Hard News: The Crazy Gang Nation
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The idea that there will be some kind of financial calamity due to a US government shutdown or a debt limit showdown is a load of old cobblers, despite how often that old chestnut gets so tediously rolled out.
While the debt limit may be hit, and no new borrowing is allowed, the Govt. will of course still keep collecting its normal levels of tax revenue through wage and salary deductions, and various other at source tax deductions (interest etc.) on a fortnightly or monthly basis (the Govt. get it sticky greedy wasteful hands out of your pocket? Unfortunately that will never happen, shutdown or no shutdown or debt limit fight or not).
At moment about 2/3rds to 3/4s of Govt. spending is funded through taxation, the rest through borrowing, so all that needs to happen is a prioritization of spending and there is many, many, many times the amount of tax revenue collected than the debt service requirement (even with $17 trillion of debt), so no default is remotely necessary. So RB, while there are many things to worry about in this world, the US defaulting is not one of them. Of course as English says, if the US did default that would be a big problem, but there is no need for that to happen. As things sit today, that is.
And the good news is that while the long term fiscal outlook for the US is not great, it is improving, reducing the possibility that the US will ever get to the stage where a default is a possibility. Since the Elephants, feral as some of them may be, took over the House in 2010 and began to try to restrain Mr.Obama’s wanton progressive profligacy on steroids approach to government spending (i.e. an $840 billion stimulus program that everyone agrees did not work, even Obama cracked joke about not being able to find any shovel ready projects!) Federal spending has dropped from 25% to 22% of GDP, and will continue to drop so long as the sequestration and other spending restraints remain in place (in other words as long as Nancy Pelosi doesn't get anywhere the Speaker’s gavel again, perish the thought!!). The deficit is down from well over a trillion to 6 or 7 hundred billion, despite Mr. Obama's overwhelming commitment and heroic desire to continue spending like a drunken progressive.
As a rule I now avoid and ignore government, politics and the media in the US as much as possible, as it is such a depressing and disappointing landscape over here at the moment. But I thought I would address the “catastrophic US default” issue as it is so often misunderstood and misreported, both in the US and NZ and around the world. -
Henry Barnard, in reply to
you can probably guess what happened. Sigh.
Like "anti-smacking"?
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Idiot Savant, in reply to
So is the Federal Republic of Germany and they seem to be managing without totally shitting the figurative bed
Yes, but gerrymandering is considered unconstitutional in Germany, as they would violate the constitutional requirement for an equal vote. The US constitution lacks any such protection.
Then again, Germans do seem to have a fairly high expectation that their politicians behave like functional adults.
And that's the major thing - the cultural part of the US constitution is utterly dysfunctional.
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Idiot Savant, in reply to
Would there be any funding to hold the mid-term elections? I/S over at NoRightTurn seems to think that the only thing the US would be able to spend money on after midnight would be waging war.
There will be other standing authorisations to; that was more a snark at the priorities of US legislators: you can starve the poor and the old, you can shutdown public health, but you can't possibly stop bombing people and waving that giant dick around.
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Rich of Observationz, in reply to
I'm not convinced about the "cultural" part. There have been numerous constitutional crises in Westminster model states, from the Tory rebellion over Lloyd George's budgets through to whatever happened in Canada a couple of years ago.
Should the government somehow lose its majority, I'd be disappointed if Labour and the Greens weren't straight in there with a motion of no confidence at the first opportunity. That is their job.
It's simply that the US constitution was designed for eighteenth century circumstances and never really reviewed.
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Only their purpose is mad…
or is it the other way around? -
Ken Double, in reply to
an $840 billion stimulus program that everyone agrees did not work
"One year after the stimulus, several independent macroeconomic firms, including Moody's and IHS Global Insight, estimated that the stimulus saved or created 1.6 to 1.8 million jobs and forecast a total impact of 2.5 million jobs saved by the time the stimulus is completed. The Congressional Budget Office considered these estimates conservative."
That's from Wikipedia by the way.
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Keir Leslie, in reply to
It's almost like the time three politicians managed to drive the NZ economy off a cliff by (as Easton puts it) a very impressive piece of political leverage.
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Idiot Savant, in reply to
I'm not convinced about the "cultural" part. There have been numerous constitutional crises in Westminster model states, from the Tory rebellion over Lloyd George's budgets through to whatever happened in Canada a couple of years ago.
Yes. But they're a bug, not a feature (meaning they are infrequent, and provoking one is not viewed by the actors as a means of leverage on the government). Though Canada I'd also say is being infected by US political norms, weakening the Westminster ones.
Should the government somehow lose its majority, I'd be disappointed if Labour and the Greens weren't straight in there with a motion of no confidence at the first opportunity. That is their job.
Absolutely. But that's the normal operation of the system, not a constitutional crisis.
It's simply that the US constitution was designed for eighteenth century circumstances and never really reviewed.
That is a big part of the problem. But I think the cultural norms around government and politics are an even bigger part. e.g. I can't think of another mature democracy where gerrymandering or disenfranchisement are seen as legitimate political tactics.
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@James: In all seriousness, I can’t find anyone who thinks seriously and credibly about the global economy who shares your Pollyanna-on-steroids view of the consequences of a debt ceiling crisis. I just suspect contractors, state and local government and US Bond holders, foreign and domestic, aren’t going to be quite so liberal when the Treasury Secretary calls and says “Chill, bitches. I’ll have your money next month. Probably.” We're not talking about some spoiled brat with a fistful of Daddy's credit cards, but the idea that the largest economy on the planet should be expected to pay its bills.
(BTW, I’ve long reconciled myself to the fact that on your planet the GOP doesn’t bear any responsibility for anything, and Obama is some deranged love child of Marie Antoinette & Stalin. But it would be useful to acknowledge that Congressional Republicans aren’t exactly passive bystanders.)
Of course, nobody knows for sure what will happen if the sociopath wing of the Republican Party get to try and shut down the global economy along with the federal government. It's never happened before, but no serious person thinks it's an occasion to be glibly dismissive about.
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"prioritization of spending" is, of course, unconstitutional. The Congress passes acts that raise money and spend money, and those acts are law. The President doesn't get to pick and choose which money to spend (as that would be a breach of the separation of powers).
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It’s all the more hypocritical of the GOP when they fight tooth and nail to oppose steps toward better healthcare coverage, while equally fighting tooth and nail to keep farm subsidies to Big Agriculture in place. And if it’s workers initiating a shutdown, the GOP would not hesitate to label it some kind of Communist insurgency.
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Rich of Observationz, in reply to
they are infrequent
The Tory rebellion (over tax and Ireland) lasted from 1909 to 1914, and was only truncated by the King threatening to create Liberal peers and (in the case of Ulster, where the revolt took military form) by the outbreak of WW1. It's a little known piece of history, largely because it conflicts so starkly with the narrative of democratic evolution. I recommend Dangerfield as an excellent introduction to this time.
Skipping to today, you have the CERA law as an example of the abuses *our* system allows. In the US, such legislation would be completely unconstitutional.
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Russell Brown, in reply to
Should the government somehow lose its majority, I’d be disappointed if Labour and the Greens weren’t straight in there with a motion of no confidence at the first opportunity. That is their job.
Absolutely. But that’s the normal operation of the system, not a constitutional crisis.
Quite.
The one we might want to look at is the 1975 Australian constitutional crisis, which saw the upper house in a bicameral system refuse to pass appropriation bills.
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Idiot Savant, in reply to
Rich:
The Tory rebellion (over tax and Ireland) lasted from 1909 to 1914, and was only truncated by the King threatening to create Liberal peers and (in the case of Ulster, where the revolt took military form) by the outbreak of WW1. It's a little known piece of history, largely because it conflicts so starkly with the narrative of democratic evolution.
Except we now look at it as part of that democratic evolution, because it gave the UK the Parliament Act and the principle that the Commons was supreme. And now that that crisis has happened, the UK won't face a similar one again because they actually solved it.
Russell:
The one we might want to look at is the 1975 Australian constitutional crisis, which saw the upper house in a bicameral system refuse to pass appropriation bills.
Its the closest analogy. Though again: infrequent, a bug, not a feature.
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Craig Ranapia, in reply to
The one we might want to look at is the 1975 Australian constitutional crisis, which saw the upper house in a bicameral system refuse to pass appropriation bills.
Which was particularly bizarre, because as far as I’m aware Whitlam had more than sufficient grounds to call a double dissolution, which is a constitutional (if politically risky) mechanism to break such deadlocks.
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Martin Brown, in reply to
Electromagnetic pulse weapons can do that quite effectively, too.
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Kyle Matthews, in reply to
Then again, Germans do seem to have a fairly high expectation that their politicians behave like functional adults.
But Germany doesn't use FPP for all their elections, they use MMP, so the tipping gets washed out at those levels. If the republicans got 40% of the vote and got 40% of the house as a result, they'd have to start behaving like someone that a coalition partner could join up with.
And also, there's a bit more adult behaviour and less money involved in most other electoral systems. All relative of course.
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Wow. I'm not sure I can recall a New York Times editorial quite this angry:
Earlier in his presidency, Mr. Obama made the catastrophic mistake — in the face of just this sort of extortion — to believe in Mr. Boehner’s willingness to be reasonable. This time, however, the cynical games of the Republicans are not going to work.
The Republicans’ reckless obsession with destroying health reform and with wounding the president has been on full display. And, as the public’s anger grows over this entirely unnecessary crisis, it should be aimed at a party and a speaker that are incapable of governing.
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Kyle Matthews, in reply to
It’s almost like the time three politicians managed to drive the NZ economy off a cliff by (as Easton puts it) a very impressive piece of political leverage.
That wasn't an electoral outcome brought about through FPP though. Labour won the election by presenting the electorate with a manifesto, and then doing something completely different when they took office. Depending on where you stand none/some/all of which was justified given the situation they found when they opened the books.
But that really was about control of cabinet and people being suddenly captured by a new right ideology (or allowing themselves to being bullied into voting for it), and a left-wing party suddenly taking a massive leap to the right and fracturing. Politicians got punished as a result by the country reclaiming the electoral system.
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B Jones, in reply to
That wasn’t an electoral outcome brought about through FPP though.
No? I thought Bob Jones' party siphoning off 10% of neo-liberal votes off the Nats had something to do with it. He explicitly set up the NZ Party to get the votes of people who disliked Muldoon's controlled economy but wouldn't vote Labour, and disbanded it once his goal was achieved. It wouldn't work like that in a MMP environment - he'd be in parliament rather than pulling the strings from outside, and people would feel differently about casting a protest vote as a result.
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BenWilson, in reply to
Labour won the election by presenting the electorate with a manifesto, and then doing something completely different when they took office.
Well, they did also win another election after that.
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Ross Mason, in reply to
Well, they did also win another election after that.
Yes. And I don't think i was the only one conned into thinking that the damage had been done over the first 3 years and they couldn't possibly do that again and so they were going to spend the "savings" on a decent social programme.
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Sacha, in reply to
conservatives claim government doesn't work, then they get elected
the ultimate bad faith move.
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Keir Leslie, in reply to
It is the same effect. The Tea Party control a majority of the Republican selectorates, so they control the majority of the Republican caucus, which given it controls the majority of the House means they control the House. Likewise, Douglas controlled the inner Cabinet and so had a majority in Cabinet, which had a majority in the Parliamentary Party which had a majority in the House. You don't need FPP for this (although it helps), you just need party discipline and a certain degree of idiocy.
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