Trouble at teatime
STONE the crows! Politics is collapsing into chaos with shouting matches utterly independent of the policy questions they are ostensibly about. In Australia, carbon tax/trading has become a metaphor for the sort of stoush we last saw in Pauline Hanson’s hey-day with hysterics on both sides of the argument accusing their opponents of bossing everybody about.
And in the US lifting the federal government debt ceiling has given the Republican right and their Tea Party pals a chance to demand the end of the big-spending state. But what is especially insane about the American argument is that everybody agrees there is a problem.
The Crows have nothing to add to the universally understood details of the doom that would follow if Congress blocked the US Government from increasing its debt and the feds ran out of cash. There could be a stop, at least a halt, to welfare payments, soldier’s salaries and interest owed bondholders. Default would damage, perhaps destroy, the standing of the world’s reserve currency and do Lord knows what damage to the international financial system.
And while everybody assumes President Obama and the GOP House leadership will do a deal before the 2 August deadline, none seems in sight.
The reason the House Republicans are willing to contemplate default rather than allow the government to borrow more, something that has occurred 70 times since 1960 (49 of them under Republican presidents) is clear – the activists in their electorates expect it.[i]
As Peggy Noonan explains,
The Republicans are being hard-line because of the base and the base is hard-line for two reasons. First, we are in an unprecedented debt crisis. Second the past 40 years have taught them that if dramatic action is not taken to staunch spending, Congress will spend more. Something is needed to shock the system. [ii]
In any case, Republicans are arguing, the world will not end without the ability to borrow more. Michelle Bachman, a friend to the Tea Party and a seemingly certain starter for the 2012 GOP nomination, argues that Washington will keep collecting taxes whatever happens.[iii]
Just not enough to keep the country running. The Treasury takes in $US170bn a month against outlays of $300bn.[iv] Short of shutting down much of the military and a fair swag of civilian services, there is only one way to claw back this size of shortfall – take an axe to health and welfare spending, especially for the expensive old.
If spending continues as is, by 2025 all federal government income will go to interest payments, and health and welfare outlays.[v]
But, if you think the Tea Partiers will want to do something about this, guess again. An April poll found 70 per cent of Tea Partiers opposed reducing the deficit by cutting health spending.[vi]
And that wouldn’t have anything to do with 50 per cent of Tea Partiers being 50 years old or over, in or edging toward the age groups that do very well from the US welfare system, would it? [vii]
So the Republican base wants to cut spending, but not on the expensive benefits the old enjoy, which are the very programs Democrats want to increase taxes to protect. It strikes the Crows that the two sides are in screaming, ranting agreement with each other’s objective to keep the state spending.
Even when it comes to the tax increases President Obama advocates, no one is talking about slugging innocent entrepreneurs. According to The Economist, the Administration proposal for lower outlays is 83 per cent spending reductions and 17 per cent tax rises – with the hikes coming from closing loopholes rather than lifting rates. “America’s tax take is at its lowest level for decades: even Ronald Reagan raised taxes when he needed to do so. … If the Republicans were real reformers, they would seize this offer,” The Economist argues. [viii]
The Crows guess Congressional Republicans know it, but the angry activists in their districts aren’t interested, being less concerned with the economy than asserting their authority in scary circumstances.
One of the Tea Party causes is repealing a Bush environmental law banning incandescent 100w light bulbs, which they argue is an environmentalist imposition on a basic right, as well as an insult to the memory of Thomas Edison. That this nonsense got a serious run in the House of Representatives demonstrates how the GOP dares not defy an army of eccentrics who see conspiracies everywhere.[ix]
And it demonstrates how rhetoric replaces reason when passion prevails over policy as the basis of the debate. We are seeing a milder version of the same thing here as the extreme ends of both sides of the carbon tax debate overheat.
However, all is calm and cool in Canberra compared to the US House of Representatives where Republicans are pandering to their base in the debt ceiling fight.
It is an example of how avoidable fights take on a life of their own when impassioned politics replaces intelligent policy debate.
A deal on the debt ceiling still seems more likely than not, but when people who will vote against inefficient light bulbs can secure the numbers nothing sane is assured. If Speaker John Boehner cannot assert his authority over the GOP members of the House they could end up rejecting a final offer from President Obama. The national interest does not always win when passions prevail and MPs focus on their own survival.
Clearly the US national debt cannot keep growing and federal outlays, including welfare spending, have to be permanently cut. But it will not happen between now and early August and grandstanding, such as the demand for a balanced budget constitutional amendment, will not get a deal done.[x]
As commentator Henry Adams put it:
No branch of the Government has a greater power for good or evil than Congress in dangerous times, and yet it is generally reserved for the Executive or for the energy of single men to throw the decisive weight into the scales while Congress is still laboring after a decision.[xi]
Of course, Adams was writing about more extreme circumstances – the 1860-61 Congressional session when the legislature watched the country slide to civil war – but the mindset seems the same. With Republic activists self-destructively demanding no increase to the very debt needed to pay for the healthcare they do not want touched the country is in trouble of the Tea Party’s making.
[i] Kenneth Rapoza, “What a US default, downgrade might look like,” Forbes, June 13 @ http://blogs.forbes.com/kenrapoza/2011/06/13/what-a-us-default-downgrade-might-look-like/ recovered on July 16
[ii] Peggy Noonan, “Obama and the debt crisis,” The Wall Street Journal, June 3
[iii] “Rep. Gohmert: Boehner is wrong on debt ceiling deadline,” The Wall Street Journal July 13 recovered on July 16
[iv] David Hale, “America’s economy could have been worse,” ABC TV Lateline, July 13 @ http://www.abc.net.au/lateline/content/2011/s3268974.htm
[vii] Lydia Saad, “Tea partiers are fairly mainstream in their demographics,” Gallup Hot topics, April 5 2010, a http://www.gallup.com/poll/127181/tea-partiers-fairly-mainstream-demographics.aspx recovered on July 16
[viii] “Shame on them: The Republicans are playing a game with hugely high economic stakes,” The Economist, July 7
[ix] Guardian News and Media, “Light goes out on bid to save old-style bulbs,” Sydney Morning Herald, July 15
[x] Alan Fram, “GOP adds constitutional amendment to budget fight,” Associated Press July 14 @ www.realclearpolitics.com/news/ap/politics/2011/Jul/14/gop_adds_constitutional_amendment_to_budget_fight.html recovered on July 17
[xi] Henry Adams, The Great Secession Winter of 1860-61 (in) Adams, The Great secession winter and other essays (10) (Sagamore Press, 1958) 1-32, 10 @ www.archive.org/details/greatsecessionwi012336mbp recovered on July 16