As Budget Stalemate Hostilities Escalate, Obama Starts to Brandish Default Threat

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The confrontation underway in Washington DC isn’t as deadly as the Cuban Missile crisis. But in many ways, a misstep could be would produce collateral damage is hard to estimate but would unquestionably be large. So given the stakes, it’s remarkable to see Obama prove his manhood by telling those Republicans he is not intimidated by the possibility of default; it may be presented in “no drama Obama” lecturing, but his message remains that he’s not going to be the one to steer out of this game of chicken. From the Financial Times:

Barack Obama said the White House was “exploring all contingencies” in the event that Congress failed to increase the country’s borrowing limit, but warned that there was no “magic wand” to brush away the threat of a default on US debt.

“No options are good in that scenario,” the US president told reporters on Tuesday, shrugging off the possibility that the White House could use creative solutions to keep borrowing – from invoking the 14th amendment of the constitution that says the validity of US debt shall not be questioned, to minting a $1tn coin…

The president did not rule out the possibility that the US would prioritise debt payments over other government outlays, but said it would put the Treasury in the difficult position of having to choose which creditors to satisfy.

And Politico tells us that, as we anticipated, both sides are simply digging in harder in their entrenched positions:

Speaker John Boehner said President Barack Obama’s desire to negotiate after the debt ceiling is lifted and government is funded amounts to “unconditional surrender by Republicans.”

The message, delivered outside the speaker’s office on Tuesday afternoon as a response to Obama’s earlier press conference, does not bode well for solving the government shutdown or debt default this week…

The dueling statements from Obama and Boehner came on a day when there was little progress toward solving the standoff, but the rhetoric between the president and the speaker escalated.

As this stalemate progresses, the ugly truth is becoming more and more obvious: there is no bargaining space where the two sides’ interests overlap, short term or long term. On the Grand Bargain Great Betrayal, as we said before, Obama and the Republicans could not reach a deal last year because Obama insisted on at least some tax increases on the rich and the Republicans were not willing to yield on that issue. Neither side has budged an iota. On the immediate impasse, we have two outtrades. First, even though Boehner has stopped squalling about it in the last few days, the insurgents still want to whack Obamacare. From a different Politico story:

And as Republican leadership tries to broaden the debate beyond Obamacare to other areas of mandatory spending, many in the rank and file want to keep focus on the health care law. That’s a major reason they’re pushing party leaders to keep a government funding bill separate from debt ceiling legislation, worried that Obamacare could get lost in such a big fiscal package….

Right now, there doesn’t appear to be any incentive to back down. Republicans largely say they aren’t feeling any pressure from their constituents and instead say that people contacting their office are urging them to keep up the fight.

Paul Krugman recaps the views of various camps in the right-wing punditocracy, but they are variants of two themes: that either the damage done by a default (which might mean a default on Social Security payments rather than Treasuries) is being exaggerated by the Democrats, and that those profligates need to have that government tit taken away from them (this from representatives in red states that are net financial beneficiaries of Federal taxation and spending). The latter position is dressed up in proper Peterson Institute “we need to live within our means” packaging, but it’s an intellectually respectable cover for the apocalyptically-minded among the Republican base. As we’ve stressed, both the evangelicals and the Tea Partiers see government (and society generally) as corrupt, and if they can’t get their way, they believe they will do better if they wreck the entire system. So even if the doomsters are right and Obama were unsuccessful in escaping a Treasury default, many would say that a global financial meltdown would be a survivable event and would cleanse the system. They’ve got no idea what they are asking for.

We are already seeing damage from the first week of the Federal shutdown. Gallup tells us Weekly Drop in U.S. Economic Confidence Largest Since ’08

Americans’ confidence in the economy has deteriorated more in the past week during the partial government shutdown than in any week since Lehman Brothers collapsed on Sept. 15, 2008, which triggered a global economic crisis. Gallup’s Economic Confidence Index tumbled 12 points to -34 last week, the second-largest weekly decline since Gallup began tracking economic confidence daily in January 2008.

Screen shot 2013-10-09 at 4.47.50 AM

And mind you, this poll is as of the end of last week. There is no way were are going to have a resolution of this impasse this week; we’ll be lucky if there’s one by the end of next week. And even though the Republicans are caucusing internally, they aren’t agreed on how to proceed, so the lack of cohesiveness is a further impediment to dealmaking. I could well be proven wrong, but I don’t see Boehner conceding to Obama and letting his 20 or so moderate Republicans join the House Democrats to pass a continuing resolution and/or a deficit ceiling extension while the to-ing and fro-ing is still in process (meetings are scheduled for Wednesday, but the internal fissures seem so large that any agreement within the party is likely to take longer to hammer out). My guess continues to be he needs the excuse of a market upheaval or more evidence (economic or political) that the shutdown is doing damage before he’d pull that ripcord.

Note that Obama is still trying to get a short-term extension with the carrot of a Great Betrayal (which is framed as a bigger but yet to be determined deficit-cutting deal). But even if the Republicans get out of their own way and seek to exit the corner they’ve gotten themselves into, I don’t see how we get to a deal in four to six weeks. As much as Obama really really really wants his Great Betrayal, he also wants his tax increase fig leaf and won’t budge on Obamacare. And the Democrats are also likely to want lower cuts than were on the table last year, given how deficit levels were falling over the course of the year. So even if

Even though the stock market and gold did not react all that much today, it would be a mistake to think that investors aren’t getting rattled. MacroBusiness pointed out that the VIX rose to 20% and short-duration Treasuries have also suffered a wild ride. And while the markets continue to discount that the folks in DC would be so deranged as to default, pundits are pointing out how even getting this close to the brink will have long-term consequences. And let us not forget that if this impasse goes past October 17, which looking more and more likely, that the consequences of cutting off government spending and services even more radically to preserve the ability to ability to service debt will be tantamount to suddenly signing on to an IMF austerity program. If you thought the shutdown was ugly, you ain’t seen nuthin’ yet.

Now the Administration might plan to alleviate the severity of debt-ceiling inflicted spending limits by having the Fed use its “unusual and exigent circumstances” authority to monetize debt (I’m assuming Obama and Bernanke would wait for the deus ex machina of market upset to provide air cover). But even austerity lite would be ugly on top of the partial shutdown spending reductions.

And a final thought: Obama and the Democrats are confident that the Republicans will lose seats in the House if they keep refusing to blink on budget brinksmanship. But what happens if the game of chicken continues and we get a deeper economic downdraft as a result? Bill Clinton’s explained his 1992 campaign as “It’s the economy, stupid.” If the economy takes a hit next year, which seems certain, and the fact set is more complicated than just a Republican-induced showdown, I’m not certain the Democrats will escape blame. The incumbent Administration is generally seen as responsible for the state of the economy. If voters come to see the wrangle in “a pox on both their houses” terms, it could take more out of the Democrats than they now anticipate.

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    1. Expat

      The Cuban Missile crisis is indeed instructive. Let’s be grateful that the knaves and fools who have seized leadership positions in the US only seem to care about money and haven’t raised their credibility crisis to actual nukes.

      Below, I have selected some passages from the very good Atlantic article you link to and ask you to imagine substituting Obama for Kennedy, the House Republicans for Moscow, and the debt crisis for the missile crisis. The Grand Betrayal is the same, whether it is the arms race or the eviceration of Social Security and Medicare.

      “Given [America’s powerful nuclear superiority] Obama’s vast presidential powers, as well as the [deployment of the Jupiter missiles] rollout of Obamacare, [Moscow] House Republicans suspected that Washington viewed [a nuclear first strike] eliminating the debt ceiling as an attractive option. They were right to be suspicious. The archives reveal that in fact the [Kennedy] Obama administration had strongly considered this option during the [Berlin] debt ceiling crisis in [1961] 2011.

      “In retirement, [Khrushchev] Boehner explained his reasoning to the American journalist [Strobe Talbott] ??? (!): Americans “would learn just what it feels like to have [enemy missiles pointing at you] an uncompromising foe; we’d be doing nothing more than giving them a little of their own medicine.”)

      “[W]hile the [missiles in Cuba] debt ceiling threat did not add appreciably to [the nuclear menace]threat of a default, they could have somewhat complicated America’s planning for a [successful first strike] Grand Bargain/Betrayal—which may well have been part of [Khrushchev’s] Boehner’s rationale for deploying them. If so, the [missiles] debt ceiling antics paradoxically could have [enhanced deterrence between the superpowers] postponed the Grand Bargain, and thereby reduced the risk of [nuclear war] the Grand Betrayal.

      “As the State Department’s legal adviser recalled, “Our legal problem was that their action wasn’t illegal.”

      “Washington’s self-regard for its credibility was almost certainly the main reason it risked [nuclear war] defaulting on the national debt over a negligible threat to [national] security.

      “[T]he opening of previously classified archives and the decision by a number of participants to finally tell the truth revealed that the crisis was indeed resolved by an explicit but concealed deal [to remove both the Jupiter and the Cuban missiles] kill Social Security and Medicare. [Kennedy] Obama in fact threatened to abrogate if the [Soviets] House Republicans disclosed it. He did so for the same reasons that had largely engendered the crisis in the first place—domestic politics and the maintenance of [America’s] the Democratic Party’s image as the [indispensable nation] party of relative probity.”

      The following paragraphs speak for themselves:

      “Only a handful of administration officials knew about the trade; most members of the ExComm, including Vice President Lyndon Johnson did not. And in their effort to maintain the cover-up, a number of those who did, including McNamara and Rusk, lied to Congress.”

      “Although Kennedy in fact agreed to the missile swap and, with Khrushchev, helped settle the confrontation maturely, the legacy of that confrontation was nonetheless pernicious. By successfully hiding the deal from the vice president, from a generation of foreign-policy makers and strategists, and from the American public, Kennedy and his team reinforced the dangerous notion that firmness in the face of what the United States construes as aggression, and the graduated escalation of military threats and action in countering that aggression, makes for a successful national-security strategy — really, all but defines it.”

  1. from Mexico

    From the Financial Times:

    The president did not rule out the possibility that the US would prioritise debt payments over other government outlays, but said it would put the Treasury in the difficult position of having to choose which creditors to satisfy.

    This to me, more than anything else, sends the message that Obama is not a people’s president, but Wall Street’s president.

    For Obama, when push comes to shove, the #1 (and perhaps only) priority is getting the rentiers paid, and everybody else can go pound sand.

    There was a CNN interview of Jack Lew where this message came through even clearer:

    What would be wrong with the Obama administration saying we’re going to take care of rank and file Americans first, and it is the rentiers can go pound sand?

    I think it’s because of Obama’s duplicitous messaging that he fails, and in no small way, to gain the moral high ground.

    1. Walter Map

      The Amerikan people are screwed either way. The only questions are:

      (1) How deeply screwed are they going to be? How much of Social Security and Medicare are going to be gutted, and how much of other social programs and regulatory programs will be gutted with them?

      (2) How much misery will the general population be induced to suffer with the sequester, the shutdown, and the default until an agreement is made on how much to gut Social Security, Medicare, and other programs that serve the general population?

      Both sides are in agreement on devastating the general population, but Obama only wants to maim it to the condition of Mexico for now, while the Republicans dead set on mutilating it down to Haiti all in one go. The patient is already prostrate from decades of malign treatment and isn’t about to be given any say about which and how many major organs get harvested.

      You can be sure that whatever the resolution, the winners will declare it a Great Victory for the American People. “The operation was a total success, but unfortunately we lost the patient.”

      It’s just about time to kiss the U.S. middle class goodbye and call a 1930s-style depression The New Normal.

      My advice to young Amerikans is to flee the country while they still have anything they can take with them, and study up on the survival techniques of the lower castes in India for future reference.

      Next year will be worse, of course. The rich will continue to pillage the country, and the world, until there’s nothing left to steal.

      1. from Mexico

        Walter Map says:

        Next year will be worse, of course. The rich will continue to pillage the country, and the world, until there’s nothing left to steal.

        “and the world”

        Yep. That point also came through loud and clear on the Jack Lew interview with CNN.

        As Candy Crowley points out, the unit that monitors sanctions against Iran and Syria has been “gutted” and “can no longer do its job” because of the shutdown.

        She then cites this quote:

        The recent staffing decisions leave me puzzled. I respectfully ask that you reconsider these ill-advised staffing decisions that undermine support for vigorous Iran sanctions and other critical national security efforts.

        Rep. Ed Royce (Republican), Chairman of the House Foreign Affairs Committee

        Crowley then just goes on to blithely and unquestioningly parrot the Republican Party line, calling the imposition of sanctions on Iran as “vital” and “esential.”

        But instead of using this opening to bat the ball back, to challenge the vitalness and essentialness of destroying America in order to make the necons’ Utopian vision of global full spectrum dominace come true, Lew merely responds with his mealy-mouthed evasions and dissimulations.

        I don’t think a majority of Americans are on board for the neocon adventure — transforming the world to conform to some highly romantic but completely imaginary image of America — any more than they are on board for the neoliberal adventure: lavising everything on the rentiers while at the same time starving to death those Americans who actually work for a living and produce something.

        So we definitely know what punches the Republicans’ buttons: Utopian visions of full spectrum domiance in order to starve working people, Americans or otherwise, to death. But given repeated opportunites to take a principled stand against this higher lunacy and knock a home run, indeed to knock the ball out of the ballpark, the Obama administration instead punts.

        Why do you believe that is?

        1. jrs

          We can’t starve Iranians and deprive them of vital medicines anymore because we’re too busy doing it to Americans. Actually I’ll take it. What gets done to other countries in the name of sanctions is really hard to surpass.

          And the whole world. Yea it’s kind of a myth that there are other countries to escape to. I mean there are other countries that will fare better short term, but long term, if we’re going for global corporate governance (the TPP), maybe not so much so.

      2. LucyLulu

        Social Security has $2.6T in the trust fund to continue paying benefits. If they aren’t redeemed, how is that not a default on the debt?

        And if payments are prioritized, and more than one past Treasury officials has said it isn’t possible, at 20 million checks issued daily (look at the health exchange, and you think they can reprogram ths software in a couple weeks or so?), leaving some creditors unpaid, how is this not still a default?

        I guess my question is why wouldn’t markets be just as rattled, e.g. China, oil countries, retail investors, even if “Wall Street” might uniquely feel assured they’d be taken care of. Wall Street should be the last priority, since their products are of questionable value at best (if one is generous)….. unlike the people who provide the labor, resulting in wages and products/services that are taxed to pay the prioritized debts, along with the supply and demand for a healthy economy (if anyone still remembers THAT).

        And when the elite bring up how the bottom half don’t pay any taxes, they conveniently neglect to mention the payroll taxes that were estimated at $1.4T for 2013, versus $1.9T income taxes (and $0.5T corporate taxes). Without those payroll taxes, those deficits the right complains about would be blown to hell.

        Obama pointed out that using the 14th Amendment, which surely would precipitate challenges by Republicans over its legality, would bring the validity of any post-ceiling issued debt into question, and demands for discounts. Obama is delusional if he thinks stiffing some creditors, including old or poor people, would elicit less nervous responses in the global markets. Goodbye reserve currency (when replacement can be arranged), hello higher interest rates.

        Ms. Yellen must be nuts to want to chair the Fed.

    1. Yves Smith Post author

      He is convinced the Rs will blink before things get impossible, which is actually more like Oct 31-Nov 1. Or else he figures a real shit storm will be blamed on them.

      The fact that he’s willing to risk the latter to score a victory (even if that is how it were to play out, I think both sides lose and in a real train wreck) show how unfit he is to be President. No one should be willing to risk inflicting that sort of damage on the citizenry to achieve political advantage. And the really dopey bit is a mess hurts the 1% (income and wealth inequality fell during the crisis and rose afterwards). So it’s not like this is a “rich win, the little guy loses” strategy.

        1. liberal

          Agreed. The idea that Obama should cave into the Republicans for the good of the country is nonsense.

          Of course, it would be far better for Obama to mint the coin (or use the 14th Amendment) than to let us default. But caving to the far right thugs? Terrible idea.

          1. Walter Map

            Obama has already caved to Republicans by offering to gut Social Security and Medicare. Republicans just can’t take Yes for an answer: having been given a couple of trillion, they’re now demanding ten trillion. Give them ten trillion, they’ll want fifty trillion.

            And so forth. So you see, very quickly you get to the point where there’s nothing left to steal, and they’ll still be famished and angrily clamor for more.

            The more you feed them, the more they want. That’s just how it works.

            1. NotTimothyGeithner

              Obama hasn’t caved to the GOP on SS and Medicare. Obama believes those programs are liberal evils. Obama kept the idea alive with his catfood commission. Obama keeps bringing it up.

              The GOP faced an outright revolt of seniors and boomers in 2005*, the GOP base, and has backed off SS and Medicare reforms. Despite Democrats mocking signs about “keep the government out of medicare” signs, those are sentiments shared by the GOP base. They are at an age where they need these issues, and no Republican who wants to win statewide will ever move against SS and Medicare. W. only made his move after his re-election, and the Senate map in 2006 made it almost impossible for Republicans to lose. Yes, I know Democrats running as pro-choice, anti-war candidates did manage to win despite the mantra of the DLC. W. only moved when it was safe. The GOP will not touch SS and Medicare ever. They aren’t bringing it up in negotiations. Only Obama is because he thinks it will cement his legacy in a positive way.

              *The whole Terry Schaevo fiasco was to convince Seniors and boomers who were rapidly souring on the GOP that the GOP would protect them. It actually worked because many GOP voters are at the age where younger people will be making decisions for them. The GOP stemmed the bleeding and strengthened their position among the base. The Democrats who flipped out over the whole thing weren’t going to vote for the Republicans.

              1. Adriannzinha

                Glad to see comments like this acknowledging what should be obvious to anyone who has been even remotely paying attention:

                Obama isn’t caving, he’s not making mistakes, he’s not being manipulated, he’s not being poorly advised, he hasn’t suffered from some sort of lapse or betrayal. No, no, it is entirely his agenda to gut SS & Medicare.

                The legacy of his entire regime reads like an absolute wish list for the right-wing: Obamacare, a gift to the private health insurance industries profits and a bonus for corporate America to cut costs. NDAA – detain and assassinate anyone, including American’s on home soil, for any reason. The sequester budget cuts. Libya, 2011. And hey, he’s still got several more years.

                The Obamacons are nowhere near done.

                1. ian

                  “No, no, it is entirely his agenda to gut SS & Medicare.”

                  I honestly don’t get this. I think the only way (assuming this is what he wants) for him to get this, is to get some kind of bargain where gutting SS and medicare gets blamed on the GOP. If that is true, it wouldn’t be his legacy, which makes me wonder why he would want it.

              2. from Mexico


                The GOP will not touch SS and Medicare ever. They aren’t bringing it up in negotiations.

                I disagree. It seems both you and Banger are going out of your way today to run interference for the GOP.

                What do you believe the arbitrary and grotesquely hyocritical* “balance-the-budget” and “debt-ceiling” mantras, which in the Republican mind have achieved divine status, are all about?

                Me, I’ll throw my lot in with Victor Quirk, whose thinking in my opinion is much more respectful of reality:

                [S]uch governments do not make cuts to public spending because of shortages of money, as they routinely claim to the public, but because they are attempting to produce some other macroeconomic effect, like using unemployment to lower labour costs.


                I present evidence that unemployment is deliberately preserved as a means of disempowering working people, and that in order for it to have the desired effect, the unemployed have to be kept in as miserable condition as possible. In order for governments to avoid electoral backlash for doing this, they need to fabricate myths about the macroeconomy, particularly about the causation of unemployment, to camouflage their agenda.


                And while there might be a great deal of congitive dissonance, confusion, and irrationality on the part of the Republican rank and file (e.g., the Tea Partiers and evangelicals), I think it’s a mistake to assume those traits extend to the upper echelons of the party.

                *The fiscal and budget decrees somehow magically disappear when it comes to tilting at neocon windmills or bailing out alpha-bankers.

                1. Banger

                  How you imagine I support the RP is beyond me. Just because you completely misunderstood what I had written you put me in that category? WTF, is all I have to say to that.

                  We all seem to agree here that the current political arrangements are noxious as I’ve been saying from as soon as I saw who Obama picked for his cabinet and staff. I also told people before Obama was nominated not to vote for him in the primaries. Why? Because I listened to him being interviewed by Charlie Rose and knew immediately that the dude was full of sh!t. I’ve written about why the left fell for this guy and how it displayed the fatal flaw of American progressives which I won’t go into at this point.

                  So the point is that something that will blow up the status-quo has a good side to it–I’d rather it did not happen because many people will suffer–but if it does we need to see that it, at least, opens up fresh possibilities for fresh thinking. We need something to change.

                  1. Lambert Strether

                    I’ve speculated that both legacy parties prop each other up; if one splits, the other one will too. I don’t especially care which one goes first. If there was a way for both parties to lose in this situation, I’d give it serious thought.

                    1. ambrit

                      Since both legacy parties are, as Gore Vidal so eloquently put it “…two Right wings..” (of the same party,) we could hope for a Third Way. However, Third parties have not fared well in American Politics for over a hundred years. The closest thing to a successful Third Way I can think of off the top of my head is Teddy Roosevelts “Bull Moose Party” of the election of 1912. There is what I think will be the most probable course for the near future. One or perhaps both legacy parties will split. The ensuing free for all will shake out the winners from the losers. Think Whigs and Democrats in the 1830s 40s and 50s. The question of slavery destroyed the Whig Party. They became the modern Republicans. Lincoln was their first President. Look at them now. I wouldn’t be a bit surprised to see a wing of todays Republican Party split off and ally with the modern Whig Party. Maybe economics will be the death knell of the Republicans. One can only hope. (Lest you see this as a partisan demonization of the Republican Party, I plead equal opportunity. The Democrats deserve a rant all their own I’ll own.)

                  2. from Mexico

                    Banger says:

                    How you imagine I support the RP is beyond me. Just because you completely misunderstood what I had written you put me in that category? WTF, is all I have to say to that.

                    You know, Banger, this hide and seek routine — now you see me and now you don’t — doesn’t work for me, and I doubt that it works for many people.

                    If you don’t want to be “misunderstood,” then you shouldn’t say things like this:

                    One thing we can say is that the Republican Party, however mean-spirited it is, offers us something new in a town that has been kind of stuck in stalemate for some time. Fresh thinking, however deluded, may inject some more creative approach to solving our collective problems.


                    Or this:

                    I don’t think the RP offers fresh solutions I think their destructiveness offers us a chance to inject new solutions.


                    Or this:

                    In defense of the neocon project–it was the only project by a group of policy elites that made sense….

                    Back to the neocons–these people were and are intellectuals who are aware of history and understand the classical view of politics….


                    When I see this flip-flopping all over the place — the on-again, off-again love affair with the Republican Party and its neocon/neoliberal agenda — I’m reminded of something the Rev. Martin Luther King said:

                    What we are witnessing today in so many northern communities is a sort of quasi liberalism which is based on the principle of looking sympathetically at all sides. It is a liberalism so bent on seeing all sides that it fails to become committed to either side. It is a liberalism that is so objectively analytical that it is not subjectively committed.

                    [ ….]

                    Our position has always been that there is a wrong and right side to the quesiton of full freedom and equality…and that the federal government does not belong in the middle on this issue.

                    1. hunkerdown

                      Observation that rain would be beneficial is not a pledge of allegiance, though it’s easy to see how those who identify as sunbathers or with “tan culture” might think so. It’s also easy to see how seaside resorts dependent on a close-fought reputation for least rain anywhere (i.e. China) might not like such talk either.

                2. NotTimothyGeithner

                  I’m merely pointing out reality, and the events around the 2005 efforts to privatize. The GOP was hammered in the polls, and their voter (i.e. AARP members) will not stand for it. AARP is already sending out literature to oppose chained CPI.

                  Remember it was Obama in the debates who was trying to connect his and Romney’s views on Social Security. The GOP underlings will back away from Social Security. Its why they have not embraced a grand bargain despite the banter from the President. The GOP understands it is political suicide.

                  Can you point to the recent calls from the GOP for a grand bargain? They mostly come from the White House. The GOP is afraid of their voters. Dick Lugar, a Republican fanatic, was tossed aside.

                  The upper echelons depend on votes at the end of the day. Republicans were holding hands with a vegetable to get their voters back. The GOP was ready to let military contractors have their way in Syria, but they had to back off when their voters opposed it.

                  1. from Mexico

                    My starting point is what Robert Hughes wrote in Culture of Complaint 20 years ago:

                    In effect, the Republican and Democratic parties since 1968 have practiced two forms of conservative policy, one episodically liberal and the other aggressively not. Both are parties of upper-middle-class interests: the last genuinely progressive tax reform proposed by a President, for instance, was put forward by Jimmy Carter in 1977 — and it was immediately sunk by the vote of a Democratic Congress. The whole apparatus of influence in Washington is geared to lobbying by big business, not to input from small citizen groups. As E.J. Dione eloquently argued in his recent book Why Americans Hate Politics, there is no bloc in Congress or the Senate that truly represents the needs or opinions of people in the enormous central band of American life where workers and the middle class overlap.

                    Each party plays its starring role in a stage production which is masterfully coreographed, not by artists in search of truth but by superlative sophists in the employ of rentiers, their sole purpose being to confuse and to deceive. The final product is our current brand of politics, the grand finale being the spectacle we call elections. Walter Map put it perfectly: it’s nothing but “Good Cop Bad Cop” agitprop.

                    I believe the playwrights so employed in this deceiving game are virtuosos, but that does not make them invincible. They have a major stumbling block, and that is they do not speak the truth. So while I very much embrace the structuralist critique, my optimism nevertheless stops me short of the determinism of the more extreme disciples of this school.

                    I believe J.K. Galbraith will be proved right when he said:

                    It is not often that people misjudge their pecuniary interest on a large scale over a long time…. Those who suggested otherwise were showing that, then as still, what is called sound economics is very often what mirrors the needs of the respectably affluent.

                    Of course “over a long time” can seem like an insufferably long time when one is living it in real time.

                    1. Lambert Strether

                      @hunkerdown None of this is mechanical. Kayfabe is the best metaphor I’ve seen (better than kanbuki, because everybody’s in the game) but even that’s insufficient. There’s an old SF novel by Frank Herbert called The Dosadi Experiment, which has the idea of the Court Arena, where anybody can be killed: Lawyers, judges, audience members… More than kayfabe.

                      In addition to good cop/bad cop, we need to remember that many members of both parties actually do hate each other, there are genuine ideological and value-based differences, and then there’s the fog of war. “Events, dear boy. Events.”

              3. Walter Map

                Quite right. Obama couldn’t have “caved to Republicans” because the Grand Betrayal is his policy.

                Both sides are having a contest to see who can give away the most to transnational corporatists the fastest. It may not be possible to tell which side is winning, but it’s easy to tell who’s losing.

                No matter how pessimistic I get, my pessimism simply can’t keep up with them.

                1. NotTimothyGeithner

                  The one major issue with the GOP is they are fracturing. The GOP base and probably the majority of their elected offials represent a coalition of Christians and libertarian/local chamber of commerce members with an understanding they have united with traditional big business tycoons.

                  The coalition which has been the primary supplier of GOP elected over the last 20+ years is starting to exert their power. They were bought off during housing booms, the construction of new churches, and arguments over gays marrying, but what has the older elite offered recently? Not a lot, and I think they are seeing what they can be offered.

      1. Dan Kervick

        I don’t know. It seems to me that it is more than a question of political point-scoring. There is a serious public purpose in trying to drive a political stake through the heart of a radical right movement that is responsible for several years of derelict government, and is pursuing a long-term agenda to totally dismantle every last aspect of progressive government, even the lame versions of progressive government defended by contemporary centrist Democrats.

        Obviously there are risks involved in brinkmanship. But a policy of continued appeasement and dodging only empowers the far right to keep going. At some point people have to stop avoiding the fight and say, “F You”, even if there are risks.

        1. from Mexico

          So Obama has finally grown a spine?

          Well I suppose hope springs eternal.

          But what is it in Obama’s past that would lead one to such an optimistic conclusion?

            1. from Mexico

              True that.

              When it comes to standing up for the banksters, Obama has exhibited plenty of spine.

              But when it comes to standing up for working folks, that spine invariably has turned to mush.

              But the jest of my original comment is valid, no? The quesiton remains: How is it that the leopard can all of a sudden change his spots?

            2. Crazy Horse

              Discussions about whether Obama has a spine or simple cartilage like a shark are pointless unless one is fond of wearing hats with propellers on top and still believes in the Audacity of Hope.

              Obama is and has always been a wholly owned property of the Bankster class. His ascendency to political stardom was a cleverly orchestrated PR exercise designed to play upon liberals’ repressed sense of racial guilt and awe over somebody with that color of skin who could actually deliver a complete speech without inventing new words on the fly. If you were in the business of training political actors and creating their public persona, which raw material would you prefer to work with– an ex-alcoholic business failure with a sub-par IQ, who’s only qualification for the Presidency was the fact that his father had held the office, or an articulate and ambitious half-black man who had no ideology or moral beliefs of his own except “success”?

              Now five years into the charade, “liberals” are still hoping that he will grow a spine and actually support one of his campaign platform promises? Give me a break.

              Think of the situation from Obama’s perspective. Even if he wanted to leave his mark for posterity by supporting at least one policy that benefits the general public at the expense of his owners what is in it for him? Doing so would surely threaten the symbolic Goldman Sacs or JPM vice presidency waiting for him with its trophy salary. It might well mean that he wouldn’t be able to grow his net worth by 106 million $ by speech making like Bill Clinton has, and would certainly cut into the demand and rate for his influence peddling. Biting the hand that feeds you has never been a good policy for pets, and Obama understands very well who holds his leash.

        2. Lambert Strether

          Well, that’s certainly what some Democratic factions would have us believe, yes.

          Adding… I mean, come on. We’re talking about a party that’s utterly complicit in a multi-trillion dollar control fraud — in fact, let the perps keep power and grow their institutions larger — and we’re talking about “the lame version of progressive government defended by contemporary centrist Democrats”? I mean, there’s literally not one word of that phrase that’s correct, given FIRE sector ownership of the Democrats. Not “lame,” very effective. Not a “version,” a deception. Not “progressive,” financialized. Maybe “government,” allowing for a very weakened, privatized government with a vast shadow government of corporate interests. Not “defended.” I mean, did the Dems shut down the government over the sequester? How about HeritageCare RomneyCare ObamaCare vs. single payer? OK, “contemporary” is almost right, except the rot started to set in in the mid70s, and was fully advanced under Clinton. “Centrist” weirdly assumes some sort of essentially static (Broderist?) vital center, whereas in fact the Overton Window and with it the “center” has been and is being pulled steadily right, with Democrats fully on board with it. And, yeah I guess “Democrats” is 100% right. One of the words is correct, and another one is kinda correct. My bad.

          1. Dan Kervick

            I think that’s false. Neoliberal Democrats of the Obama type have shown an interest in cutting into entitlements in the pursuit of budget balancing, but also support higher taxes on the rich. Radical right Republicans have made no secret of the fact that not only are they opposed to tax increases of any kind, but they have a long-term agenda of destroying every aspect of social welfare, and seek total privatization of everything beyond the military – and sometimes want to privatize even that. Progressives should disdain both outlooks, but they are not morally equivalent.

            1. from Mexico

              @ Dan Kervick

              You seem to stake out a position not far from what I perceive to be mainstream MMT.

              I find myself more pessimistic than this, but admit I may be influenced by a purpose-driven rhetorical-polemical agenda.

              “If Marx helped in liberating the poor,” Hannah Arendt notes in On Revolution, “it was not by telling them that they were the living embodiments of some historical or other necessity, but by persuading them that poverty itself is a political, not a natural phenomenon, the result of violence and violation rather than of scarcity.”

              This is an idea which J.K. Galbraith does not seem to have been comfortable with. He accused the policymakers of his day of “human inadequacy,” “stupidity,” and “obtuseness combined with inertness,” but never of malicious intent. “To see economic policy as a problem of choice between rival ideologies is the greatest error of our time,” he warned, and counseled that “We should be kind to those whose performance has been poor.”

              Victor Quirk has noted a similar tendency amongst leading figures of the MMT school. In his dealings with Bill Mitchell, Randy Wray, Warren Mosler and others he says he’s “always been met with what I can best describe as a professional academic position in which they seem reluctant to offer more than the suggestion that the mainstream economists keep missing the point or ‘just don’t get it’.” ( ) And who knows? Maybe they’re right! If they’re operating in the tradition of Keynes, FDR, and Galbraith, after all, they’re out to save capitalism, not destroy it as Marx was. It is the Neoliberal Thought Collective which poses the greatest threat to capitalism.

              In addition to Marx, another pessimistic condemnation of American-style bourgeoisie democracy comes from the anarchist filmmaker Scott Noble:

              People like Walter Lippmann and Edward Bernays are great exemplars of what Peter Bachrach called “The theory of democratic elitism”, but they didn’t create this philosophy. They merely updated it to correspond with new developments in technology and communication. You can go back Mosca or Schumpeter or a whole slew of other anti-democratic philosophers from Machiavelli to Plato, but crucially, for our discussion, the Founding Fathers of the United States itself.

              There is very little difference between Lippmann’s suggestion that “the people” are a “bewildered herd” which “must be put in place”, and John Jay’s remark that the “people who own the country ought to govern it”, or Alexander Hamilton’s quip that the people are a “great beast” needing to be tamed, or Madison’s insistence that a primary function of government is to “protect the minority of the opulent against the majority”.

              The overriding theme is that real democracy might produce “leveling tendencies”, in other words, an egalitarian society in which “regular people” might actually be able to participate in the running of their government (or lack thereof, depending how anarchistic your tendencies).

              What has emerged as the primary form of governance around the globe is what social scientists describe as polyarchy. There’s a fancy definition for it, but the basic gist is that we get to vote every few years to elect some rich guy, write letters to our “representatives”, and if we’re really uppity – attend a demonstration – but by no means should we be permitted to actually make decisions collectively on matters of any import. Important decisions are the purview of the enlightened ones – people like Henry Kissinger, Dick Cheney, Alan Greenspan. Or, if you like, the Founding Fathers and their “responsible set of men” – the wealthy.

              I have received some criticism that the section on the Constitution and the American power structure is a “departure” from the other content. In my own view, it is impossible to understand modern propaganda without understanding the theory of democratic elitism. Indeed, the idea that modern governments (whether labeled Republic or parliamentary democracy) are or were in any way “democratic” is perhaps the greatest psyop of them all.

              These structures are based on the premise that the “powers” can be “balanced by each other”, a concept which should, at this point, be recognized as a monumental failure. The majority recognized it as a con at the time of the constitutional convention, and indeed the anti-Federalists predicted quite accurately what would occur as a result.

              There is a good deal of myth-making associated with colonial America. We are invited to imagine the halcyon days in which some sort of “free market” existed alongside “limited government”. Granted, it is acknowledged, there were minor problems in the form of slavery, the oppression of women and the genocide of Native Americans, but by and large you had something approaching a legitimate meritocracy: an honest to goodness bootstrap society.

              The reality was quite different. As Norman Livergood explains, “In Colonial America, the rich were getting richer and the poor were getting much poorer. In 1687 in Boston, the top 1% owned about 25% of the wealth. By 1770, the top 1% owned 44%. In those same years, the poor–those who owned no property–represented 14% in 1687 and 29% in 1770.”

              So you had a system of rapidly increasing inequality and class conflict, culminating in the Shay’s Rebellion and other debtor riots, which necessitated a strong Federal Government to crush the nascent spirit of democracy flowering amongst the American people.

              In some ways, it should not be surprising that many Americans regard the word “democracy” with contempt.

              The absurdist PR spectacles known as “elections”, in which issues like gay marriage can actually sway the balance of power, deserve nothing but disdain. But we would do well to remember that the Soviet Union also called itself a democracy.

              While I’m not quite as pessimistic as Noble, who believes there is no way the powers can be balanced against each other, I nevertheless agree that the balance of powers has gotten all out of whack. The rentiers and financiers have definitely got the upper hand. Moreover, this is no accident; they worked long and hard to formulate the sophistries which allowed them to come out on top. So I find myself sandwiched somewhere between, on one hand, Noble, Marx and the right-wing libertarian doomsayers, and on the one hand more optimistic folks like Galbraith, Wray, Mosler and Mitchell.

              1. Benjamin

                I’m probably hpelessly naive, but I don’t mind our leaders being elites. In fact I want them to be. I want to be ruled by platonic supermen who represent the best our society can offer. But I also want every citizen to have at least some say in who rules them. Everyone should have the freedom to run for office, but the voters to be sufficiently educated to know that while Phil the plumber may be great at fixing pipes, he isn’t qualified to run a nation. With public campaign financing and broadcasting fairness doctrines it should be as even a playing field as possible, where the most qualified candidates will win out.

                I know that level of perfection is a pipedream, but maybe in striving for it we can achieve at least some level of sanity and just leadership.

              2. Cassiodorus

                It is the Neoliberal Thought Collective which poses the greatest threat to capitalism.

                I would say, rather, that capitalism is the greatest threat to itself, and that it is the hope of the Neoliberal Thought Collective that, as capitalism dies, it can smother the truth with ideological lies while preserving “capitalism” as a simulacrum of what it used to be through the government creation of “markets” and the enslavement of the public to those “markets.” The ACA is just the start in this regard.

                1. skippy

                  The term capitalist as referring to an owner of capital (rather than its meaning of someone adherent to the economic system) shows earlier recorded use than the term capitalism, dating back to the mid-17th century. Capitalist is derived from capital, which evolved from capitale, a late Latin word based on proto-Indo-European caput, meaning “head” — also the origin of chattel and cattle in the sense of movable property (only much later to refer only to livestock). Capitale emerged in the 12th to 13th centuries in the sense of referring to funds, stock of merchandise, sum of money, or money carrying interest.[38][39][40] By 1283 it was used in the sense of the capital assets of a trading firm. It was frequently interchanged with a number of other words — wealth, money, funds, goods, assets, property, and so on.[38] – wiki

                  skippy… by your name you shall be known… funny stuff~

            2. Yves Smith Post author

              The tax increases they want are strictly optical. They’ve never been serious about dealing with the most obvious abuse, the loophole private equity and hedge fund guys use to get their labor income taxed at capital gains rates. Closing that would would both create a lot of revenues and be the single most effective measure in reducing income inequality.

              The reasons Dem neoliberals call for token tax increases on the rich is that what differentiates the Ds from the Rs is the demographic groups they pitch in their identity politics game. Key Democrat groups, namely blacks, Hispanics, women, have less income on average than the population as a whole. So the party needs to pander to them.

              1. hunkerdown

                “So the party needs to pander to them.” I might add, because if they don’t, it’s only a matter of time before another Rev. MLK Jr. builds a power base that threatens the divinity of the ordained.

            3. Lambert Strether

              I don’t recall making the claim that the two parties are “morally equivalent.” Would you like match for that straw? How would one even begin to determine whether the good cop is morally equivalent to the bad cop? It’s morality of the system that runs the police station as a whole that’s at issue.

              Similarly, no matter how much the Democrats and their apologists yammer that if only it weren’t for those mean Republicans, there’d be ponies, the Overton Window has been steadly dragged right since the mid-70s, and the Democrats and their apologists haven’t done squat about it. (Indeed, when the hippies try to pull them left, the hippie punchers come out in force, and apologists start yelling STFU.)

              In fact, in the two last major turning points to the right — election 2000 and election 2010 — the Democrats were completely complicit, Gore et al. by not challenging or resisting the result in 2000, Obama et al. by not gutting the Republicans in 2009, when they had the House, the Senate, a mandate for “hope and change,” and the greatest orator of our time in the White House.

              They call it a two party system for a reason.

      2. Glen

        Obama would have served much better if he had this confrontation with the Republicans right after his election in 2009, but that would have assumed he would go populist, and do the FDR.

        Now, he seems to be willing to “go to the mat” to preserve Presidential power, and protect Obamacare. The irony is many on the left had hoped that Obama would roll back Presidential overreach, and aren’t exactly thrilled with the Obamacare compromise, but perhaps he views these as his legacy.

        By any objective measure the Republicans have already “won” this confrontation. The negotiations over the budget will leave it at best in Ryan budget territory and with an implemented Grand Betrayal. One cannot help but think this was always the plan.

        1. hunkerdown

          The eagerness of politicos to treat such contentious matters as settled as soon as they’re no longer in play ought to be the giveaway there. Show’s over, tip your waitress…

      3. Aries

        I am hoping for the best possible outcome, whatever it may be, but it does strike me that with this crowd he’s damned if he does, damned if he doesn’t. Either he’s screwing us over by caving or he’s screwing us over by standing firm. Why not just admit there is no way to win against the crazy?

    2. NotTimothyGeithner

      “Creative solutions” have largely come from outside the White House which is dominated by a small inner circle of like minded individuals. Obama is both incredibly arrogant, even for Presidents, and paranoid about outsiders as can be seen from his desire to control secrets to a point of expending resources to hide minor issues.

      As Obama and his inner cadre are largely incapable of doing anything other than serving the status quo, there is simply an Administration incapable of seeing beyond the paradigm seen on cable news. Much of why we are even here is because Obama was too arrogant to recognize his strategies from 2009 still have not produced the desired results and have made his position weaker over time because it would undermine the White House narrative of 853rd dimensional chess, the importance of compromise as a means to an end while the ends are nebulous are best, and Obama’s status as a transformational leader.

      As far as pressure from the Democrats themselves, the leader of the Senate Democrats is former boxer and adult convert to Mormonism. Yes, this is correct. Harry Reid as an adult thought, “Jesus came to America?!?! WOWEE!”

      1. Cassiodorus

        Since Obama’s role is that of preserver of the profit rates in an era of declining global growth, I see no point in judging, one way or another, what Obama has or hasn’t “realized.” It’s quite possible he’s “realized” the whole kit and kaboodle — global warming, peak oil, the insanity of capitalism in this era — but that he plans to get out the same way the executives of Enron got out. When the organization collapses, write yourself a golden parachute contract, and put it into action.

  2. GRP

    It doesn’t appear Obama wants to avoid a default. Otherwise he has all the legal framework necessary to use HVPCS, avoid the default and continue essential governance till the end of his term, regardless of who controls the house or senate. By ruling out the use of HVPCS, Obama is implementing the Republican agenda. A default or delay will cause the bond yields to rise, even if for the time being bonds are rolled over and interest on bonds paid on time. If the house republicans continue to insist on a dollar value for the budget, the spending cuts will have to be deeper when the interest rates are higher since interest payments on the new debt would be higher.

  3. from Mexico

    Yves Smith said:

    As we’ve stressed, both the evangelicals and the Tea Partiers see government (and society generally) as corrupt, and if they can’t get their way, they believe they will do better if they wreck the entire system. So even if the doomsters are right and Obama were unsuccessful in escaping a Treasury default, many would say that a global financial meltdown would be a survivable event and would cleanse the system. They’ve got no idea what they are asking for.

    Not just evangelicals and Tea Partiers, but orthodox economists — “the most intelligent and respectable persons in America” as the most intelligent and respectable historian, Professor Charles J. Bullock, put it.

    John Kenneth Galbraith in Money: Whence It Came, Where It Went calls this the “purgative conception of economic policy.” As he explains:

    This held that the boom built damaging, though often unspecified, distortions into the economic system. Recovery could only come as these were eliminated. Deflation and bankruptcy were the natural correctives. Joseph Schumpeter, his country’s Finance Minister during much of the Austrian inflation, was now emerging as a major figure on the American economic scene. He argued that the economic system had, through depression, to expel its own poisons. Looking at the history of business cycles, he concluded that no recovery was ever permanent until this happened and that any public intervention to speed recovery merely postponed the therapy and therewith the recovery. Lionel Robbins, as noted the most admired voice of British orthodoxy, offered essentially the same advice in the most famous book on the Depression: “Nobody wishes for bankruptcies. Nobody likes liquidation as such . . . [But] when the extent of mal-investment and over-indebtedness has passed a certain limit, measures which postpone liquidation only tend to make matters worse.” 5 A rather cruder formulation came from Secretary of the Treasury Andrew Mellon. To promote recovery, he advised, the country needed to “liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate.” 6

    I never cease to be amazed at the malodorous crap that gets taught to our children in our nation’s leading universities.

    1. from Mexico

      And of course one can’t help but be struck by the double standard that always inhere’s in this sort of “science” or “intellectualism” that pervades the ivory tower.

      It’s always those “other” people, those “bad” people — the “booboisie” as that quintessential spokesperson for “the most intelligent and respectable persons in America,” H.L. Mencken, branded the proletariat — that are going to get liquidated.

        1. from Mexico

          That’s because Hoover had already surreptitiously set up the RFC to throw a lifeline to the beautiful people, the only people that matter:

          Again Hoover acted, and again his action was financial. Something must be done to save the American banking system, and the bankers were not doing it; the spirit of the day was sauve qui peut. Hoover called fifteen of the overlords of the banking world to a secret evening meeting with him and his financial aides at Secretary Mellon’s apartment in Washington, and proposed to them that the strong banks of the country form a credit pool to help the weak ones. When it became clear that this would not suffice–for the strong banks were taking no chances and this pool, the National Credit Corporation, lent almost no money at all–Hoover recommended the formation of a big governmental credit agency, the Reconstruction Finance Corporation, with two billion dollars to lend to banks, railroads, insurance companies.


          Now a new panic was beginning, and it was beyond the power of these agencies to stop. Perhaps the newspaper publication of the facts about RFC loans was a factor in bringing about this panic–though to say this is to beg the question whether a banking system dependent upon secret loans from a democratic government is not already in an indefensible position.

          –FREDERICK LEWIS ALLEN, Since Yesterday

        2. Walter Map

          He didn’t mention liquidating the banksters because the banksters are the beneficiaries. Keep in mind that U.S. federal policy goal is to enrich the wealthy at the expense of the general population.

          Why shear the flock when you can fleece it?

  4. Z

    obama has already started to talk around the tax increases as in he is not holding strong to them as being necessary for any grand betrayal. Holding onto obamacare is now seen as the trade piece instead of tax cuts.

    obama can care less about the democratic party and its election prospects in 2014 … he didn’t exactly fight hard for the dems in the 2010 mid-terms … and in fact he’d probably prefer that the republicans win them since that would increase his chances of getting what he wants the most: cuts to the social safety net.


    1. Z

      And all this public back-and-forth between obama and boehner is just for show – to keep their political party fandumbs blaming the other side and hence keeping them in thier camps so when the grand betrayal goes down neither will pay a political … or brand, in the case of obama … price.


    2. Brooklin Bridge

      I think you’re on to it. That Obama is holding firm to his fig leaf of taxes on the rich, and won’t budge, seems just too petty a wart even for him to hang on to now given the intensity of his desire to gut and cut the safety net. He is looking for something, anything, that will allow him to jettison his fig leaf in favor of cramming the Republican’s wet dream (one more link in the leg iron chain of privatization of the safety net) down their throats since they simply don’t know how to say yes to someone they would prefer to string up to the branch of a tree. Something tells me Obama would hand them the standing end of the rope if he could just get that destructive male approval from them he so craves.

  5. Adriannzinha

    I read Obama’s manufactured crisis somewhat differently. In between the overdone metaphors of credit cards and burning down houses in his speech, Obama gave clear signals to the Republicans. Those signals mark the real aim of this fake stalemate and obvious by Obama’s comments:

    “I’ll talk about ways to improve the health care system … I’ll talk about ways that we can shrink our long-term deficits”

    It should be clear from a quick glance at the Washington-speak dictionary that “Improve” = cut, reduce, gut.

    The standoff was never really about Obamacare. By now regular readers here should know Obamacare was crafted nearly word and letter to the insurance industries whims. The goals of it are to cut business costs and of course, boost profits for the insurers.

    There’s some definite anger about Obamacare in the public with more coming once the reality of the legislation sets in but it’s just a useful device in this debate.

    The real target are the social programs like Medicare and Social Security. Notice how the Obamacare carrot is fading and the argument has quickly been reframed around spending.

    Obama wants his grand bargain. He has longed to cement his supposed reputation as a ‘responsible’ democrat who perpetually tries to “out-republican” the republicans while still holding up a token crumb to the left. In this manufactured crisis environment, he can gut entitlement programs with plenty of cover from a potential default.

    Whether they use a short-term funding agreement to then negotiate further remains to be seen. What is not in doubt is that it will ultimately end with big cuts in SS & Medicare with the Obama and Democratic media organs cheering their messiah.

    1. Benjamin

      This seems as good a place as any to ask: why does Obama want to gut these programs so badly? I know the topic of what actually goes on inside his head could lead to endless debates and theories, but what is the most likely reason? I get that he’s obsessed with his legacy, but I don’t understand how he can possibly think that cutting off money to non-working old people is a good thing. Oh, he’ll be remembered for it all right, but not fondly. Is he simply that delusional?

  6. Ep3

    Yves, but maybe Obama sees republican victories in the next election as important. Maybe the democrats think that they can lose the congress in 2014 and then anything that happens between 14 and 16 can be blamed on the republicans. Then in 16, Hillary can ride a way of “the democrats will save us again”.
    Or as you say, maybe Obama sees this as his way to impose his great betrayal. No matter what happens, he thinks he has ppl duped into thinking “we have no other options, we better give up our SS & Medicare”. In that context, how about is scenario. This drags out another couple weeks, but Obama and the elites think they have so much power over the economy that they can bend the economic rod and it will not break. But cracks start forming in the economy. So a solution with a great betrayal is presented. And of course, there are no other options and it passes. In obamas brain, he is thinking ‘the global crisis was severe but didn’t last very long, so this won’t be as bad’. His thinking is that they drive to the cliff, hang over the edge, and are pulled back by the great betrayal. Then history can look back and say “the govt was so broken, terribly in debt, etc. but Obama came in at the last minute and saved everything by taking away food, shelter and health care from old ppl and crippled/parentless children”. Remember, this is about his legacy. He thinks that if he passes the great betrayal, he will go down in history as great as FDR. So if he saves the country from a situation like this, then that will get him even more brownie points with historians.

    1. Z

      “He thinks that if he passes the great betrayal, he will go down in history as great as FDR.”

      I don’t agree with this. Why would he think with the rough economic times ahead that people will look back at social seafety net cuts with admiration for the man that signed off on them? No, obama wants the clinton post-presidency package from the 1% and cutting ss … the biggest target of the 1%ers … will get him that.


      1. NotTimothyGeithner

        Delusion is a helluva drug. Why would you assume Obama is rationale? Clinton left office with an aura, although mistaken, of prosperity. Obama won’t.

        I think you are making an assumption he’s rationale or has a set end. Obama is a man who mimicked Lincoln’s funeral parade during his entrance into Washington for his first inaugeral. Obama may be petty, but Obama is interested in being a great President. Obama sees the path to greatness as being someone who bucks who own party which doesn’t make sense considering he is the leader of the party. I don’t Obama is particularly rationale. Social Security and Medicare are his targets. Obama speaks well of Reagan because he admires Reagan and thinks Reagan was an exceptional man.

        The guy already hangs out with celebrities and will make a fortune on his book as people buy it to put out for their friends to see. This is a man who ran for President of the United States. Money is a trivial issue. Obama already is more important than these underlings who line up to the kiss his ring. He may like them and be in their thrall, but Obama is President and our wise father who knows what is best for us.

  7. Banger

    There is an excellent article in the NYT ( about people in the RP believing that the default would not be a serious problem and may even be a good thing.

    What does this mean? Is there merit to what they are saying? One argument they have is that the sequester was thought to be a disaster and it wasn’t. They say the partial government shutdown has not been so bad and now they want to open selected parts of government rather than resolve the budget as a whole.

    One thing we can say is that the Republican Party, however mean-spirited it is, offers us something new in a town that has been kind of stuck in stalemate for some time. Fresh thinking, however deluded, may inject some more creative approach to solving our collective problems.

    1. Walter Map

      You misunderstand. Official Washington has no interest in “solving our collective problems”. It is only interested in deciding how and how much to rob the U.S. middle class to give to transnational corporatists.

      1. Lambert Strether

        Yves writes: “the consequences of cutting off government spending and services even more radically to preserve the ability to ability to service debt will be tantamount to suddenly signing on to an IMF austerity program.”

        So from that, cui bibo?

        1. Walter Map

          Historically the favored weapon of banksters has been debt slavery. Enslaving individuals is too tedious, and far more efficient to enslave whole countries. Greece was just for practice.

          Austerity in Amerika can be expected to become total in short order. Republicans merely prefer that order to be as short as possible, while Democrats want a more measured, more compassionate destitution. Either way the general population ends up impoverished and in debt so deep it’ll need to reach up to touch bottom.

          It hasn’t even gotten ugly yet, much less weird ugly.

          1. anon y'mouse

            a slave is pure cost. their food, their housing, their health & welfare. our lords prefer the company store model, where you can pretend to pay them and then profit on the backside, and then make sure they don’t earn enough so that they have to borrow, and then indenture them for 30 year mortgages, and then steal their homes and pensions at the end anyway.

            our system seems invented to make people believe that they are free, meantime most of the hours of their day are tied up in “working harder” to prove they are worthy to enter heaven, and the rest spent recuperating from the physical & psychological toll this takes (sprawled in front of TV with beer in one hand and remote in the other is not productive leisure). under this view, we have been neofeudal for many years.

            1. JTFaraday

              “under this view, we have been neofeudal for many years.”

              Oh good. I’m glad someone else finally said it, so that I didn’t have to.

    2. from Mexico

      Banger says:

      One thing we can say is that the Republican Party, however mean-spirited it is, offers us something new in a town that has been kind of stuck in stalemate for some time. Fresh thinking, however deluded, may inject some more creative approach to solving our collective problems.

      There’s “something new,” “fresh,” and “more creative” about the idea of impoverishing the helots to enrich the patriciate?

      Sorry, Banger, but I think that idea has been around even before the advent of Classical Civilization, over three millenia ago.

      1. Banger

        I think you misunderstand me. I don’t think the RP offers fresh solutions I think their destructiveness offers us a chance to inject new solutions. You know that the current BS that passes for progressive politics needs a serious re-vamping–now is the opportunity. Make sense?

        1. from Mexico

          Well no, it doesn’t make sense.

          What you seem to be circling around to is what I mention in my comment below, what Galbraith the elder called the “purgative conception of economic policy.”

          Or to put it another way, what you are invoking, as Bill Black put it, is “the conservative love of ‘creative destruction’ – a concept made famous by the economist Joseph Schumpeter.”

          However, as Black goes on to explain, certain things, like control frauds, “cause immense ‘destruction’ of wealth, but they are the opposite of ‘creative.’ ”

          Besides control fraud, Black gives another example of destruction that is hardly creative:

          When blue collar workers complain that their clothing manufacturing firm was put out of business by a rival firm that locates its plants in Bangladesh and is able to charge less for their goods because they pay their workers a pittance and “save” money by building factories that are death traps the conservative answer is to tell the U.S. workers to stop whining and light a candle on the altar devoted to the worship of capitalism celebrating the “creative destruction” of their jobs.

          So just because something is destructive doesn’t automatically mean it is creative, as neoclassical/Austrian/neoliberal lore would have us believe.

          You assert that the GOP “offers fresh solutions” and “I think their destructiveness offers us a chance to inject new solutions,” which you follow with “You know that the current BS that passes for progressive politics needs a serious re-vamping–now is the opportunity.” But you never indicate how the GOP’s depraved destructiveness brings about a revamping of “the current BS that passes for progressive politcs.”

          With your two wrongs make a right defense of the GOP, you have committed what in logic, rhetoric and philosophy is known as fallacy of relevance, in which an allegation of wrongdoing is countered with a similar allegation.

          1. hunkerdown

            But you never indicate how the GOP’s depraved destructiveness brings about a revamping of “the current BS that passes for progressive politcs.”

            Two ways, one slightly deranged, the other shrewd:

            Intel used to take surplus, fully functional 486DX chips and disable the floating point units before packaging to make a downmarket 486SX chip[1]. A default similarly disempowers (or “power-manages”, perhaps) the accelerators of elite primacy in a number of ways useful to the 99%.

            For one instance, so long as China’s holding trillions in very expensive wallpaper, any attempts to advance the US’ “pivot to the Pacific” would be answered with strongmen dunking our heads in the toilet and peeing on our rug, and rightfully so. TPP vs. TP? No contest.

            (There is the chance that something else might replace the polyarchic machinery, but writing of the sunk cost of existing efforts is no mean blow.)

            More interesting to those who believe that the system can be saved is air cover. Paint the Democratic Party as bought and paid for, paint the Republican Party as deluded, and the socialist left might have room enough to wedge in.

            [1] Technophiles raised quite a hue and cry at the time. A couple of decades later, few batted an eye at the Playstation 3’s processor being subject to very much the same handicapping, and product configuration during trim and test is now uncontroversial and quite common.

        2. Cassiodorus

          “Make sense?” No.

          First off, who’s “we”? The “left”? The “left” is a laughingstock. People are so colonized by neoliberal thinking that the best thing to do at this time is to hole up in one’s attic and theorize, or to band together in little groups and do something with that, or to strategize around single issue campaigns — a humane life for farm workers or whatever. There is no imminent revolution, and there won’t be one after the default starts. We are in for a long, messy, ugly period.

    1. Walter Map

      Fallow? Try razed.

      You could write a memoir, working title “The Strip-Mining of a Nation.”

      1. skippy

        @Walter Map… IMO it has already been razed by the use of synthetic financial instruments* (*time travel portal to future expectations banked, many times over global GDP – hard assets – resources).

        FWIW the lack of virgin frontiers, toxification, diminishment of basic critical resources, population lifestyle expectations on a regional basis out stripping regional capacity which necessitates importation, peak failed ex nihilo ideology, etc, all ongoing to preserve the status of a very small percent of the worlds population.

        skippy… shenanigans aside… potable water is one percent of the total water available for human usage. If we can’t rationally utilize this core resource, everything else is just mental cardboard filler.
        Water scarcity already affects almost every continent and more than 40 percent of the people on our planet. By 2025, 1.8 billion people will be living in countries or regions with absolute water scarcity, and two-thirds of the world’s population could be living under water stressed conditions.
        Source: FAO, 2012

        In 2030, 47% of world population will be living in areas of high water stress. Most population growth will occur in developing countries, mainly in regions that are already experiencing water stress and in areas with limited access to safe drinking water and adequate sanitation facilities.
        Source: WWDR, 2012

        Water resource management impacts almost all aspects of the economy, in particular, health, food production and security, domestic water supply and sanitation, energy, industry and environmental sustainability.

  8. Lambert Strether

    There isn’t anything about the Republican Party of today we didn’t know in 2009 or even 2000. Abolish the filibuster in 2009 and eviscerate them, pass progressive legislation, and you hold Congress in 2010. Something like this was baked in back then, whether from complicity or calculation or miscalculation I don’t know.

    As the Republicans point out, they got elected too. So the effect of all thus is not to discredit The party, but constituents and state political establishments and social mores. 1854….

    1. NotTimothyGeithner

      The delusion among rank-and-file Democrats about the always recent surprising unreasonable nature of the GOP is hilarious if it was so damaging.

      Oh well, I’m sure they will find their Arne Duncan who will make governing easy and fun and won’t call Democrats names.

    2. Banger

      I think the RP is a very different party today. In 2000 the party was in the hands of a disciplined group of hustlers who knew how to rule through the system. They manipulated the system and the system rewarded them. They made gestures towards the fundamentalists and anti-government people but in private made fun of them.

      Today, the element that controlled the RP, is holding on by the skin of their teeth–the War Party part of the RP is in shreds and the TP is more than just rich corporate types manipulating the dumb electorate. Yes, there is a strong faction within the oligarch class of the Kochs, the Waltons and a whole network of nasty characters that helped create the TP and largely controls it—but it has grown to substantial now–elements within this movement are beginning to feel empowered and this is their time–they are ready to throw the wrench in the works and have already done so. I’m beginning to think this represents a major shift in the history of this country that goes beyond what the oligarchs want. The country may be, literally, breaking up as we watch. Certainly the left and the center seem to be relatively unconcerned and everyone expects a deal–I’m not so sure.

      1. Lambert Strether

        “Disciplined hustlers” applies across the board. And the RP of 2000 really did stage a coup — if you view the long assault on the Clinton administration, from the previous shutdown, to Whitewater, to the Lewinsky Matter, to impeachment over a *******, to Bush v. Gore, as a slow motion, media-fuelled coup. (Hilariously, the Obots of 2008 adopted all the RP talking points from those “scandals,” no doubt because they had been horrified by them as children.) Today’s RP has yet to match that record. (I mean, c’mon. Fast & Furious? Benghazi?)

        If we look only at the parties, I think the RP is weaker, and their weakness is exactly why they’re doing what they do: Rather like the German General Staff in 1914, who felt that a general conflagration was better sooner rather than later, from Russian demographics.

        So there are other factors than party alone that are preventing resolution, our mutual candidate being splits in the oligarchy over dividing the spoils. A Grand Bargain isn’t enough, as Yves points out, so what? The military? How about a flight from the dollar? Who would benefit from that?

        Adding… Re-reading… The grass-roots of the TP getting loose might be one such differentiating factor. I’ve always said the RP had a “layered architecture” — from the talkshow bottom feeders all the way up to the Heritage Foundation, and that the top layers listened to the bottom layers dragged the Overton Window right (in other words, not all top down manipulation; I’ve for sure seen this in Maine). The RP fears their base, while the DP kicks it and betrays it. However, what we are now seeing is the RP “delaminating,” as it were. So that would be a new factor to add to the mix, in addition to oligarchal splits. A good result!

        And adding… So all Obama really has to do is show the RP how to kick their base — share expertise — and one element for “compromise” falls into place. Pretty hilarious the choice is between financial armageddon and a Grand Bargain, eh? After both sides have agreed on sequester? Almost enough make you buy into that kayfabe concept…

        1. Banger

          Though I’m in voluntary exile from the weird world of Washington I am a product of that millieu almost from birth. I’m a weird and twisted product of a weird and twisted world and therefore am actually pretty ‘normal.’ So, while I have been away from that world for over two years and I’ve studied that world and been involved, usually peripherally, but occasionally found myself close to power and witness to the odd minor conspiracy (clue: Washington is full of Shakespearian plots) as befits the capital of the most powerful country in the world and a center of global power.

          The old Washington had its factions but they were largely integrated and important figures whether fixers or Senators or Tip O’Neal tended to weild real power. People went to them for favors deals were made, people agreed and life went on. Today that’s not happening. There are too many people playing the power game and they don’t agree and they don’t talk to each other and they each are largely uniterested in the country itself. Patriotism, however perverse, was a powerful force that brought people together that seems to be gone.

          I’m not going to go into how we got to this point–simply that the consensus that once was able to bring most people together does not exist and, as far as I can see, cannot exist. It looks and feels to me like the whole thing is in the process of dissolution whether in this crisis or the next one. Obama does not have the power to lead–his office is not as strong as the public believes and he is under tremendous constraints and lives in a shark tank.

          The only powerful force in Washington right now that is playing hardball politics, however, it the Tea Party minority. They have a vision, a mission, a sense of cohesion and purpose and I don’t think they can be stopped at this point and they don’t think they can be stopped. Even though the public is largely against them the public is not actually “for” anything are they?

          And who knows? Maybe we don’t need Washington any more. I don’t exactly see a ringing endorsement around here for the feds–instead we’ve documented how they act in bad faith and perform tasks for the oligarchs so do we really have anything to lose? We need a positive and well-articulated answer that can elicit enthusiastic suppport from the left and center of the political spectrum. Or we’re done.

          1. JTFaraday

            “I’m a weird and twisted product of a weird and twisted world and therefore am actually pretty ‘normal.’”

            To be honest with you, I think I agree with from Mexico that you contradict yourself a little more than normal. I’m not going to speculate as to why, as I have no idea.

            “The only powerful force in Washington right now that is playing hardball politics, however, it the Tea Party minority. They have a vision, a mission, a sense of cohesion and purpose”

            So what is this “sense of purpose”? People have been going around and around in circles for dayz trying to figure it out.

            I mean other than “get the lazy N-ers off foodstamps,” a goal they share in common with any number of liberal and big government ideologues.

      2. NotTimothyGeithner

        I think the Tea Party was largely an attempt to reorganize Libertarians and the Christian alliance in the absence of George W. Bush who commanded a loyalty.

        W. was one of them, and he could unite both wings of the GOP, the nutty followers and their crooked overlords because of his reformed drunk status.

        I think the real situation is its still the same GOP alliance, but there isn’t a single figure to rule. The Christians are not as dominated by personalities the way they were. The borg has power. Jerry Falwell commanded followers, and his sons despite more power and resources are in many ways commanded by their followers.

        The conservative Christian establishment (every denomination) has grown in wealth and power, not necessarily followers. The individual mega-churches aren’t loyal to Rome, and they want what they perceive to be theirs for their loyalty. Many Romney voters don’t think he is in their tribe. They shopped around in the primaries for someone else to unite the sects.

        In many ways, the original alliance between Falwell/Robertson and the GOP has been accomplished, and now the Christians are interested in what is next. Are the Koch brothers/Romney/the neocons/the non-minister affiliated elite offering it?

        I think this conflict would have occurred earlier except for George W. Bush being the perfect candidate. His father’s credentials on behalf of traditional GOP power were sacrosanct, and W. was a calvinist former drunk. Palin was McCain’s way of getting the Christians riled up to vote for him. The GOP base loved her because she had that same dopey W. charm. They only turned against her when she was the brunt of every joke, and the country club Republican was worried Democrats might wake up to the reality there are no decent Republicans.

      3. Patricia

        Banger, you know something about conservative circles. I have a question. I’ve been roaming Evangelical sites/blogs for the last 4 mths or so, to see what’s up. There is a constant refrain that Obama is socialist and socialism is fascism and that we will be destroyed by it “if we don’t do something”. Can you tell me the reasoning behind it? It makes no sense to me but it must have a kind of logic from their point of view.

        If I can’t at least understand their logic, I have no way to enter into conversation.

        1. Banger

          The simple answer is that right-wing religion and political ideology serves as antidote to modernism. For a variety of reasons the right-winger needs certainty and can’t live without it. Skepticism and questioning are seen as bringers of confusion and insecurity. These people must live in very carefully demarcated conceptual frameworks. American Exceptionalism is essential to the world view. If you are poor or can’t find work it means you’re lazy–whether there is any work to be had or not is irrelevant. Opportunity always exists in this country. If the government provides any aid it does so at the expense of society as a whole and is thus destructive—not just because it robs people of their dignity but because it takes money out of the pocket of hard-working people. You know the rest. But the reason for this POV has nothing whatever to do with reality or rationality. It is very delberately anti-rartional. For example, there are people who believe they are Christians and followers of Ayn Rand–but this is impossible! Rand was virtually a Satanist who was explicitly anti-Christian. Yet, this is common on the right.

          The fault lies in the modernist project itself–it is not sustainable in my view without rigorous intellectual discipline and/or a high-level spiritual understanding. Progressives don’t understand how difficult it is for that segment of the population–there are a number of social critics who understood this problem. But they are all dead now.

          The irony is that the right preaches and individualist ideology yet they are much more communitarian and conformist while the left tends to be more have an ideology of collectiveism yet tend to be very individualistic and non-conformist.

          1. Patricia

            Don’t know if you’ll return to this thread, Banger, but in case…. I understand their desperate need to retain the fantasy of American Exceptionalism. Plus, because they have to work at awful jobs to get by (all their frickin’ lives), they flip it into dignity and pride (in order to give it meaning) and this is where they tie in to Ayn Rand, I think.

            I recognize that they are deeply irrational but in their own minds they are logical and I’d like to know how it shapes up re the foul-evil-that-is-socialism. They think we are becoming a fascist country and I can agree with that, but when I track back from there, I get lost because of this strange insistence.

            AFAIK, they see communism as Stalinism which is fascism. They see that Hitler’s party had the word “Socialist” in it and thus socialism is fascism. Some say that we have socialism for the rich and the poor, financed by the middle.

            My main takeaway so far—they are the most intensely literal bunch I’ve ever met. I would like us to require them all to obtain a BFA in visual art or creative writing. Might be the most effective and quickest way to drain away the peculiar industrial rigidity that nourishes their ideology.

            Of course, they aren’t a monolithic bunch. Anyway, I’ll keep plodding on. Thanks.

            (I enjoyed Bageant’s Deer Hunting.)

            1. Patricia

              Your last sentence is astute, I think. We humans need both and how it works out in the various parts of our society is fascinating. USians are cultural extremists, ISTM. There’s very little blending at any level and it creates profound disconnects inside our ideologies as well as between them.

            2. Foppe

              If you’ll forgive me, I’d like to quote a bit from an essay that DG wrote as a preface to a (wonderful, but quite academic) book about value theory, which seems to me relevant. I don’t know if you’re familiar with it, but if not, you might like it.

              Bush voters, I would suggest, tend to resent intellectuals as a class more than rich people, largely because they can imagine a scenario in which they might become rich, but cannot possibly imagine one in which they or any of their children would become a member of the liberal intelligentsia. If you think about it that’s not an unreasonable assessment. A truck driver’s son from Wyoming might not have very much chance of becoming a millionaire, but it could happen. Certainly, it’s much more likely than his ever becoming an international human rights lawyer, or drama critic for the New York Times. Such jobs go almost exclusively to children of privilege. Insofar as there are not quite enough children of privilege to go around—since elites almost never produce enough offspring to reproduce themselves demographically—the jobs are likely to go to the most remarkable children of immigrants. Executives with Bank of America, or Enron, when facing a similar demographic problem, are much more likely to recruit from poorer white folk like themselves. This is partly because of racism; partly, too, because corporations tend to encourage a broadly anti-intellectual climate themselves. (p.10)

          2. skippy

            Indoctrination into any manic ideology that is so horribly conflicted will produce all kinds of cognitive impairment.

            skippy… if wealth is worshiped as the pinnacle of human achievement and one is found wanting… well?

            1. Patricia

              Yeah, the wealth emphasis is particularly pernicious among a number of their leaders/pastors across denoms (of course). Those who see it sound remarkably like the people here re gov’t/corp greed. I offer parallels.

              The American-Dream-as-middle-class-nuclear-family is most widely held. They are a deeply moral bunch but in an absurdly literal and narrow way and that’s what makes them dangerous even to their own basic goals, much less those of everyone else. Altemeyer mentions it. I’m looking for ways to connect with these ethics and broaden them out.

              So far, I’ve stayed with the message-of-Jesus: loving enemies, helping the poor, inclusionary justice etc. But I keep running up against this socialism dealie and haven’t found a way to dismantle the bad information without them flaming out. Oy!

              1. anon y'mouse

                i’m treading waters in areas that I have no expertise in, but I’ve interacted with white trash and pseudo-middle class types all of my life. granted, quite a few were drug-taking/drug-dealing white trash types rather than churchgoers, but still. I would not imagine speaking FOR them or their political views, but will share what I’ve seen, heard and read from a lot of different people over the years. a lot of this stuff may be caricature of these people on my end, or pure product of media culture brainwashing mostly on their end.

                their perception is that everyone should have to struggle, just like they see themselves as doing, therefore “equality of opportunity.” they view that as the test of moral and genetic fitness, and if you become rich you are fit. they view it as the ultimate in meritocracy. if you do not become rich, you are some kind of sinner and put foot awry somewhere in your past from the correct path (work hard, save money, don’t go into debt, and respect your obligations, plus obey sexual-moral laws). their issues with gov’t is that it has put foot awry in some one or all of these, or alternately wants to give money to “reward” people who have done so (Behaviorism rears its head).

                if your family/clan helps you, that is to be expected (blood ties). if you are engaged in immoral behavior (out of wedlock births, nonstandard living of any type but especially sexual), then you deserve some kind of karmic fate for this. if you’re black, you’re Other and your genetics & culture are inferior and FOSTER this kind of thing (especially unmarried mothership. they don’t view that as result of economic decimation from racism/slavery & drug war, but poor morals and genetic idiocy). if you’re Hispanic, you came to take some poor white man’s job in construction (which might actually be somewhat true, but nevertheless they are not keen to greater issues of human dignity) and broke OUR LAWS!!! to boot. there is a strong element of eugenic racism and “we went to the moon and Africans ate dirt” kind of genetic superiority under here somewhere, and lots of Great Wisdom of Founding Fathers mythology.

                I think at heart they want what once was the normal family-clan backscratching, and view any larger attempt to help anyone outside the clan (“Others”) as giving their money away to people who sinned–the new Catholic Indulgences. “you don’t learn unless you suffer the consequences.” “work harder and crawl out of the mess you’ve made yourself.” the economic system greatchainofbeing stands in for Dante’s Inferno stuff. deterrence & eye-for-an-eye punishment is very big, after which bloodlust is sated when scapegoat is found. scapegoat does not have to BE guilty, merely look and act the part (he/she has nearly, in all cases, to be some kind of Other–ethnic, religious, cultural deviancy, immoral living or something). explanations for why guilty people may have acted as they have is viewed as rationalization/justification after the fact for bad behavior, which is always wrong regardless of circumstances, community, economy, organic brain dysfunction, the maladies of being poor or anything else. these are all “just excuses.” wrongdoers must individually pay the price, even if wrongdoing was caused by societal ills more than personal ones.

                add on top of this the neoliberal thought collective “Privatization will cure all evils, because–efficiency!” and “Public Service rewards lazy, unionized workers and leads to waste.” why should they pay their hard-earned money for another group of bloodsuckers to lead the life of Riley, and give them bad service (see The Punisher mentality piece) to boot? the commons is only their personal clan, or church, or social network. everyone outside of this is morally suspect until proven otherwise, and to help them in any way would be to reward bad behavior, not to mention add insult to injury. “I worked for it, and they didn’t. you took bread out of my mouth and gave it to someone who justly deserved punishment instead.”

                …to be continued

              2. anon y'mouse

                as for socialism = fascism, I have yet to understand that link. it used to be all socialism = communism. I had family members who were former government workers spouting that one at me, time & again. but this latest turn to focus on fascism I believe is because the mask is slipping. what we are really going through, from my (leftish) perspective is a turn to corporato-fascism, and these folks can no longer help but notice it, and now have to tie it into the framework of what they already know. this might cause a crisis of faith, because their morality system was money=moral fitness (hence, China being the new rich power player in the world causes all kinds of inferiority complexes, because Anglo=genetic fitness combined with -took our jobs- stuff). this is probably a product of the gun mentality, and fear of gov’t forcing you to do what you don’t want left over from scots-irish southern rebellion mentality. some of it is rational and some not. these things don’t have to have a purely logical construct or fit together in a neat way.

                I haven’t done it in a long time, but I will try to read some of that extreme right stuff in future and see where its logic lies. perhaps they believe that, because gov’t “socialistic” projects are so big they can pick winners and losers, thus bypass the normal $morality system, so $superiority was not justly earned, on both the personal and the corporate stage (“why should i pay for someone else’s lung cancer?” + crony capitalism and political corruption). I don’t think the ACA disputes this view at all. I think this is where their view might have potential to mesh up with leftish thinking on corporate control and neo-feudalism.

                what we have to do if we want to convince them is break the money=morality link, and then hopefully also drag them to a pluralistic worldview–the MORE difficult proposition. racism may just be a scapegoat –“took our jobs”– kind of thing, but these people view anything that isn’t STandard Americanism as WRONG. something our gov’t has played on time and time again to get the war drums rolling (“towelheads, ragheads”). they are not multiculturalist types; they equate this with moral relativism, but are willing to let people in other countries live as they like if they are left alone. this ties into the American Exceptionalism thing. they are not students of history. we “won” the wars (WWI, WWII, Industrial & Cold) because of our overall fitness, not accidents of history and economy and geography. they do not have a depth of cultural or psychological understanding about other people, and don’t go out of their way to get one unless by accident (as in, some distant family member meets, marries and has children with the Other and then they encounter grudgingly during family get-togethers and claim “that Mexican guy isn’t half bad!” or “my co-worker Amar is a hard-working, no nonsense sort. but he still eats that tortilla stuff for lunch and speaks that loopy language when he’s natterin’ on the phone”). they live on the surface of their own intellectual lives and find that to be enough, and question the motives of anyone who wants to go a bit deeper.

                the main problem emotionally that these types seem to have is in perspective-taking and black/white thinking. they can’t fathom what another person’s world view is or why it is, and many don’t seem to want to try either. they are not big on context. “My way or the highway” plays heavy, here. big on paternalistic, authoritarian mentality. big on traditional gender and other roles. big on knowing your place in the greatchainofbeing and, by dint of toil & sweat, moving up the ladder. Banger’s “reaction against modernism” is probably dead-on here. Anything by Joe Bageant is dead-on here (gosh, i miss reading that guy).

                this may be mostly a description of the older generation with whom i had more contact and conversation. the lower orders over the past 30 years have succumbed to the same sort of economic devastation that the black community has encountered, thus largely turned to drugs (used to be, what, beer & whiskey?), and have the same kinds of out-of-wedlock type problems that it does. this they tend to blame mostly on the -took our jobs- theme, so it all ties nicely back together again for them. they still cling to cultural memories of past greatness. also, military culture has big inroads here due to economic conscription, and from my total outsider glimpses, meshes up in many ways with their greater morality system.

                these are all obvious. also, all mischaracterizations and confusions are my own.

  9. MikeNY

    To me, it seems that the “lasting damage” from an actual default, or even a prolonged flirtation with default, is that it crystallizes the perception that America is no longer governable. That is a potentially perilous predicament for the world, since the US issues the world’s reserve currency and has mountains of nukes.

    This isn’t news to many NC readers, since we’ve been living it. But for the ROW, it could be something of a Wile E. Coyote moment: the empire is coming apart, and the consequences are unpredictable.

  10. middle seaman

    It might be best to view Obama’s stance as an attempt to improve his legacy. His refusal to negotiate now compensates for his “give away the store” negotiations in the past. His offer, or obvious hint, to negotiate after lifting the debt ceiling plans another attack on the safety net. His assumption that making seniors poorer will improve his historical standing is as delusional as the Teas are.

    His current steadfastness while willing to sell us down the river later should scare us badly. Obama started in 2009 lacking across the board. Almost five years later he made no progress. That’s very scary.

  11. James

    Could someone provide links to articles on this site detailing the ways in which the ACA siphons money from the low and middle classes and directs it to the institutions in power? I’ve been searching for this kind of thing on here, but have been unable to find what I’m looking for.

    1. Lambert Strether

      If I see, I will. The money flow is I am sure horribly complexified. The whole thing is a guaranteed market for rent-seeking health insurance companies, and they wouldn’t have written the bill any other way, but I have yet to see figures (and net of the subsidies) of the wealth transfer upward/

    2. craazyboy

      The ACA money flow is pretty simple from a top level view. There are subsidies up to $80k in family income. This means the healthcare, drug and insurance industry now have a direct line to the borrowing power of the US treasury. They need it because they have priced their “product” way beyond the ability of normal income people to pay.

      Then if you have a corporate provided plan, rising cost is still a problem. Your benefit cost to the corporation went up – then guess what? Less is left for the annual raise.

  12. craazyboy

    It’s obvious to me that we need to be invaded by Space Aliens. Even the ones that plan to raise us as feedstock.

    At least then they would keep us fed and healthy, until it’s time to be herded into the Flying Grill and we’re off to the great BBQ in the sky.

  13. Samuel Conner

    I’m wondering if the special securities in the SS trust fund could be repoed to the Fed to fund Social Security payments. They aren’t marketable, but perhaps could be used as secure collateral. Fed is lending of last resort to practically everything these days; why not to the Social Security Administration?

    1. craazyboy

      um, if that were legal, then the Fed would be giving a cash loan to the SS Admin, and they are the only government entity that doesn’t need any.

      You do mean give the cash to SS, and not someplace else, right?

  14. Hugh

    Anyone who votes for a Democrat or a Republican ever again is approving this round of kleptocratic kabuki as well as those that will inevitably follow.

    We are enmeshed in a class war where the rich, the elites, and the two parties are committed to stealing us into serfdom. The current political conflict in Washington over the debt ceiling is about how we are to be looted.

    What Obama could do is irrelevant. Yes, he does have options, but they are irrelevant because Obama’s plan is not to solve this crisis, but to exploit it. It is after all why he and the rest of our political classes, Democrats and Republicans, engineered it. And yes, the Republicans are just as eager to exploit it for their own ends as he is.

    And that is where the real possibility for miscalculation lies. We are in late stage kleptocracy. The façades are falling away. The theft is more blatant and in your face. No one thinks that the rubes will react let alone rebel. Or rather I should say, they think they can steer any reaction into safe channels that cancel each other out, Democrats against Republicans, conservatives against liberals.

    But with the falling of façades, our ruling classes are getting increasingly sloppy. They risk creating havoc among themselves, precisely because they think they can manage the havoc to their advantage. But they are dealing with a complicated kleptocratic financial system they do not even begin to understand. Hence the possibility of another explosion. And just as the Conventional Wisdom of the powers that be was that a revolt from the French and Russian lower classes was impossible, so now our ruling classes formed of the rich and elites also think that revolution from us is not only impossible but absurdly so. But here’s the thing. Revolution is always utterly impossible, until it happens.

    1. Doug Terpstra

      “What Obama could do is irrelevant … because Obama’s plan is not to solve this crisis, but to exploit it. It is after all why he and the rest of our political classes, Democrats and Republicans, engineered it.”

      Indeed, and as much as I’d love to see it vaporized, [Obamney]Care is an obvious straw man distraction in this faux crisis. Both parties (not in spite of but with spite for their bases) want this insurance racket bailout from the Heritage Foundation, and we can be certain that will not be affected except, if possible, to make it worse. It is only used here as a vehicle to seize the holy grail (or at least pieces of it to start), the “salvation” of Social Security and Medicare for Wall Street.

      That will become clear as the contrived brinksmanship proceeds to sufficiently wobble the market wheels …. whereupon, amid fear and desperation, Obama will once again rise up as a false messiah to feed the multitudes …. with cat food. The machinations of Washington have moved on from making sausage to manufacturing Soylent Green.

      Contrary to his apologists, Obama is not merely an amoral power-broker captive to and logically serving his sponsors; he is an active deceiver and conniver in this betrayal. That may finally become clear to a sufficient number of passive supporters to change the calculus and spark a desperately needed revolution.

  15. Ralph Chaplin

    Obama doesn’t want to mint a coin or use the 14th amendment because they don’t solve the problem. Either “solution” will likely be challenged and wind up in court. Any treasuries issued on that basis will come with a substantial discount as they lack the credibility of the entire USG. Picking which obligations to pay doesn’t fix things either. Even if I get paid this time, I might not next time. All that matters is credibility, and they are pissing it away.

  16. clarence swinney


    In a blockbuster story this weekend, The New York Times reported that “the billionaire Koch brothers, Charles and David, have been deeply involved with financing the overall [government shutdown] effort,” backing multiple dark-money groups. They even funded the group that ran that horrible ad with a creepy Uncle Sam in the doctor’s office.
    It’s more important than ever that we unite to support President Obama and Harry Reid as they stare down the Republican extremists — we need to make sure that Republicans, and the billionaires behind them, know they can’t buy our government.

    Boehner said two weeks ago he would not let the nation go into default.
    Now he says he thinks the president will yield to the demands of the suicidal Republican majority. No sign anyone is talking just mud slinging. The budget should have been passed and ready to finance the government as of October 1. The president will not yield on Affordable Health Carer which is a law. Much of this goes to 80 members of the House known as Tea Party
    gut the government for their rich backer, David Koch. It is not long till some large payments such as Social Security must be paid. The Tea Party members are up for re-election and the president
    is not. A clean CR or not? Delay Affordable Health Care for a year or not? The Tea Party members are playing games with the budget. Cutting items that have little to do with decreasing debt. We should attack with revenue increases and balance that budget. The Tea Party is dead set against hurting their very wealthy backers with tax increases yet there is no way to balance the budget without revenue increases. President Obama cut Bush Deficit in half. His 2014 budget projects a 700B deficit while keeping spending below recent years.
    Almost everybody is disgusted. Tea Party members celebrate. Let us wake up and do what is right.

  17. clarence swinney


    In a blockbuster story this weekend, The New York Times reported that “the billionaire Koch brothers, Charles and David, have been deeply involved with financing the overall [government shutdown] effort,” backing multiple dark-money groups. They even funded the group that ran that horrible ad with a creepy Uncle Sam in the doctor’s office.
    It’s more important than ever that we unite to support President Obama and Harry Reid as they stare down the Republican extremists — we need to make sure that Republicans, and the billionaires behind them, know they can’t buy our government.

    Boehner said two weeks ago he would not let the nation go into default.
    Now he says he thinks the president will yield to the demands of the suicidal Republican majority. No sign anyone is talking just mud slinging. The budget should have been passed and ready to finance the government as of October 1. The president will not yield on Affordable Health Carer which is a law. Much of this goes to 80 members of the House known as Tea Party
    gut the government for their rich backer, David Koch. It is not long till some large payments such as Social Security must be paid. The Tea Party members are up for re-election and the president
    is not. A clean CR or not? Delay Affordable Health Care for a year or not? The Tea Party members are playing games with the budget. Cutting items that have little to do with decreasing debt. We should attack with revenue increases and balance that budget. The Tea Party is dead set against hurting their very wealthy backers with tax increases yet there is no way to balance the budget without revenue increases. President Obama cut Bush Deficit in half. His 2014 budget projects a 700B deficit while keeping spending below recent years.
    Almost everybody is disgusted. Tea Party members celebrate. Let us wake up and do what is right.

    1. Kurt Sperry

      “It’s more important than ever that we unite to support President Obama and Harry Reid”

      Who left the backdoor open? I don’t know why but this strikes me as hilariously funny. I mean it can’t be serious? Right? Nobody that reads NC is that stupid?

      1. Banger

        Well we should unite but definitely not to support the Democratic Party unless they move in our direction. That has been the trouble with the left–it has gone to Obama without him having to move left. Why? Out of fear of the right. Even though I believe the RP has become, in recent years, more destructive than the DP, that doesn’t make it right to support, out of cowardice, the DP.

  18. RO

    This is a planned jubilee. Like Nixon did.
    Holders of US debt are in for a hard landing.
    We still control the oil, food, technology at vital choke points – so we’ll come out of this OK after some inflation and a few disruptions.

  19. RO

    This is all very good kayfab. The end result is to stiff the creditors and then make huge profits by controlling critical assets.

  20. docg

    The catastrophic effect on the world economy has to be balanced against the priceless amusement value the situation has to offer. We all know Obama is going to cave. It’s just a question of when. This isn’t the first time he’s drawn a “red line,” remember? Last time he took a “non-negotiable” position he was forced to swallow that great sequester deal.

    As far as “Mr. Market” is concerned, the only thing that would cause stocks to plunge would be a QE taper, and we know THAT ain’t about to happen any time soon.

    Someone ought to invent a board game called “Deficit Limit.” Or nowadays I guess it would have to be a computer game. Or better yet, a sitcom.

    1. Spengler

      Taper, taper? Sorry, there is no QE going on. Unless there is consistant upping of purchases, overall bond prices never move.

      The taper is irrelevant. It is all foward guidance. The FED is irrelevant anyways. Obama has no reason to cave. He holds the high ground. Republicans will cave because they are a totalitarian agenda they don’t want exposed.

      They want to abolish the nation state and replace it with the market state. Anti-government blah. No such thing. Somebody is always ruling. Always.

  21. Spengler

    You can never liquidate bankers. You can liquidate their corps, but not them. They got money flowing from their ears. You can reinstall a pre-Civil War system and Jamie Dimon would find a way to make money.

    Bankers don’t control the type of system we have. Capitalists do. The bankers are nothing more than middle men.

  22. Jess


    Well, not actually a typo, more like a missing sentence fragment. The second paragraph under the chart box ends with:

    “So even if”

  23. Jerome Armstrong

    Looks like the Supreme Court is signaling that it intends to take away the remaining part of campaign finance regulations, and thus remove from law, the financial limitations to a party that an individual can contribute. If this were in a vacuum, but it’s within the framework of Citizens United having sailed, and the shadow, 527ish infrastructure that has created. Having been a part of these organizations the last few years, I can’t really see them being a part of the answer.

    So, if the limits on individuals are tossed, it could present a way through to a different outcome than what the DNC and RNC believe will happen.

    The unintended consequence could lead to a viable third, fourth, maybe fifth party structure. If a person can put $4M into a party pot, that makes it much easier to see how the Libertarian party begins to get funded, how the Green party begins to grow, how a new populist internet-based party emerges. Sure, the DNC and RNC are going to pull in $100’s of millions, corporate-sponsor galore, but they will be opening the door to competition as well.

    No longer tied to the yearly max of $100K or so, divided up like a hill of beans to all of the party committees, it’s only going to take a handful of individuals to provide the infrastructure for a national party to emerge. An already built party will be an umbrella for candidates to emerge within the local organization depth, funded, and ability to compete with the two-party oligarchy.

    1. Banger

      Good thoughts–we definitely need some changes maybe this could be a blessing in disguise or maybe just make things much worse and strengthen the stranglehold the two parties have on our politics.

      1. Jerome Armstrong

        It’s hard to imagine how the two parties could have more of a strangle hold. Now, I would love to go back to the pre-CU days, as I thought we had there, from 2002-2008, a pretty good, as far as that goes, campaign finance system for the parties and candidates, which leveraged the necessity for small dollar donations.

        But given CU, it’s just crazy the amount of money that can be thrown, without any transparency, at these campaigns. It’s worse, because its all a one-time shot of knocking out an incumbent. If the court goes the way it’s leaning, then we can see the framework for minor parties becoming major parties.

        It’s going to keep in place the limit to any one candidate, and probably keep in place the limit to the parties. But it will allow a person to give to every single candidate. So $1.4M across the board to all the candidates of the party.

    2. Fiver

      It could also lead to simply moving to making public financing of all candidates mandatory and exclusive, thus removing the inequity in corporations’ “individual” ability to “speak freely” completely.

  24. diptherio

    Looks like someone is taking the default threat seriously…CNBC just tweeted, “BREAKING: Ahead of U.S. debt ceiling deadline, Fidelity sells off all U.S. debt holdings that come due in late October/early November – AP”

  25. John

    Selfish question here: Should I get out of my 401K bond fund now and where do I move the $$$ ( Money market??). Thanks experts!!

    1. anonymouse

      short answer (if you’re risk-adverse).

      1. see if your etf/bond fund has high yield debt. look for funds with less/low/no exposure; and/or

      2. lower your “duration” to something around 1 to 5 years.

      naturally ymmv and it all depends on your exact circumstances/risk tolerance/financial needs, etc. but whatever you do.

  26. Fiver

    Another excellent piece and discussion.

    I’ll just note again that the walrus in the room was alluded to by Yves, and that is the reaction of “markets”. Yves suggests a slide is what will turn the trick for Obama (or at least, that perhaps Obama et al think that is the case) yet there is another way to look at these events. I will pose a simple question or two:

    1) Can you identify a better way for political hacks to make an enormous pile of money for their patrons than to be effectively in control of a market dive, or “dramatic” market moon shot? We’re talking moves in the trillions.

    2) Is there a better answer to the “What to do about QE?” question than a significantly scary correction that “forces” the Fed’s hand, bubbles be damned, opening the tap for at least another $trillion for the Wall Street crowd on top of what they rake in from the “correction”?

    The GFC saw the greatest transfer of wealth in human history up the ladder to the stinking rich. What’s more, they got away with it virtually untouched.

    Once Obama let the banks and Bushies up off the ground by appointing Geithner and a bunch of criminals, then launching the Health Care debacle rather than cleaning the decks, the crazies among the rich (including the Kochs) bought out the Tea Party to go for more – and they’ve more than made out like bandits on that investment.

    However, some very important events have taken place in other realms that have completely changed the political landscape – the Snowden revelations, and the failure to convince the American people another war was a good idea.

    Obama has taken 2 major hits. I don’t think he thinks he can afford another. The biggest money has to be more than a little nervous as well.

    Now is not the time to attempt to strip Social Security or Medicare, or any other important social program. In fact, I’d say the elite will be quite happy to bask in another round of QE (or something similar), and in fact have no further use for the whacky right – indeed, they would go absolutely batshit if the whacky right were ever to hold legitimate power (Obama, as I’ve observed previously, having taken his power off the table – or so he says).

    What I see coming is the end of the whackies (and Boehner) after a deal is reached that doesn’t include cuts to SS or Medicare or really anything vital, perhaps something for repatriating off-shore profits, but mostly nothing – except enough of a scare to ensure Yellen hits “print” before she takes her Chair.

    The real crisis is next year, after a final QE (or proxy) takes “markets” to absurd new highs running into an election that for all intents and purposes will make or break one or both Parties, yielding 4 contenders in 2016.

    1. Fiver

      Would just like to note that the “market” today demonstrates the sort of money-maker for insiders I mean – Dow up over 200 pts on an offer from Boehner to extend the debt-ceiling for 6 weeks in order to provide time to ‘negotiate’.

      Now, since Obama said he would not negotiate, you’d think this many billions of dollars wouldn’t be bet. You’d be wrong. This much and then some would evaporate should Obama later today nix the proposal. The key is that big money insiders will know both sides’ moves as they’re made, which today requires only 1 phone call to actuate a “buy” or “sell” program. How many triple-digit days were created so far? How many were created last time around?

      Anyway, that’s the sort of thing I was talking about on the way to more Fed stimulus should they play chicken close to the wire.

  27. EmilianoZ

    Extreme kabuki or disintegration?

    So, in the 2nd half of the 20th century, there was this titanic fight between the US and the USSR. In the 90ies, the USSR collapsed and the US declared victory.

    This reminds me of the end of the Matrix trilogy. Agent Smith finally manages to whack Neo, thinks he has won but soon realizes he’s starting to disintegrate himself.

    What the US had to do to win, the monstrous expansion of the industrial military complex, the intense brainwashing about “socialism”, will now start to destroy the so-called “victor”.

    Future historians will say nobody won, the US just lasted a little bit longer

    1. anon y'mouse

      kayfabe on a larger stage.

      who runs the countries in question even today? former KGB and military/industrial/financial complex. that show constantly threatening the ultimate in firework displays was put on for their benefit.

  28. bob goodwin

    Well balanced essay, Yves.

    I think it is true that the tea party is acting within its principles, and that it feels more secure flexing its muscles than supporting the status quo. I think its also largely true that Obama cannot afford to meet any of the primary goals of the tea party. It is my guess that the tea party will come away from this crisis with very few tangible concessions from Obama, but will have been successful in building momentum toward greater fiscal contraction.

    Although I takes sides on the issue like everyone else, I believe that both sides are honorably using democracy to work a genuine breakdown in consensus on business, monetary and economic policy. If the tea party had only miniscule support (as is often claimed when you see words like sliver of the republican party) the current stand off could not have occurred.

    Like it or not, the debate does not closely match the party lines on either side, although the democrats are incumbent, so have stronger tools to keep cohesion within their lawmakers.

    1. Spengler

      Fiscal contraction on the federal level, yes. But rumbling that a state/local spending boom may be near as Republicans have to be reelected in state.

      The “Tea Party” aka Koch,Loeb and Rothchilds is just for show. Republicans are pushing away independents and they can’t continue to do this.

  29. ian

    I keep reading about the upcoming “great betrayal”. What I don’t get is why Obama would want this. First off, I don’t believe it has anything to do with “doing the right thing” – he’s in it for himself and always will be.

    Help me out here.

    1. Foppe

      It has to do with his belief that the state (and therefore the people) has to ‘live within its means’, coupled with his refusal to believe that taxes should be raised, or that companies should not be able to evade taxation, and his defense of the surveillance state (subcontracted as it is to the private sector).. And additionally, that nothing can be done to curb healthcare cost growth, either because he assumes that there is no inefficiency in the way the healthcare industry works, or because he doesn’t believe the state has a right to force them to decrease their overhead. (Or allow healthcare providers to band together to have a stronger bargaining position vs. big pharma.)
      Given that he considers all of the latter things beyond criticism/beyond his reach, and given that he doesn’t even want to try to fight for change, or even to create awareness, the only way to ‘balance the budget’ is by cutting social security, medicare, etc.

      1. Foppe

        And since he cares very much about being seen as ‘responsible’, he feels that this is the best way he can ensure his legacy. And incidentally, doing so is the best way for him to convince all of his future employers/sponsors that he is a kindred spirit, which will ensure that he will not have to get by on a presidential pension for the rest of his life…

        1. Benjamin

          How the hell can he think anything he’s done in the last five years is ‘responsible’? Does the man live in that much of a bubble, surrounded by sychophants?

          I recall that recently he made a speech about the Keystone pipeline, suggesting he’s turned against it (doubt that will last long) and bringing up the fact that it will only create about fifty permanent jobs. He brought this up as if it were an amazing new fact. Maybe for him it was. It’s terrifying to consider, but the most powerful man in the world might be really ignorant of many basic facts.

          1. Foppe

            Well, if you’ll allow me to caricaturize the democratic party only slightly, I would say the following: The current Democratic Party (leadership) is concerned primarily if not wholly with form, while it has no real opinions about content. (This is not entirely true, because they also actively like the way the world works now, but anyway.) As such, it has nothing to say about the reasonableness of different political positions and standards of living other than relative to what positions are reasonable in light of where the Overton window happens to be. Now, since it is pretty hard for politicians to not know that an Overton window can be shifted, the only possible reasons why the party is so uninterested in shifting it to other places itself are that either a. the current politicians are constitutionally incapable of framing (which seems unlikely), or b. there are forces at work that ensure that only people who want to frame issues in certain ways can rise within the parties, while control mechanisms ensure they don’t make mistakes once they’re in. In any case, the consequence of this is that politicians of this ilk have no interest whatsoever in doing political work (see, e.g., George Lakoff’s work) to shift the window anywhere, which is an ability they leave to the corporate media, the GOP, and whoever else happens to be successful in doing so (Occupy, to some extent). The party’s only concern in all of this is ensuring that no force to their left becomes important (see posts on this site, and by Jane Hamsher, concerning the so-called veal pen), in order to ensure they remain the only progressive choice.

            Besides that, there is a complementary agenda at work, which has to do with personal gain — it is not incidental that so many liberals are such inveterate social climbers. Yet this attitude can only thrive in the absence of serious critique. (This has to do with the fact that social climbing is easiest if you do not yourself doubt the value of getting higher up on the ladder you are doing work to climb. Because if people have too many doubts about the value of the ladder they are ascending, either because of their own thoughts or because they hear others call its value into question, they will have a harder time rationalizing their constantly having to ingratiate themselves in order to get ahead. This creates a further incentive for those climbers to marginalize critics..) This is why gating party ascension behind a pay to play system is so pernicious; it filters people who constitutionally dislike having to sell themselves to investors, it takes away from the time that politicians spend on legislative issues, making it harder for honest people to feel like they’re accomplishing something, etc.. The system exists to allow in like-minded individuals.

            Given this framework, in which the party leadership’s only worry is with the overton window being dragged to the left, the only real issue is whether you want to be perceived as radical or ‘reasonable’. Since the republicans (specifically, the tea party) is ‘radical’, and since ‘reasonableness’ is conflated with maturity, as well as with ‘standing above the parties/objectivity’; while ‘living within your means’ is such a hallmark of the shopkeeper’s little mind, the only thing Obama feels he has to do in order to market himself, is to always remain aloof, mature, wise, reasonable, etc. Since he has no fixed anchor (this is generally justified by saying that ‘globalization changed everything, and it is happening without political actions shaping those changes’) wrt a reasonable standard of living, and a fair distribution of burdens, all he can do is sagely nod that it is indeed sad that the poor and elderly have such a nasty future ahead of them, and then continuing by saying that maintaining their lifestyles has simply become unaffordable.

            (Lastly, I am not sure the word ‘bubble’ covers what is at issue. Certainly, Obama lives inside a personal bubble, but on a larger scale, there is a more diffuse issue at work, which is the neoliberal belief system, and the way that has led to different kinds of organizational changes at every level of society, from the party to the labor union to the media to the school system to the judiciary, which all contribute to the status quo.)

          2. NotTimothyGeithner

            Yes. He does live in a bubble surrounded by sycophants. Combined with his own spectacular narcissism, his lack intellectual curiosity, and probably delusion, Obama has really no clue about anything. Despite the current crisis (and ongoing crisis of unemployment) which was an October date known for a whole year, the President spent his summer pushing right-wing immigration changes and trying to lie us into a war.

            The American mainstream media is largely a stenographers club. They ask the questions they understand (remember they are “journalism” majors; advanced rolodex sorting 301) and think will get them access.

            Obama has crowds of fawning adorers. There are countless, qualified yes men available.

            Obama’s inner circle and means of acquiring information much like W. only requires being a part of his small inner circle. I suspect Obama is paranoid and believes everyone is out to get him, much like Nixon which is why he maintains such a small clique.

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