My Morning Kyle

It has been a while since I've picked on the AJC's (usually) reasonable conservative voice, but some things cannot pass.

It is not much of a leap from the rhetoric of our president to the violence and looting that has beset Great Britain.

No, Kyle. Connecting a President, in a time of severe financial crisis where we may ask our grandparents to continue working until they are 70, asking the wealthiest in this country to return to the tax rate they "suffered" under for the entire decade of the 90s to people literally burning their cities to the ground is a huge leap.

Hyperbole is an effective tool in the hands of the political provocateur, but there is a difference between stretching a rhetorical point and living in another universe while proclaiming your feet are firmly planted on planet Earth.

We need more reality in our conversations. Kyle, you ain't helping.

Two Years Ago

What I said two years ago.

But what I am sure of is there is a wave of irrationality. As to how large that wave is, I do not think we know.

I don't think anyone ever imagined the wave would get this high.

And yes, I called out one side.

Even though we don't know how pervasive the irrational fear is, leaders (and there is little denying some of the people I am about to name have been embraced as leaders) on the right have trumpeted it as a "movement" and "patriotic" and as "mainstream". We've reached the existential moment where fear of the unknown or ignorance of the known is not only seen as rational political thought but a reason to proudly thump one's chest and declare patriotism.

And there is no mushy middle here. I was right and I'm not too shy to say it.

Those that ride the tiger do not fear the dismount. They no longer care. They only revel in the red of tooth and claw as it continues to ravage anyone in their path.

The Profoundly Unserioius

The Speaker of the U.S. House of Representatives uses a talk radio program to vet his plan to save us from financial ruin.

The acolytes continue to spin the tale that even if the debt ceiling is not raised, we will have plenty of money to keep the "important" things solvent.

Now, today, the usual suspects are cackling all over twitter about Apple having more cash on hand than the entity that represents all 300 million of us.

Up to this point, the lunacy that infects the GOP has been inside baseball or the navel gazing of the teevee hairdos. Now, it is starting to affect the entire economy - from the cats om the "Street" to the payroll of soldiers in the field to the young couple considering buying a new house.

And the Republican intelligentsia is laughing all the way.

Outside the deafening echoes of the re-affirming radio, television, social media chambers, regular folks are starting to notice.

Quote Of The Day

From Megan McArdle, who recently spoke to some finance people about why the stock market was not reacting badly to the news out of Washington:

No, they're relatively calm because they simply cannot bring themselves to believe that we're not, in the end, going to raise the ceiling.  It's too outlandish that we would, through the collective action of our congressmen, suddenly and for no apparent reason shoot ourselves in the head.

 The Dow is currently down for the fourth straight day but still relatively modest in its downturn. Right now it's the annoying cat scratching your leg to wake you up. Next Tuesday, it could a tiger eating us all alive.

Chart Of The Day

Some will dismiss it because of the source (Center for American Progress), but I believe it's difficult to argue with the numbers.

The President is now to the right of Bowles-Simpson.

We are on the brink of fiscal disaster, but it is the President who is creating job stifling "uncertainty" and it is the President who is engaging in "class warfare".

But most importantly, it is all his fault because he steadfastly refuses to put anything on paper.

What About The Bookkeepers?

The Atlantic's Megan McArdle, coming at it sideways, has the best explanation how all the financial trickery in the world won't keep "critical" programs from being affected.if we do not raise the debt ceiling

My favorite:

You just cut the IRS and all the accountants at Treasury, which means that the actual revenue you have to spend is $0.

 Doesn't matter how much money is being deposited if no one can sign a withdrawal slip.

If It's Not On Paper, It's Not Real

You know how deeply a meme has penetrated when it is repeated in blog comments. It's a sure sign that something, probably not based in reality, has gained traction in the common mind; therefore making its own reality.

From Jay Bookman's blog this morning:

Jay, I have never seen any details regarding this “proposal.” Do you have a link?

Even Speak Boehner began parroting the line this morning. And they are right. The one thing President Obama has not done is roll out flowcharts, power points or even Paul Ryan like fancy commercials with scary spiraling graphs.

He has done nothing at all! All those meetings! All those negotiations! And nothing! What disdain our President shows for the process.

Except he has.

Press conference - July 11, 2011

http://www.c-span.org/Events/President-Discusses-Status-of-Debt-Reduction-Talks/10737422780-2/

President Obama said the Republicans need to come to the plate and work to reduce the deficit by $4 trillion over ten years.

Washington Post Report - July 10, 2011

http://www.washingtonpost.com/business/economy/obama-will-still-seek-a-4-trillion-debt-deal-despite-gop-opposition-aides-say/2011/07/10/gIQAOKq86H_story.html

Two of President Obama’s top advisers said he will continue to press for a far-reaching, $4 trillion deal to cut the deficit when he meets with congressional leaders on Sunday evening, despite new opposition from Republican leaders to such a compromise.

Obama Speech - April 13th

http://www.whitehouse.gov/the-press-office/2011/04/13/remarks-president-fiscal-policy

So today, I’m proposing a more balanced approach to achieve $4 trillion in deficit reduction over 12 years.  It’s an approach that borrows from the recommendations of the bipartisan Fiscal Commission that I appointed last year, and it builds on the roughly $1 trillion in deficit reduction I already proposed in my 2012 budget.  It’s an approach that puts every kind of spending on the table -- but one that protects the middle class, our promise to seniors, and our investments in the future.

Also from the April 13th speech

http://money.cnn.com/2011/04/13/news/economy/obama_debt_plan/index.htm?iid=EL

But like the commission, the White House estimates that spending would account for the bulk of deficit reduction. Obama says he wants $3 in spending cuts for every $1 in additional tax revenue

He also said he supports a "debt failsafe" trigger that would be activated if Congress fails to enact fiscally sound budgets. His target: Annual deficits that are no more than 2.8% of GDP, on average, starting in the second half of this decade. Of late, annual deficits have been close to 10%

Cut non-security spending over the next decade in a manner recommended by his debt commission. The commission set 2012 non-security spending at 2011 levels, and by 2020, would allocate only slightly more than the 2012 amount.

 The April 13th speech in particular was heavy on specifics and called for $4 trillion in deficit reduction, primarily through spending cuts. In any other setting this would be seen as an austerity plan similar to the one implemented recently by the British Tory government.


But because it isn't on paper, it isn't "real". And these people expect us to continue to take them seriously?

The Balanced Budget Amendment Is Not Conservative

In my mind, conservative politics rest on two ideological poles - the present is guided by the past and the world should be managed as it is, not as it should be.

In the current financial crisis, the Republican party's favorite zombie legislation has risen again - the balanced budget amendment. It has been lurking since the 80s and like any good monster seems to pop out of the shadows just as things seem the scariest.

But is it a conservative idea? Modern politics would say, yes. Certainly, you could make the argument that the only way to deal with the world as it is would be to control spending and due to the lack of fiscal fortitude in the nation's Capitol, the only sure method is to put it in black and white in the U.S. Constitution.

However, if we take my thesis at the beginning and apply the two poles of conservatism, we arrive at a very different answer.

Practicality first. Does a balanced budget amendment actually deal with the world as it is or does it attempt to mold the world into a vision of what we want.

Steven Taylor of Outside The Beltway dives deep into the idea of a federal balanced budget and concludes it is practically impossible.Everyone wants the federal government to work like a household budget. Although it is a nice analogy and makes an easy talking point, it in no way is reality. Unlike your budget which is based on a paycheck where the amount remains virtually the same and arrives on a regular basis, federal revenue gyrates wildly based on many external factors. The Feds have a general idea of how much money is coming, but no real idea until it actually arrives. And let's not even venture down the rabbit hole of what happens if the ledger doesn't balance at the end of the year (here's a hint, the courts would get involved, what fun!)

That's one pole knocked from the tent. Perhaps it can stand on the remaining support.

Here's a fun way to win a drink in a bar bet. Ask someone how many times the U.S. has been debt free*. If they answer in any way except "exactly once", drink up!

The year was 1835. The nation was led by a man who hated debt and despised the central U.S. Bank. He proceeded to slash the Federal government, sold Federal holdings such as public lands and refused to re-authorize the central bank.

Sound familiar?

It worked. By the end of 1835, President Andrew Jackson managed for the first and only time to completely balance the budget. No debt. None.

Two years later, following financial chaos as state banks issued there own specie and speculation went wild., the country plunged into a depression, the panic of 1837, and federal debt returned but at 10 times the previous level.

The depression was not directly the result of the leveling of the debt but there is little doubt it exacerbated the crisis.

So, the one time we actually balanced the ledger, instead of jubilee, we had disaster. Does this sound like using the past to guide the present?

The U.S. has always had debt (except for those two unfortunate years in the 1830s). We had it under Washington on day one, we had it through Presidents, bad, good or indifferent. We have it under Obama today and I guarantee we'll have it under his successor.

Debt is not a good thing, but it is not a bad thing either. Modern financial systems, from the small business that depends on a line of credit to maintain payroll, up to the massive federal government, depend on debt to function. To remove it would be akin to removing all the oil from an engine. The wiser course would be to manage the level so it neither overfills to spatter everything nor falls to low, causing parts to seize.

Instead of advocating such a course of management and practicality, modern Republicans want to place debt in stark binary terms, then codify that cold equation in the fabric of our greatest law. They desire to do this despite the lessons of history and despite the great unknowns of the future.

This is not conservatism. This is radicalism.



* I understand that you could technically have a balanced budget amendment and still carry debt, however that does not reflect the context of what is promoting the current version of the BBA