for the things the growing population wants is growing, too. People keep saying we’re bequeathing the cost of our own problems to be paid for by our children and grandchildren, but rather than problems each generation leaves to the next, it’s really a whole full-blown civilization, and hopefully a life worth living, one they can pass on to their own descendants.
But the people who emerged victorious apparently prefer shrinkage to growth, and don’t want to kick the issue of reducing spending down the road, which is odd:
Our economy, unfortunately or not, depends on growth. “Kicking the can” isn’t just a characteristic of just the last few decades, it’s a component of hope for the future, an American tradition of keeping the faith that things will work out, as long as we don’t give in to fearing fear itself. FDR couldn’t be absolutely sure that something would come along to allow us to pay back the investment he had us making in ourselves, but things did get better, largely because of things we did to make them better, not just some blind faith that they would. After all, we not only got the Hoover dam and the Eisenhower interstates, but a space program, and eventually even the laptop computer I’m typing this on. Without somebody back then having enough faith to go out on a limb, none of these things would have come about.
And here’s the core of it:
The truth is, the Tea Partiers – along with other conservative Republicans – are only pretending to care about the deficit anyway. They think government does too much, and is too big. They’re real objective is to shrink government down to a size that they can, in the words of Grover Norquist, “drown it in a bathtub.” But they also know that, since most of America disagrees with them about this, the only way they can get their way is through extortion on the debt limit, as well as fabricating a credible ruse that we need to “get our fiscal house in order.” And so far, unfortunately with help from a president I voted for, they’re winning.
But what I find particularly annoying is knowing that, when the economy gets worse – and I predict it will get much worse after last night’s foolishness – the people who mainly caused it to get worse will still find a way to blame it all on Obama’s “big spending” ways, and because there will be such rampant bewilderment about what’s causing all these ongoing problems, the Tea Party and the Republicans will not get the comeuppance they so richly deserve.
But in the Economist, Will Wilkinson says there’s no reason to get all excited about the debt ceiling deal:
Maybe Washington’s game of debt-ceiling chicken went on too long for comfort, but the resolution of the game looks a lot like a pragmatic compromise to me. … It looks like our democracy will have raised the debt ceiling, didn’t really cut a thing, passed off responsibility for substantial deficit reduction to a “super committee” – which will either come up with a plan that does not bind the future executive and legislature or will trip a “trigger” that won’t go into effect until after the next election, and then, again, will go into effect only if the government of the future wants it to go into effect. If this is what “raw extortion” delivers, it’s not very much.
From the earliest years of the American republic, white Southern conservatives when they have lost elections and found themselves in the political minority have sought to extort concession from national majorities by paralyzing or threatening to destroy the United States…
The debt ceiling crisis is the latest case in which the radical right in the South has held America hostage until its demands are met. Presidents Andrew Jackson and Abraham Lincoln refused to appease the Southern fanatics. Unfortunately, President Obama and the Democrats in Congress chose not to follow their example and instead gave in. In doing so, they have encouraged the neo-Confederate minority in Congress to find yet another opportunity in the near future to extort concessions from America’s majority by sabotaging America’s government.
And Andrew Sullivan adds this:
Funny, but my memory was that, for a long time, Lincoln did all he could to appease the South without conceding the whole ball-game. I see Obama in Lincoln’s position. Not for the first time.
And Politico reports here that Joe Biden let loose with a classic:
Vice President Joe Biden joined House Democrats in lashing tea party Republicans Monday, accusing them of having “acted like terrorists” in the fight over raising the nation’s debt limit, according to several sources in the room. Biden was agreeing with a line of argument made by Rep. Mike Doyle (D-Pa.) at a two-hour, closed-door Democratic Caucus meeting.
But Biden denies he called Republicans terrorists, although the right is very angry with him – see this and this – even if Steve Benen recounts here how the Tea-Partiers started comparing themselves to terrorists first:
Let’s also not forget the rhetoric from congressional Republicans themselves. Last year, Rep. Steve King (R-Iowa) said he could “empathize” with a terrorist who flew an airplane into a building on American soil. The year prior, shortly after President Obama’s inauguration, Rep. Pete Sessions (R-Texas) said if the Democratic majority didn’t allow Republicans to influence policy debates, the GOP would have to emulate the “insurgency” tactics of “the Taliban.” Sessions, a member of the Republican leadership, added, “[W]e need to understand that insurgency may be required,” and that if Democrats resist, Republicans “will then become an insurgency.” The Taliban, he went on to say, offer the GOP a tactical “model.”
The Tea Party is trying to pass a particular agenda, which is basically this all-cuts budget. It cannot get it through the Congress of the United States. It cannot get it through the political democratic process that we have, which is that Congress passes something and the president must sign it. That’s the normal workings of democracy.
So, instead of accepting some compromise that can get through the democratic process, what they’re saying is we’ll blow up the country if you don’t listen to us. We’ll hold hostage the credit of the United States, the good standing of the United States and we’ll blow it up…
I think they don’t understand the workings of democracy. They have not been elected as dictators of the United States. They have been elected to one house in one branch of the American government. The only way you can translate your wishes into public policy in America is if you can convince your branch and the other one, the Senate and the White House, to go along with it.
If you can’t, you’ve got to figure out amongst yourself what you can agree on. This is why it is fundamentally anti-democratic – “counter-constitutional” in the words of Charles Krauthammer – to be trying to do this. It’s just an extraordinary act of hostage-taking on the part of the Tea Party. It is holding the country hostage.
And it has already damaged the good standing of the United States…
And Juan Cole sees it this way:
Democratic politics is the art of negotiation and compromise. Taking the credit rating of the United States of America and its ability to meet its obligations hostage in order to force through a minority agenda is at the least a form of political coercion and an attempted minority coup.
Was that an attempted coup? Maybe that’s one thing you see when the dust settles. Or there’s David Frum:
Republicans have become so gripped by pessimism and panic that they feel they have nothing to lose by rushing into a catastrophe now. But there is a lot to lose, and in these past weeks America nearly lost it. Let’s hope that as America steps back from the brink, Republicans remember that it’s their job to protect the system, not to smash the system in hopes of building something better from the ruins.
That’s how student radicals think – not conservatives.
Is that what was going on?
Well, Kevin Drum reports that according to a recent poll, only twenty-two percent of Americans consider themselves Tea Party members or supporters, which is half the number from last November. And of that twenty-two percent, two-thirds supported a debt ceiling compromise, and more than half thought it should include tax increases as well as spending cuts:
In a nationwide CBS News poll in mid-July, 66 percent of Tea Party supporters said that Republicans in Congress should compromise on some of their positions to come to an agreement with Democrats on the debt-ceiling increase. By contrast, 31 percent said Republicans should stick to their positions even if it meant not coming to an agreement… When Tea Party supporters were asked if the debt-ceiling agreement should include only tax increases, only spending cuts, or a combination of both, the majority – 53 percent – said that it should include a combination. Forty-five percent preferred only spending cuts…
And Drum adds this:
So who was driving the absolutist view in Congress over the past few months? If it was the no-compromise wing of the tea party, that’s less than 10% of the country. So riddle me this: how did we manage to let 10% of the country bring us to the brink of disaster? It is a remarkable thing.
Is that what was going on? And Matt Miller seems to think we’ve become a joke:
So this is what we’ve driven the global economy and America’s credit rating to the brink for?
This is why Republicans (who voted for the Paul Ryan plan that would add $5 trillion in red ink over the next decade) decided it was vital to not lift the debt ceiling to accommodate their own budget’s outsized debt?
This is the best the White House could salvage after inexplicably failing to insist that the debt ceiling be raised as part of December’s deal to extend the Bush tax cuts – which would have let the country avoid this unprecedented exercise in self-inflicted damage?
Here’s what we got:
First, Washington will do nothing more to boost jobs and growth. The best that can be said is that the spending cuts will be tiny in the next two years, so the feds won’t be contracting demand, save for the end of the stimulus. Our epic jobs crisis remains ignored.
Next – as to long-term deficit reduction, supposedly the reason the GOP put the country through this costly fiasco – the deal remains utterly inadequate, even if the joint congressional committee the plan would empower to address this succeeds.
It’s a three trillion dollar package – that allows seven trillion to be added to the deficit in the next decade, instead of ten trillion. That’s it? Yep.
But Miller notes it is a politically sufficient escape hatch:
The Tea Party can claim it changed the debate. Other Republicans can say “this is the best we can do without the presidency.” President Obama can tell independents he got “a major down payment on deficit reduction” while still casting the GOP as unreasonably opposed to fair tax hikes on hedge fund managers, oil companies and corporate jet owners.
And the president got the only thing that was ever nonnegotiable from his perspective: a big enough increase in the debt limit to ensure he doesn’t have a repeat of this fiasco during the 2012 campaign, which would make him look fatally weak.
Miller calls it an almost perfect blend of policy punt and political ploy:
That’s what passes for “accomplishment” in Washington nowadays.
The media will now parse the byzantine details and the mechanics of passage. But the depressing big picture is this: We’ve averted disaster only to double down on decline.
The only sane agenda – more tax cuts and spending stimulus in the near term, coupled with much more deficit reduction in the long term, triggered once unemployment is back below 6 or 7 percent – is not even on the table. Nor is there room made for needed investments in infrastructure, research and development, and a new generation of teaching talent.
It was nothing. But everyone gets to talk about it, saying nasty things about the other side, and patting each other on the back. Young, we loved each other and were ignorant. It’s always that way. Yeats knew. And after a long silence, that may be all there is to say.