Month: July 2011

Default crisis kabuki, Act III
by David Atkins (“thereisnospoon”)

It’s time to play another round of “who could have predicted?”, default crisis edition:

A Congressional aide briefed on ongoing negotiations between House Speaker John Boehner and President Obama says the two principals may be nearing a “grand bargain” to raise the debt limit which would contain large, set-in-stone spending cuts but only the possibility of future revenue increases.

“All cuts,” the aide said. “Maybe revenues some time in the future.”

The status of negotiations has Democratic aides on both sides of the Capitol nervous and unhappy. And the notion that the impasse over the debt limit may be nearing an end is sparking denials from both the White House and Boehner’s office — in part, perhaps, because neither side has buy-in from their parties on a consensus plan.

Of course, no one knows if this is a trial balloon, if the aides don’t know what they’re talking about, if it represents just a feint in the negotiation process, or the final offer on the table from the Obama Administration. In the end, it doesn’t really matter, because what we’re going to get when all is said and done is massive cuts with no reveneus, or phantom revenues at best. Maybe Social Security and Medicare will be on the chopping block, or maybe not, depending on how strongly the Democratic House Caucus can hold out.

Writing about the default crisis negotiation is depressing, because the endgame is already telegraphed. The highest echelons of the Democratic Party take orders from Wall St., because that’s where the campaign cash comes from, and because if Republicans get all of Wall Street’s money and the Southern/Midwestern conservative vote, it’s game over for Democrats and hello to President Bachmann. Add to that the fact that most of the acclaimed “best and brightest” Ivy League economists still subscribe to some form of neoliberal economic theory, and the fact that Democrats subscribe to the rationalist Enlightenment-based technocratic impulse that inclines to believe them, and Democrats will go along with what Wall St. wants when push comes to shove.

Of course, The entire Republican Party worships at the altar of the Golden Bull, and blames poor minorities when the bull rampages in a frenzy of bubbly economic destruction. Other “principles” may get in the way, but if Wall St. says “boo” loud enough, the GOP will ultimately fall in line. They always do. The House Democratic caucus is somewhat less pliable to financial sector demands, depending on the local campaign contribution revenue stream, but other local businesses that depend on short-term bank loans will eventually twist their arms into submission, too. If you’re a Congresswoman having to choose between raising the Medicare eligibility age or allowing businesses that employ over thousands of people in your district to go underwater, you’ll raise the eligibility age no matter how much you hate the idea.

The TARP vote was the model for the default ceiling vote: everyone will likely posture until the market flips out, and then everyone will panic and do exactly what conservatives and the Rick Santellis of the world want them to.

So here’s how this plays out: the Obama Administration lays down a marker that says we’ll accept 90% spending cuts and 10% revenue increases in exchange for a default ceiling increase. The GOP lays down a marker that says the ceiling increase vote itself is a compromise, so just the vote with no revenues attached is their final offer. Impasse. The Obama Administration sweetens the pot by putting Medicare and Social Security on the table. House Democrats, appropriately, refuse to budge. McConnell Republicans (mostly in the Senate) who understand what even the prospect of a debt default would mean on Wall St. panic and capitulate. The Ignorant Caucus of the House GOP tells the GOP Senators to take a long walk off a short pier, and passes a preposterous, economy-killing bill that has no chance in hell of going anywhere. The Administration sweetens the deal for Republicans even further, which emboldens the GOP to see what more they can extract. And almost certainly, Congressional Dems will push back pretty hard. More impasse. Then possibly a short-term extension.

Eventually, as with the TARP vote, the market will freak out. There will be a big plunge, leading to mass panic on Capitol Hill. At that point, enough House GOP yokels and wavering Democrats will come out of their camps to unite behind a plan involving massive cuts, the promise of phantom future revenues that everyone knows won’t happen, and some minor cuts to “entitlement programs” that Democrats might think are livable.

And everyone will breathe a big sigh of relief, both camps will declare victory and go home happy. Everyone, of course, but the American people getting screwed. But as we all know, Wall Street’s needs and political campaign coffers come first, every single time.

Bully For Tea

by digby

I’ve been lectured recently about being nice to these people because they’re just good folks with different views and problems of their own that I should try to understand and empathize with. But I can’t empathize with people who think it’s cute or funny or useful to surround average citizens having a meeting to bully and intimidate them. I’m sorry, I just can’t. In fact, I think it’s immoral not to speak out against them.

They may have their grievances, but there’s is no reason on earth to do this:

A small political gathering of about 18 liberal thinkers at River Forks Park Sunday afternoon erupted in conflict when about 35 members of the conservative tea party intruded upon the meeting, waving flags and holding signs accusing the rival group of being communists, Marxists and socialists.

The liberal group — organized by MoveOn.org — decided to leave the park and move its potluck to a nearby home. Members of the conservative group followed, parking at the entrance of a private lane leading to the home to continue their protest.

Roseburg Democrats Dean and Sara Byers said Monday they told tea party members who followed that they were not welcome to drive down the lane to their home.

[…]

A leader of the tea party group, Rich Raynor of Roseburg, disputed the liberal group’s version of events.

“They are liars,” said Raynor, director of Douglas County Americans for Prosperity. “That is what communists do.”

Members of the smaller group said Monday they were intimidated by the tea partiers, whom they accused of violating their constitutional right to peacefully assembly.

Roseburg resident Lillen Fifield, 70, called the group’s actions an “act of domestic terrorism” and said she was appalled that a peaceful gathering — mostly of women older than 65 — was interrupted.

“It is not OK to go around and intimidate and threaten people. That is not acceptable in a polite society,” Fifield said.

Conservative organizers defended their actions and said they will continue to protest similar gatherings.

“We were there to find out what they had to say and to bring a notice to the public that this kind of thing was going on. Quite honestly, if they have it again, then we are really going to make it well known,” Raynor said.

Raynor said the group believes MoveOn.org is a communist front and said he would not stand for America becoming a fascist nation.

Sara Byers said she could not believe the meeting was targeted for protest. She said the group supports the middle class and wants to take back the government from the stranglehold of corporations.

She laughed at the accusations of communism and said the two groups actually have more in common than people think.

“I just said, ‘Are you kidding me?’ ” Byers said.

Tea party members posted a 2:46-minute video of the confrontation in the park and added captions.

On the video, heckling members of the larger group celebrate breaking up the meeting.

“That sure did it in a hurry, huh?” a man says. A woman references next year’s election year and shouts, “Sure shows who is going to win! We are!”

I wouldn’t go so far as to call it domestic terrorism, but it is mean and thuggish and these Tea Partiers are jerks for doing it.

Watch the video. It’s true that the meeting was out in the open in a public place, so there was no expectations of privacy. The Tea Partiers didn’t break any laws and they didn’t get violent. They didn’t have to. They just converged on a group of fellow citizens sitting quietly at picnic tables and hovered over them holding accusatory signs until the citizens packed up and left. They may have the perfect right to do that, but that doesn’t make it right.

Raynor maintained the tea party’s goal was to attend the meeting and hear what the rival group had to say.

He said the fact that they stopped the meeting and left proves they have something to hide.

Sutherlin conservative Karen Meier said she posed as a MoveOn.org member and infiltrated the group’s meeting prior to the confrontation. She said she found many of the liberals to be pleasant.

“Obviously, they don’t really know what MoveOn is and who it entails,” Meier said.

A MoveOn.org meeting attendee Lorna Hayden of Roseburg said the tea party mischaracterized the nature of the meeting. Still, any group, no matter what its agenda, has a right to be in the park Sunday without being harassed, she said.

Raynor said the tea party never threatened anyone with violence and said no one brought guns to the confrontation. [big of him] He said he urged his group to be civil but also to stand up against a group they believe is harming America.

“It is not our fault that we outnumber them,” Raynor said. “The philosophy they espouse is not a live-and-let-live philosophy. … I am fearful for my children and my grandchildren.”

I’m sorry if this offends my critics who believe it’s “bad politics” to pass judgment on my fellow Americans, but too bad: These people are assholes. They should be ashamed of themselves.

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The WTF do we do now moment — for Democrats

by digby

Greg Sargent reports that the House Republicans are digging in on no new revenues and lays out their final choices:

As Ezra Klein notes, it’s still unknowable: “what no one quite knows is what the House GOP will accept when the clock is one minute from midnight, or, in more pessimistic tellings, the Dow is 1,000 points below whatever it was at the day before.”

This “WTF do we do now” moment can take one of two forms: Either House Republicans agree to new revenues, or they agree to the McConnell proposal. But one of those two things has to happen. And that moment is almost upon us.

There is another “WTF do we do now” scenario: Democrats agree to more spending cuts with no tax hikes. Is it really so impossible to see them doing that under these same “Armageddon” pressures? Particularly when their President and the Democrats in the Senate are all eager to do “tax reform” down the road?

Assuming they don’t hammer out a Grand Bargain that the Republicans can get behind (which I still think is very possible) if Boehner and the President come up with a last ditch plan to cut more spending with say, a non-binding promise to talk about tax-hikes in the future (something the Village will be thrilled to endorse as a perfect bipartisan agreement) and maybe some UI, I just don’t see the House Democrats being the ones to hold out and let the country default. They just aren’t crazy enough (and everybody knows it.)

We already know that there are 1.5 trillion in cuts agreed to under the McConnell plan. The Republicans are demanding 2.4 and the Democrats say the difference must be in the form of tax hikes. What if they agree to split the difference?

Andrea Mitchell just tweeted:

Budget Chair Paul Ryan on show -I think we should grab the spending cuts we can right now. Says there has been lot that is constructive.

(If he thinks it’s constructive … watch grandpa’s wallet.)

Considering what we’ve been watching for the past two months, I wouldn’t be the least bit surprised if 2 trillion isn’t the real fallback. Pushed against the deadline, I can easily see the Dems being arm twisted as long as there’s some band-aid they can throw on it afterwards. After all the talk about 4 trillion and massive cuts to entitlements, they’ll even spin it as a “win.” (And anyway, there’s now the Gang of Six budget talks ahead in which everyone can pretend to be really, really serious about raising revenue in exchange for a thorough shredding of the safety net. It’s all good.)

The President and the speaker badly want a deal to show for all this sturm und drang. So it’s a matter of which House caucus will blink first in the countdown to Armageddon. If you were a betting person, which side would you bet on?

Update: This just in:

A Congressional aide briefed on ongoing negotiations between House Speaker John Boehner and President Obama says the two principals may be nearing a “grand bargain” on to raise the debt limit which would contain large, set-in-stone spending cuts but only the possibility of future revenue increases.

“All cuts,” the aide said. “Maybe revenues some time in the future.”

[…]

A White House spokesman called the claims from aides “not credible” — the result of having a “3rd hand version of the facts.”

However two aides and a third source, close to the principals confirmed that Obama has been emphatic with Democratic negotiators that his preference is to negotiate a big deal with Boehner and squeeze it through Congress.

Lacking still, including among Democratic sources, is any sense of what’s in the still-forming plan — vis a vis both spending and revenue. And Democrats, particularly in the House, will have a lot to say over whether the deal is acceptable — their votes will be necessary for Boehner to pull off a grand bargain.

Again, anyone want to bet on them being “crazy” enough to defy their President and default on the debt?

(On the other hand, who knows if this is true — it ain’t over til it’s over. But if it is true, I was definitely channeling the zeitgeist. I wrote this piece immediately after Sargent posted this morning at 9:30 my time.;)

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Cash Flow Problems

by digby

This isn’t good:

Consumers in the U.S. are increasingly using credit cards to pay for basic necessities as income gains fail to keep pace with rising food and fuel prices.
The dollar volume of purchases charged grew 10.7 percent in June from a year ago, while the number of transactions rose 6.8 percent, according to First Data Corp.’s SpendTrend report issued this month. The difference probably represents the increasing cost of gasoline, said Silvio Tavares, senior vice president at First Data, the largest credit card processor.

“Consumers, particularly in the lower-income end, are being forced to use their credit cards for everyday spending like gas and food,” said Tavares, who’s based in Atlanta. “That’s because there’s been no other positive catalyst, like an increase in wages, to offset higher prices. It’s a cash-flow problem.”

Rising costs of food and gasoline are leaving Americans less money to spend discretionary items, slowing the pace of the recovery, Tavares said. Household spending accounts for about 70 percent of the world’s largest economy.
After-tax income adjusted for inflation fell 0.1 percent from January through May, according to figures from the Commerce Department. The drop came as Labor Department data showed energy prices rose 8.2 percent and food climbed 2 percent during the same period.

The good news is that just as soon as they solve every problem projected to emerge after 2035, the government plans to take a look at that one and see if they can’t do a little something about it. So that’s good.

Update: We simply must tackle that deficit problem in 2046 or the country will go to hell in a handbasket. It’s the responsible thing to do.

New claims for unemployment benefits rose more than expected last week, a government report showed on Thursday, pointing to a labor market that is struggling to regain momentum after job growth faltered in the last two months.

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War is over (if they want it)

by digby

Washington Post editorial:

WITH A HANDFUL of exceptions, every Republican member of Congress has signed a pledge against increasing taxes. Would allowing the Bush tax cuts to expire as scheduled in 2012 violate this vow? We posed this question to Grover Norquist, its author and enforcer, and his answer was both surprising and encouraging: No.

In other words, according to Mr. Norquist’s interpretation of the Americans for Tax Reform pledge, lawmakers have the technical leeway to bring in as much as $4 trillion in new tax revenue — the cost of extending President George W. Bush’s tax cuts for another decade — without being accused of breaking their promise. “Not continuing a tax cut is not technically a tax increase,” Mr. Norquist told us. So it doesn’t violate the pledge? “We wouldn’t hold it that way,” he said.

Dday:

[J]ust let the Bush tax cuts expire, all of them, and reach the $4 trillion deficit target that way. Now maybe there are some things that, piece by piece, you could substitute out in exchange: defense cuts for middle-class tax cuts, for example. But that’s essentially PAYGO. Just sticking to the CBO baseline, rather than this opulent tax reform plan that makes no sense in reality, seems preferable. And besides, even rich GOP donors are telling their leadership that they want their taxes increased.

Keep it simple stupid — If Emperor Norquist signs off on those tax increases, then everyone should jump at it. As Dday says, they can mitigate the middle class cuts with cuts to defense and we’ve got us a deal! Debt ceiling raised. Deficits reduced. Spending cut. SS saved. All of it will be “off the table” and we can start talking jobs, jobs, jobs.

That’s what everyone wants, right?

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The World is Flattened
by David Atkins (“thereisnospoon”)

Much has been made of the Heritage Foundation’s recently released report on poverty in America from a couple of days ago. The report declares that America’s poor aren’t really poor, because many of them have the audacity to possess such luxuries as air conditioning, a stove and a refrigerator–which in Tea Party parlance means both that they clearly lack the incentive to work harder to escape their pretend squalor, and that America’s billionaires are still clearly paying too much in taxes to support the lucky duckies. Here’s a real, honest-to-goodness sentence from the report:

The actual living conditions of America’s poor are far different from these images. In 2005, the typical household defined as poor by the government had a car and air conditioning.

As outrageous as this piece of propaganda may be, in blog time it’s already yawn-inducing ancient news as we train our eyes on the next twist in the ongoing default crisis drama.

But one salient point has gone somewhat unnoticed nonetheless. Most of the critiques of the report center around the idea that diachronic comparisons of poverty are unrealistic: e.g., the fact only the very wealthy had indoor plumbing in the 1830s doesn’t mean that a flush toilet should be considered a luxury today. Few white collar and even a significantly decreasing number of blue collar jobs in America are available to those without access to Internet, a cell phone, and some form of transportation. These sorts of things are not luxuries, but in today’s world necessary prerequisites for the sort of pull-yourself-up-by-your-bootstraps Horatio Alger mythology prized by the modern Right.

This is not the first such report Heritage has produced, however. In 2007 Heritage minimized the challenges faced by America’s poor by comparing them to unfortunate souls around the world in countries less wealthy than the United States. Global poverty comparisons are hinted at in the latest report as well.

And that’s important, because the double-whammy involved in Wall Street types accusing struggling Americans of being spoiled whiners because they can afford a microwave, three square meals a day and a used car while the poor in Brazil have none of those, is a particularly insidious and revolting bit of sophistry.

There are three key reasons that the lack of significant increase in middle-class wages vis-a-vis productivity and inflation since the 1970s has not led to the sort of riots and revolution we are seeing in the Middle East. The first is massive subsidies of agribusiness and processed foods in the U.S., which keep prices for unhealthy foods low, leading to America’s poor rarely experiencing starvation, but often experiencing massive diet-related health problems. The second is cheap prices due to globalization and lack of tariffs: even as jobs manufacturing microwave ovens in America have disappeared, leading to lower wages and higher unemployment, the price of a Chinese-manufactured microwave oven has become more affordable. Wage deflation due to labor arbitrage has also led to price deflation–particularly in the prices of the sorts of electronic goods like refrigerators and videogame consoles on which the Heritage Foundation places such a keen focus. The third reason is the widespread availability of credit, which has served to mask the inability of middle-class and poorer American households to balance incomes and expenses. Shred the credit cards of every single American, and you would have riots the very next day. And in fact, that very explosion of credit in the United States that both keeps the pitchforks away from investment bankers’ mansions in the Hamptons and makes those mansions possible, is part of what has driven the world economy into recession.

It’s a nifty trick Heritage has pulled: promote agribusiness subsidy, free trade and credit expansion policies that kill domestic jobs while putting households in debt, but make DVD players and cheeseburgers cheap to obtain. Then criticize America’s poor for being overweight, in debt, and owning a DVD player, in order to con the beleaguered American middle class into cutting taxes on billionaires.

Of course, good luck trying to explain that to the average American. They’re a little busy these days trying desperately to make ends meet during their 10-hour workday, and compensating for it by at least relaxing in front of a movie on their cheap flatscreen TV at night. Altogether a quite convenient set of circumstances for Thomas Friedman’s Flatworld utopians and the Heritage Foundation’s wealthy donors, if somewhat inconvenient for those struggling to get by in today’s America.

Murdoch’s defense

by digby

This piece by Nick Davies on the Murdoch testimony yesterday is fascinating. He points out that on display were two separate tracks — the PR and legal defenses. This is always interesting because often in these cases, the two wind up being at odds. So far, they seem to be working in tandem.

The foundation stone of the PR strategy was humble apology. James Murdoch interrupted his first answer to say how sorry he was, how great his regret was. Rupert Murdoch interrupted his son’s apology to make his own. “This is the most humble day of my life,” he said. Twice. PR consultants around the planet would spot the soundbite there, uttered by Mr Murdoch but written surely by an expert.

They continued to apologise at all available intervals. Rupert, in particular, volunteered that he had been absolutely shocked, appalled and ashamed to hear of the hacking of the phone of Milly Dowler. This, in turn, proved to be part of a wider strategy – a non-aggression pact with everyone. The MPs on the committee; their tormentors on the Guardian; the lawyers who have hauled them through the courts: none were to be attacked. Murdoch Sr sat with head bowed and his hands clasped. Murdoch Jr – whose temper is globally famous – was a model of deference and courtesy…

But behind that gloss, there was an intensely serious and carefully organised defence. They allowed some moral blame to get through – hence the humility – but at all costs they had to repel anything that looked remotely like criminal responsibility.

For Rupert Murdoch, this was simple. Essentially, he worked too high up the ladder to see the ground. He had 52,000 employees, and the News of the World accounted for less than 1% of News Corp, he explained. Twice.
[…]
For James Murdoch, the defence was more complex. He was not so high up the ladder and was specifically responsible for minding the family business in the region which included the UK. He took a chronological approach, using a different blockade for each phase, to separate himself from culpability.

Read the whole thing, it’s really interesting.

Here in the US we call Rupert’s strategy the “Ken Lay” defense, which amounts to “I didn’t know nothin’ about anythin'” which has always brought to mind a big question for me: if they didn’t know anything about what was going on in their companies, why in the hell were they paid so much money? It should, by all rights, inspire some sort of re-evaluation of CEO pay if nothing else.

It’s hard to know if either of them will face criminal charges, but it’s clear their lawyers aren’t taking any chances. As for the PR, I’d have to say they did well yesterday. I only saw the highlights of the testimony, but between the pie incident (which made Murdoch look like a vulnerable elderly man rather than the rapacious snake he actually is) and their apology chorus, they came off looking pretty good.

I wouldn’t be surprised if Rupert nodding off wasn’t part of the strategy. (Look for him to show up in his pajamas next time.) And it all works nicely with the criminal defense strategy that Rupert had no idea what was going on around him.

James may be in bigger trouble.

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Watching the flames

by digby

I am fairly sure that the Gang of Six rushing into the debate at the last possible moment is designed to give some impetus to House Republicans to agree to some kind of deal that pretends to raise taxes on rich people. Certainly the White House seems to think its “balanced approach” is important to repeat like a bunch of parrots:

TAPPER: Does the White House have a position — have you had a chance to review the Gang of Six plan beyond the general support for principle — its principles that the president discussed yesterday?

CARNEY: Well, what I would say is that — again, as I said yesterday, it represents significant broad support along the lines of the approach the president took. There are — as we look at the provisions within it, and as you know, the — there was some level of detail provided, and more coming. You know, it’s possible we may not agree with every aspect of their approach, but the issue here isn’t which piece of paper will be the final piece of legislation because that — you know, that’s going to be up — if the decision is made that we’re going to take a bipartisan approach, that we’re going to take a balanced approach, the framework that the president put forward, that the Gang of Six has now put forward, that Simpson and Bowles commission has put forward and others — you know, are all available to create a process that produces a piece of legislation that we believe a majority in Congress would support, and certainly the American people would support and the president would sign, the details of that, obviously, would have to be worked out.

But the frame here — savings out of the tax code, savings out of — from entitlement reform, significantly reduced nondefense discretionary spending, reduced defense spending that’s done in a waythat protects our national security — this is the way to go about it. And that’s how you get to the 3.5 trillion (dollars) and above savings over 10 years that we’ve talked about and that the Gang of Six is talking about.

So as long as there’s political will, the details — there’s enough substance out there now for a package to be crafted.

And I think — I would note that one of the things that either Speaker Boehner or his spokesperson said last night was that there was some similarity between what the Gang of Six had put forward and what the president and the speaker had been talking about when they were looking at the possibility of achieving a grand bargain. So, again, that’s the — that’s the — you know, we agree with that assessment. And if the will is there, we can get down to negotiating the details.

I can’t imagine why people have gotten the ridiculous idea that the White house is enthusiastic about the idea in this plan.

And it seems to be having quite an effect on the beltway wags. Here’s Ezra Klein this morning:

All in all, it looks a lot like the Simpson-Bowles plan, which was pretty much the point of the exercise. A few weeks ago, I wrote a column arguing that, in retrospect, the Simpson-Bowles plan was a pretty good deal: It was more balanced on both the spending and the tax side than the president’s April deficit-reduction proposal. I think that it is, if anything, truer now than it was then, and truer in this bill than it was in that bill. This bill, for instance, appears to jettison the Simpson-Bowles recommendation that tax revenues be capped at 21 percent of GDP.

It’s become quite clear that a big deficit bill will be more balanced than a series of small bills. It would also be nice to get deficits off of the agenda for awhile so the political system could do other things. And though this doesn’t get much attention, you can get more actual reform in a big bill — think of the difference between overhauling the tax code and simply raising rates slightly, or the difference between changing how Medicare pays doctors and simply cutting benefits — than you can out of a small bill, which ultimately means you’re making better policy. So though there’s lots to argue with in this bill, and lots that I, personally, would like to change, I don’t think there’s much doubt that it’s far better than what Congress is likely to do — or not do — if it fails.

I think that about says it all. This has become the new “middle ground” and it includes devastating cuts to Social Security, the worst of which will fall upon women in their most geriatric years and disabled people who depend upon SSI, more cuts to Medicare and a likely devastating body blow to Medicaid, which also will hit the elderly far worse than anyone realizes. (Learn how to change adult diapers, kids, because that’s what you’re going to spend your 40s and 50s doing.)

And then there’s the illusory “tax reform” which the plan sets forth as:

• Lower marginal tax rates so that they fall in 3 brackets: one at 8-12%, one at 14-22%, and one at 23-29%;
• The elimination of the alternative minimum tax, which would cost $1.7 trillion;
• Reform but not elimination of the really big tax expenditures, like charitable deductions, the employer health care deduction and the mortgage interest deduction;
• Revenue-neutral corporate income tax reform;
• And yet a grand total of $1 trillion in net revenues, on top of the $800 billion built in from the assumption of the end of the high-end Bush tax cuts.

I’ve been talking about this for some time. “Tax reform” as currently conceived is bullshit. It is basically more tax cuts for the wealthy and some magical thinking about revenues. It’s fairly clear that any chance of passage depends upon that being so.

As Dday says, there is a better way:

If it seems too complicated, that’s because it probably is. Only the mother of all accounting tricks could lead to this tax reform penciling out. It’s far easier to just let the Bush tax cuts expire, all of them, and reach the $4 trillion deficit target that way. Now maybe there are some things that, piece by piece, you could substitute out in exchange: defense cuts for middle-class tax cuts, for example. But that’s essentially PAYGO. Just sticking to the CBO baseline, rather than this opulent tax reform plan that makes no sense in reality, seems preferable. And besides, even rich GOP donors are telling their leadership that they want their taxes increased.

If it is absolutely necessary to cut 4 trillion dollars in government spending in the middle of an economic downturn (a very questionable assumption) that should be the administration’s preferred route, not this Grand Bargain nonsense.

Until the last few months I have always argued that a Democratic president was always going to be preferable to a Republican because of the Supreme Court — and the partisan necessity to protect the “entitlements” from the GOP’s ongoing assaults. I would have assumed that any Democrat would issue a veto threat on this Gang of Six monstrosity rather than praise it. I would have also assumed that all Democratic voters and liberal commentators would be aghast that the Democratic Party would even contemplate such a plan when so many people are suffering and there’s no end in sight. Times have certainly changed.

Look at what’s really happening and tell me that it makes sense for our entire government to be obsessed with projected deficits right now. This is from Jared Bernstein:

The line is but a simple plot of the inflation-adjusted, median weekly earnings for full-time workers. The median worker, to remind you, is the person right in the middle of the wage scale. So think of this as a proxy for the middle-class wage.

It’s falling in real terms.

I know this is depressing. And there is still a good chance that the Republicans are too stupid to take yes for an answer. For all we know, a huge new boom in something is waiting just around the corner and it will obliterate all the bad decisions that are being made right now. But it still pays to remember that all this deficit talk is a construct that has no real meaning in terms of the immediate problems we face or the election to come. Interest rates are well in hand and even if they weren’t, there would be other things to do aside from slashing government spending. This Grand Bargain talk is only even possible because we are in an Economic Shock environment in which all manner of otherwise nonsensical policies and delusional beliefs in magical solutions to irrelevant problems are being tested and possibly enacted.

It’s true that the GOP is batshit nuts. Nobody is going to argue that the prospect of Michele Bachman and her freakshow followers with more power than they already have is terrifying. But the Democratic party isn’t exactly behaving like solid, serious leaders either, no matter how many times they use the words “balanced approach.” They are fiddling while Rome burns and the Tea Party is just dancing around the fire throwing gas on the flames.

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The Donkey in the Room
by David Atkins (“thereisnospoon”)

Since Digby so graciously granted me the opportunity to leave my graffiti on these hallowed halls, some concerns have arisen within the Hullabaloo community both about the culture of DailyKos, and my involvement as an official in the Democratic Party. The Obama Wars, as they are called on the blogs, are the elephant in the room in the progressive community, the subject on the minds of many not only within the online activist community, but the local offline community as well, and even (as I found out in D.C. just recently) within the highest reaches of power in the Democratic Party.

Dealing with the Obama Wars is something that people looking to engage productively on behalf of the movement generally look to avoid, because it never ends well. That said, on my first day here, I think it’s probably best to deal briefly with the 800-pound gorilla and share my thoughts on it.

For those who may not know, I’m 1st Vice Chair of the Ventura County Democratic Party in California, and a recently elected member of the California Democratic Party Executive Board. To many, that would be considered an asset. To others, it might be a curse, a straitjacket preventing free expression of ideas and forcing a toeing of the “party line.” It shouldn’t bear reminding that it was none other than Howard Dean, no slouch in the progressive movement, who first asked of all of us who were upset with cowardice and corporatism in the Democratic Party not to shun the Party, but to actively get involved with it. The reason for Howard Dean’s call to arms was not so that progressives might be co-opted and sell out, but rather that they might storm the gates and force real changes in the Party. I am not alone in having done this in California: my brother Dante is a vice-chair in the L.A. County Dem Party and a CDP E-Board member; Robert Cruickshank, a superb netroots activist and constant and forceful Obama Administration critic, was a vice-chair in the Monterey Dem Party for a long while before moving to Seattle to work on progressive mayor McGinn’s communications team; Brian Leubitz, owner of progressive California blog Calitics is a CDP Regional Director in the Bay Area. Getting involved in this way has been for all of us not a professional consideration, but an ideological one. The entire purpose of being involved is to force changes in the way the Party thinks and the way it behaves in every aspect: from the values of candidates endorsed, to the nature of field operations, to the aggressiveness of communications, and everything in between. These changes do not happen overnight. Often they take years to gestate. Almost invariably they are met with fierce opposition from the comfortable, institutional powers that be, as well as their ideological allies who prize being “nice” and “reasonable” as a greater good than actually solving the problems that face the country.

If even 1/10 of the progressives writing online would become similarly involved and demand that the institutions of the Democratic Party be accountable to the progressive base and the well-polled progressive preferences of the majority of Americans, it would be a boon to our political system. This is why Howard Dean asked us to do it. Nor for the most part would it hamper our ability to speak openly and honestly about our beliefs. What I say here or elsewhere is not the official position of the Democratic Party at any level, nor should be it construed as such. The only constraint on a Party official’s personal positions is that one grant that, at a fundamental level, voting for Democrats is advantageous over voting for members of other parties. That’s a big one, of course, and a non-starter for many in the progressive movement. Which is fine. Reasonable people who want the same things (single-payer healthcare, an end to pointless foreign wars, a decent safety net, a reduction in income inequality, equal rights for all Americans regardless of race, age, gender, orientation, etc.) will certainly differ on the best tactics we might use to get there.

But this last point brings us straight to the famed Obama Wars. I myself have been frequently accused by both sides of being in the other camp, depending on the time, context, issue and audience. The “hater” camp sees me as a party-line hack, while the “bot” camp sees me as an unreasonable, spiteful idealist. These perceptions matter less, however, than does the reality of what confronts America at present: on one side, we have a Republican Party that has descended into sheer, outright nihilist lunacy. It would be difficult for a person looking at the evidence to declare with a straight face that Al Gore would not have been a vastly superior president to George W. Bush, or that putting a Democrat–even a blue dog–in place of Scott Walker or Chris Christie would not improve the lives of residents of Wisconsin and New Jersey.

And on the other side, of course, we have a very flawed Democratic Party, far too beholden to the interests of Wall St. and wealthy donors, far too fractured in its coalition, far too fearful of offending hopeless voters who will never see reason, and far too willing to seek “compromise” with the nihilists on the other side of the political chasm.

Barack Obama is merely a reflection of 30 years of an evolving culture in the Democratic Party, where bland messaging on education and social services meets Wall St. money and neoliberal economics, meets coalitional turnout operations among social issue groups. Where do we place our efforts, then? Do we work on a third party? Do we reject the Democratic Party? Do we attempt to primary Barack Obama? What do we do?

For various reasons locked into the nature of our winner-take-all Constitution, we have a two-party system, not a parliamentary one. That is very unlikely to change. Further, putting efforts into third parties to the left of the Democrats has not been shown to pull the party to the left, but rather to the right (outside of small, liberal states like Vermont.) Democrats did not look at the votes for Nader in 2000 and move to Party to the left to win those voters; instead, the Bush Presidency shifted the Democrats farther to the right. Theoretically, one could try to bury the Democratic Party in the same grave as the Whigs and start over anew–but what happens in the meantime during Nihilist Republican rule? Will the country survive? Frankly, there are too many deeply vulnerable people in this country and around the world to take that chance.

Which means that for better or for worse, the Democratic Party is what we have to work with. In the short term, that means that Barack Obama, for better or for worse, is what we have to work with at this time (primarying him being pretty much a fantasy, particularly given his still soaring approval rating among the vast majority of self-described liberals.) It’s not pretty, but it’s reality.

It’s therefore our job as progressives to work both from within the Democratic Party and from outside the Democratic Party to make the changes to it we would like to see, to refashion the Party to fit the ideals that the American people deserve. That requires an aggressive, uncompromising stance.

But it’s also our job to make sure that nihilist nutcases like Michele Bachmann and Rick Perry don’t get anywhere near supreme power. If they do, we may never well get the chance to get it back.

Ideally, that balanced approach means being neither a “hater” nor a “bot.” As with so many other things in life, it just means doing the best with what you have to work with, making the best possible choices from a poor lot, and setting oneself up to have better choices in the future.

Reagan as electro-schock therapy

by digby

Back during the 2008 campaign you may recall that there was a major blogospheric dust-up over Senator Obama’s comments about Ronald Reagan and his transformational abilities. A lot of us older folks were upset by the evocation of someone we had loathed with every fiber of our being for decades, but Rick Perlstein made an excellent point at the time about how it could be useful at times and explained the wrong and right ways to do it:

Reagan didn’t praise FDR. He stole from him. As in, “This generation has a rendez vous with destiny.” We should steal from Reagan too. As in: “There is no left and right. Only up or down.” He would then use that intro to frame some outrageously right-wing notion as “common sense.” We should do the same for left-wing ideas.

Also, use Reagan to mess with righties’ heads. As in: I agree we need a Reaganite foreign policy. When Reagan realized we were caught in the crossfire of a religious civil war in Lebanon, he got the hell out. He would have done the same thing in Iraq.The rule isn’t “never say anything nice about Reagan.” It’s “use Reagan for progressive ends.”

It looks as thought the House liberals are following that advice and it’s a beautiful thing. Here’s Greg Sargent:

Dana Milbank had a provocative column this morning arguing that on the debt ceiling, Dems have become the new party of Ronald Reagan, and that Republicans only honor their alleged hero Reagan in the breach and not the observance. After all, Reagan presided over 18 debt ceiling hikes as President. But for a large swath of today’s House conservatives, the drive to prevent the debt ceiling from being hiked has replaced the now-forgotten push to repeal Obamacare as their number one ideological cause celebre.

Now House liberals have hit on a fun new way of emphasizing this point: They are sending a letter today to every House Republican asking them to raise the debt limit. Only the letter wasn’t written by House liberals. It was written by Reagan himself.

Here’s the letter to Minority Leader Howard Baker:

Dear Howard:
This letter is to ask for your help and support, and that of your colleagues, in the passage of an increase in the limit on the public debt.

As Secretary Regan has told you, the Treasury’s cash balances have reached a dangerously low point. Henceforth, the Treasury Department cannot guarantee that the Federal Government will have sufficient cash on any one day to meet all of its mandated expenses, and thus the United States could be forced to default on its obligations for the first time in its history.

This country now possesses the strongest credit in the world. The full consequences of a default or even the serious prospect of default by the United States are impossible to predict and awesome to contemplate. Denigration of the full faith and credit of the United States would have substantial effects on the domestic financial markets and on the value of the dollar in exchange markets. The Nation can ill afford to allow such a result. The risks, the cost, the disruptions, and the incalculable damage lead me to but one conclusion: the Senate must pass this legislation before the Congress adjourns.

I want to thank you for your immediate attention to this urgent problem and for your assistance in passing an extension of the debt ceiling.

Sincerely,

Ronald Reagan

Greg thinks they are doing this to help persuade the public since the tea partiers are beyond hope. But I also think they are doing what Rick outlined above — messing with their minds. And that’s a good thing. Maybe a little dissonance of this type will serve as political electro-shock therapy and bring one or two of them out of their Orange Pekoe fugue state. It could happen.

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