#default in 2011

[lemkin]

Clip and save this section for use during fiscal "negotiations": >**Serious** (ser’ ee uhs) *adj*. any of a group of proposals that immiserates large numbers of ordinary people, either immediately or in the future, via cuts to broad-based social welfare programs. > >**Unserious** (un ser’ ee uhs) *adj*. any proposal that slightly inconveniences rich people via modest tax increases or annoys military contractors via small cuts to the Defense Department.

[lemkin]

Why am I optimistic? Because you can smell the winds

**Chuck Schumer**, Senator from New York, explaining why I am very glad not to be involved in or even be located *near* these "negotiations."

[lemkin]

We shouldn’t dread the debt limit. We should welcome it. It’s an action-forcing event in a town that has become infamous for inaction.

John Boehner, Speaker of the House of Representatives, tipping his hand. I'd say this is the first time you can see real fear of the status quo. More broadly, that doing nothing will fix most of the deficit over the near term by eliminating the Bush tax cuts and a few other money-sapping provisions. Were it deemed reasonably likely that Obama will win reelection in the fall, they'd quickly calculate that the only chance the GOP has for full extension of the Bush tax cuts is to force the issue before that happens. You do that by holding the full faith and credit of these United States hostage. Again. And the only way they get there is by reneging on their previous agreements and hope nobody remembers that they're doing so. Nothing that has transpired in the past 20 years leads me to believe they are wrong on this count. Sadly for them: they think this cunning scheme to yet again needlessly and recklessly and by choice yet again delivering the nation to the economic precipice has the benefit of being a big political winner for them. Sadly for the rest of us: you can only put this particular gun to the hostage's head so many times before it gets fired. Maybe this time, maybe next. But soon.

[lemkin]

S&GOP

[Ezra Klein](http://www.washingtonpost.com/blogs/ezra-klein/post/standard-and-poors-inconsistencies/2011/07/11/gIQAswzk2I_blog.html?wprss=ezra-klein): >My hunch is that S&P was making a political argument and felt the need to cast it as deficit arithmetic. Then, when their arithmetic proved wrong, they were left looking foolish. As it stands, you actually can’t coherently merge the first and second versions of S&P’s explanation of the downgrade. That should tell you something about how rigorous their framework is, even if doesn’t obviate the still-legitimate points they made about our political system. I think Ezra is fundamentally right here. The *problem* is this: if S&P set out to make a political point, they did so in such a fumbling manner that the *political* message, *the most important part*, was utterly lost. The MSM has a fundamental inability to report on something negative relative to a single party. Obama offered *at least four* debt ceiling deals, including several that had previously *been* GOP deals. How was this reported? "Both parties unwilling to compromise; President unwilling to lead and/or deal" S&P issues a report castigating GOP intransigence on revenues. Reported: "*political system* unable to deal with current crisis." If S&P truly intended to make a political point, the *report itself* needed to be called "The GOP's Willful Destruction of The American Century" or "Political Nihilism and Today's GOP: A Downgrade Story" and furthermore needed to be told through colorful pictures and in fewer than 50 words. There's no way in hell a company like S&P is going to do this; *they* are fundamentally incapable of *really making* the political point that they seem to have set out to make, as such moves soon prove to be bad for business. (And don't think for a moment the GOP will forget this slight. There will be GOP initiated investigations, *damaging* ones, into S&P at the first available opportunity). Therefore: *you don't do it at all* unless you can back it up with hard numbers such that the conclusions are inescapable. Which they also couldn't do. But that national embarrassment is a whole other post. Assuming for the moment that they went there and *made* the political point utterly and inescapably explicit, *even then*, it would be hard to get the MSM to report it as such. They'd dodge with a "it's all very complicated" or "let's leave it there" or simply book only conservative guests and allow *them* to talk as long as they want to without challenge or correction. Above all else, they'd avoid any mention of what was actually *written in the report*. You know: pretty much what's happened in the last several days. Naturally, this all has to transpire alongside the slow-motion European financial collapse and its effect on global markets. Typically "USA *über alles*" reporting over-stresses the influence, if any, of the downgrade on global events. "*[Post hoc, ergo procter hoc](http://en.wikipedia.org/wiki/Post_hoc_ergo_propter_hoc)* motherfucker" may as well go on the *Times* masthead. People are stampeding for Treasuries!!! It must be the *downgrade* of that instrument's backing that is causing them to do this!!! (Had the downgrade not occurred, at least FOXnews and maybe the broader media would have blamed the collapse in value on the Presidential birthday BBQ's failure to durably impact jobs creation). The MSM response? Get some folks on to scream "I blame the Democrat and the dirty fucking hippies for this historic downgrade of the United States and the similarly timed collapse of the global markets. The only response is to slash the social safety net, cut taxes, and increase defense spending. Or a mandatory National Week of Constant Prayer. Whichever." What other *rational* approach is even possible?" This is why we fail.

[lemkin]

Standard and Poors to downgrade US credit rating:

A source says Republicans [steadfast refusal] to accept any tax increases as part of a larger [deficit] deal will be part of the reason cited [for the historic downgrade].

How do you imagine the radical Socialist Obama administration plans to respond on behalf of The Democrat?

[An administration] official says that S&P made a "serious mistake" in its analysis, "based on flawed math and assumptions," so the Obama administration is pushing back.

This is why they fail.

[lemkin]

Number Two

LA Times: "Investors are looking past the budget situation and realizing this is an austerity plan," said Jack Ablin, chief investment officer at Harris Private Bank in Chicago. "We have an economy that's struggling to stay afloat and we don't have the ammunition to keep prodding it forward."

Kevin Drum: Oh really? Now you tell us? There are really only two options here. (1) The Times is wrong. (2) The Times is right and America has the stupidest goddamn investors on the planet. For months they sat around cheering on the tea partiers and declaring solemnly that the federal budget was just like a household budget and we needed "real action" on the debt in order to build confidence in the economy. Then, suddenly, when they got it, they realized that what they really wanted wasn't dumb slogans but actual policies that would help spur the recovery. And that means looser monetary policy and fiscal stimulus.

Lemkin: I'll take #2 for $1000, Alex. Tea Klan nonsense works because it feels good. It's fun to rage away and tilt at grand conspiratorial windmills. Never you mind that actions have consequences, many of which will have direct and painful consequences in your lives. FOXnews and its political wing, the GOP, have a President to defeat. Nothing else matters. Pure electoral nihilism.

[lemkin]

It is hard to come up with words that are strong enough to describe what an appalling display of misguided ego, inept negotiating postures, bad policy thinking, and utter disregard for the public interest are on display in [the debt ceiling] fiasco. But as a friend of mine likes to say, “Things always look darkest before they go completely black.”

Yves Smith, bringing the optimism.

[lemkin]

In short, the Boehner plan would force policymakers to choose among cutting the incomes and health benefits of ordinary retirees, repealing the guts of health reform and leaving an estimated 34 million more Americans uninsured, and savaging the safety net for the poor. It would do so even as it shielded all tax breaks, including the many lucrative tax breaks for the wealthiest and most powerful individuals and corporations.

**Robert Greenstein**, [writing](http://www.cbpp.org/cms/index.cfm?fa=view&id=3548) about the "Boehner plan" at the nonpartisan CBPP. Said it approximately one billion times: this isn't some side affect. It's *the intended consequence*. The debt ceiling is simply a useful construct for ramming the same old policy of "zero social safety net, all wealth and benefits to top 2%" GOP dream government setup. All it is, was, or ever will be. If they fix the debt ceiling this morning, they will be using the next federal budget (which will need to be done to have a government post-September) to push the *exact same line* by this afternoon. The GOP *[does not care](http://lemkin.tumblr.com/post/6111585504/2-96)* about deficits. If they did, they'd have taken any of the *four* increasingly huge *deficit cutting* plans offered them. They want low to nonexistent tax rates on the top 2%. Simple arithmetic will show anyone that this means eliminating the social safety net; as Ezra Klein [has noted](http://voices.washingtonpost.com/ezra-klein/2011/02/the_us_government_an_insurance.html): the federal government is better thought of as an insurance conglomerate with a large standing army. To cut taxes to "GOP preferred" levels, services have to go. And to get rid of those hugely popular and helpful services, a large number of people using them have to be convinced said services (and government in general) aren't working or *even in their interest at all*. This is the core GOP governing strategy in fifty words or less. Everything they have done and said in the past several decades of tight, lockstep messaging with the aid of the most popular "news" network on television has been aimed at and in service of making those 48 words reality. Everyone not already up the ladder will kindly go die in the streets. Today they're using the debt ceiling, tomorrow it will be the FY2012 budget, the next day it will be veterans benefits or whatever else comes to hand. And until they are forced to pay a steep political price for steadfastly using gridlock and economic hostage situations as a negotiating strategy, they will continue to use them. That Congressional and Executive Democrats seemingly haven't figured this out yet is why they fail.