Debt-ceiling Showdown: A test of Sanity
by John Case
The so-called “debt ceiling” crisis is upon us. Unless the amount the US can borrow is raised, a second financial crisis looms, partial default on our debts, the furlough of 800,000 federal workers and contractors, cancelled
checks to millions of social security and medicare and medicaid clients, and a host of other evils. Th president has said his young children are performing better on their homework, than leaders in the Republican dominated House are on theirs. He’s called for all to leave ideology at the door as he convenes them again at the White House tomorrow. But the only ‘ideologists’ are the so-called Tea Party fanatics, who act as witting or unwitting flunkies for reactionary Ag-biz, Energy, Defense and some of Wall street interests — those planning to make a killing by ‘shorting’ the whole
economy as it tanks again — while striving to distract everyone with racist and nativist ‘dialogs’, keeping women barefoot and pregnant and calling it ‘religion’, and tagging unions not banks for the deepening crisis.
Its becoming a test of sanity how long it takes all reasonable people to conclude that the Republican party has painted its teeth orange, turned right, and jumped off a cliff, to mangle an old Dylan lyric. Conservative NY Times columnist David Brooks calls a) threatening to bring on another financial crisis and “stain the honor of our country” over debt, and b) refusing to raise any tax whatsoever — acts that voters will and should repudiate.
“If the debt ceiling talks fail, independents voters will see that Democrats were willing to compromise but Republicans were not. If responsible Republicans don’t take control, independents will conclude that Republican fanaticism caused this default. They will conclude that Republicans are not fit to govern. And they will be right”
Nobel Prize winning economist Joseph Stiglitz says the problem runs deeper than psychological challenges of leading Republicans. He calls the showdown over debt ceiling and the obsession of right wing leaders with even more austerity, alongside the stubborn refusal of the rich to pay even a penny tax — “the ideological crisis of western capitalism”.
What has happened is that the entire trickle-down, free market fundamentalist premises that began with the Reagan Administration and drove financialization for the past 30 years have been proven utterly false. Some call it neo-liberalism. In any event — its failing. Those clinging to the hollowed out ideology appear less and less lucid and more narcissistic. On a personal level, If not treated, this can become a personality disease we call “sociopathic behavior” — a life without conscience or sensitivity to any other beings.
The path ahead is toward more socialism to protect a fair distribution of wealth, and to restrain super high risk private corporate behavior and concentration, of power. “Too Big to Fail” means “Too Big to Remain in Private Control.”
More socialism does not mean the end of capitalism or markets. Competitive markets — that regulation insures remain competitive! — are democratizing. They are one known key to efficient — meaning productivity-enhancing — commodity production. They are an important, although hardly the only, factor in encouraging innovation.
Every generation re-invents and reproduces almost every facet of both public and private institutions and all relations of production and exchange, including social classes and the interactions of public and private
property. The “more socialism” of the next generation will not be the same public institutions that arose in the big 20th century expansion of public sector activities across the world. It will be smarter, more scientific, more resilient and less bureaucratic or centralized. We will find the ways to make public institutions and services more accountable to,, and closer partners with, the people they serve. And it will be global in scope.
I predict sanity will prevail. We will make it through this storm, as a people, though I cannot say what the toll may be, except that all will be changed. There are crazed Captain Ahabs on the decks of our ships, and they are obsessed with a whale of their imagination, when a tsunami of monumental dimensions is approaching starboard.
- Let’s Put Our Thinking Caps On, and Really Try to Figure Out the Best Way to Respond to This Argument (coordinationproblem.org)
- Stiglitz: The Ideological Crisis of Western Capitalism (economistsview.typepad.com)
- White House Debt Ceiling Summit Aims for Grand Deficit Bargain (usnews.com)
- Editorial: Make a deal on raising debt ceiling (knoxnews.com)
- Inequality Dampening Economic Recover (ritholtz.com)
- Politics hamper efforts to solve worlds debt crisis (theglobeandmail.com)
The Chinese? After all, that’s what all the politicians, especially the Conservatives, are telling us. The fear that we will be taken over by the Chinese… or that the Chinese will no longer buy our bonds… or that the Dollar will no longer be the trading currency of the Chinese… such a fear is being used to keep Americans in line and ready to vote for a batch of idiots.
But it’s not true. We owe the Chinese 9.8% of our debt, according to the Christian Science Monitor. Japan has 9.6 %, England 5.1%… and other countries have much smaller chunks. In reality, foreigners own a mere 24.7 percent of our debt.
US individuals hold 12 percent of the country’s debt. Next under the domestic category comes the Federal Reserve, which holds 9 percent of US debt, then pension and retirement funds, mutual funds, and state and local governments.
So when the Congress starts filling us with the China fear, maybe we should send them OUR bill… cash in our bonds and mutual funds… get our city government to send in their invoices.
- The GOP’s kooky debt default plan (salon.com)
- U.S. Mostly Indebted to Itself (politicalwire.com)
- Should You Pay Off Debt or Save for Retirement? (money.usnews.com)
- The real debt ceiling ‘catastrophe’ (thehill.com)
- Who Owns the U.S. Debt (mint.com)
- China lowers holdings of US debt in November (seattletimes.nwsource.com)
- Who owns the U.S. national debt? (investmentpostcards.com)
- Republican debt repayment bill “unworkable”-Geithner (reuters.com)
- U.S. must stop the kowtowing (timesunion.com)
- U.S. report finds Chinese currency gains too slow (ctv.ca)
- China’s Creative Accounting: Using Debt As a Tool for Economic Development… (projectworldawareness.com)
We are spending $2 Billion a week in Afghanistan. If you want to see zeros, that’s $2,000,000,000.00 a week. It also means $104 Billion a year.
Meanwhile, we can’t afford to keep our education budgets in functional condition. We can’t reduce our National Debt. We can’t bring down our operating deficit. And we are spending a fortune on foreign servicing (read China) of our debt.
The Teacher/Jobs bill that was passed by the Senate goes to the House tomorrow. It MUST be passed there if we want teachers to keep their jobs, if we want to see class sizes remain small enough, if we want to have all the extra programs beyond basic ABC’s working in our children’s favor.
And what about the money we are still spending in IRAQ? Here is the remains of a military action that we get just about zero benefit from (we shouldn’t have been there in the first place… and now it turns out that the Bush Administration has been documented as planning the invasion of Iraq BEFORE 9/11!)
The debate that is going to come up right away…if not as I write this…is a Guns and Butter debate. Do we keep supplying useless wars or do we keep our own middle-class culture from dying out entirely? Watch the activities of Congress and listen to the coming election speeches if you don’t believe me.
When I was young and naïve, I believed that important people took positions based on careful consideration of the options. Now I know better. Much of what Serious People believe rests on prejudices, not analysis. And these prejudices are subject to fads and fashions.
Go in and read Krugman’s NY Times column, Myths of Austerity, HERE.
Here’s a clip:
I don’t know if you get to read incoming e-mail. I doubt it, as I know the value of your time in running the country and still finding some room for your wife, children and dog. However, I would like to offer you a couple of points from my not-so-unique position as an unemployed American with two college degrees who worked on your campaign steadily for many months last year… and who is now getting more and more disappointed in your progress, or lack thereof.
“Progress” is the key word here. The expectation of so many of us who walked from door to door or sealed and sent mailing pieces or stood at intersections waving signs instead of going home to our families in the evening was that your Presidency, tied with the majorities for the Democratic Party in both Houses of Congress, would bring us out of the fiscal slurry that the Bush Administration had sunk our lower extremities in. Oh, I know you have made accomplishments… that somehow you and Bernanke saved us from a Depression with a fairly hideous Recession, that you started a process to close Gitmo and began making buddies again with the rest of the world. I know all of that.
What I can’t understand is why, after the huge effort you put into the election campaign making us all convinced you were a Progressive Hope for all of us, you have really become a mostly talk and let others do the action kind of guy. I speak specifically about Rahm Emanuel, who seems to really run the domestic policies that are fed out to the Congress, about Tim Geithner and the rest financial service types who made sure their industry was protected first while your small voters, who could not commit the millions in campaign bucks that you seem all too willing to sell us off for, cut down on their grocery shopping and debated the best way to come up with their kids’ tuition over mortgage payments, and about the Military’s need to keep us involved in the most unnecessary confrontation anyone could imagine, making our international debt so huge that even words don’t describe it.
I can’t understand why the Health Care deals where made with the Pharmaceutical companies and the lobbyists from the Insurance industry, and the Liebermans and Nelsons and other bought and paid for types, and not with the cast majority of people who elected you…people who once thought there was a chance at a single-payer solution to Health Care and who continued to think they would still get an advantage with the now vanished Public Option.
We thought you wanted to change things.
Instead, you have worked yourself into a sticky and overgrown corner where just getting out is nearly impossible. While it is possible that you might reevaluate the situation before the Fall and the 2010 Congressional elections start and get into the fray yourself (and, frankly, tell your current policy wonks to listen to the people who elected you OR ELSE), the reality seems to be that all the changes we had hoped for have been sidelined by the most controllable of uncontrollable things.
I hope you had a chance to watch, or listen to, or at least read a transcript of Bill Moyers’ Journal from the 18th of the month (and one that had not been edited by your staff to remove the highlights that they are most involved in). If not, I think you should note that the first half of the program is something is something that you should pay close attention to. It’s called “Is Washington For Sale?” and it features some very clear words from Matt Taibbi of Rolling Stone and Economist Robert Kuttner. You can see it on line at http://www.pbs.org/moyers/journal/12182009/watch.html, if you are able to get on line. I hope you can. Hell, you’re the President. Call PBS and ask them to send you a DVD!
It is so important that you become aware of what the community of Americans, who gave the government to you and the Congress not so long ago, think. All our futures are tied together, but you have your hand on the knot.