Democrats and Republicans Pedal to the Metal in Debt Ceiling/Shutdown Game of Chicken

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You know it’s bad when Grover Norquist is playing elder statesman.

Watching the shutdown/debt ceiling impasse is increasingly like living next door to an abusive couple. You hear the screaming through the wall, and you pick up enough snippets that you think you know what the fight is about, but you aren’t hearing enough to be sure.

So on the one hand, Norquist has been making the rounds trying to give everyone, meaning those Democrats who need to get the message that they need to whack all sorts of spending, especially Medicare and Social Security, the outlines of where Republicans think a budget deal lies. This is supposed to be a sane-looking Republican ask.

On the other, the Republicans are looking increasingly in disarray, hence the concern about the screaming through the wall. House Speaker Boenher’s stance appears to have changed since Friday, or it may simply be that he’s been required to posture harder. The New York Times reported Friday that Boehner told party members privately that he wouldn’t let the US default. Even though a majority of Republicans in the House are against passing a continuing resolution (ending the shutdown while the two sides work out a bigger budget deal) and putting the debt ceiling on hold, Boehner is widely believed to have enough votes to join with Democrats and vote through agreements that would provide for a longer negotiating runway.

But on Sunday, Boehner’s talk hardened. He insisted he does not have the votes to get anything through unless the Democrats make concessions to get those measures passed. Obama has refused to do so. More worrisome, Boehner is changing his demands. Earlier, it was to delay implementation of Obamacare a year. Yesterday, there was no mention of Obamacare; the bone of contention was now out of control spending and debt (note that I’m not sure this is an actual change in position but in messaging, with the fight now moving to the debt ceiling). Mr. Market does not like the idea of even talking about default; US futures are down about 1% and foreign markets are generally down by a half a percent to a bit over a percent. In other words, concerned but not rattled.

Now political negotiations differ in important ways from private sector ones; the rituals and signaling are different. And there may be things going on behind the scenes, but normally, those wind up being leaked pretty pronto.

But from a negotiating perspective, the state of play looks ugly. Basically, the majority of one side does not want a deal unless it is on extremely favorable terms to them, and is prepared to walk from the table. Even though the media keeps depicting the Republicans as the Tea Party fringe versus a presumed less extreme and a lot less vocal majority, in fact the traditional conservatives look to be seriously outnumbered. Focus group work by DemocracyCorps shows the degree to which evangelicals, which it estimates at 55% of Republicans, are aligned with Tea Partiers on economics issues (social issues like gay marriage are a completely different kettle of fish). Together, the study estimates that they account for 75% of Republican voters.

Now one might assume, since donations count for more than votes in terms of power blocks and voting patterns (see Tom Ferguson’s work, particularly his book The Golden Rule for details), that even if DemocracyCorps is right and moderates only represent 25% of Republicans, surely they carry more clout, since pragmatic business types would fall more into that camp than into the more extreme groups. That may be true, but I suspect you’d have to do pretty granular district by district to know for sure. But the bottom line is that Boehner really is fundamentally conflicted: his members don’t want to do the “responsible” sort of thing that makes sense to traditional conservatives like him. The whip count reports have only 19 to 21 Republican votes supporting a continuing resolution or a clean “suspend the debt ceiling for X weeks” bill.

The Tea Parties and their fellow travelers are taking an apocalyptic stand. They really think it would be better to blow up the economy to get their way. For them, this isn’t posturing. And that means there really is no way to cut a deal that includes them. There is no overlap of one side’s bid and the other’s offer that allows them to work out a deal.

The Democrats cheerily assume that all this Republican extremist behavior will cost them in the Congressional midterms. That might be true but I’m mot sure it’s the slam dunk the Democrats think it is. The results of the 1990s shutdown were less clear cut than they profess (for instance, Clinton’s reelection had much more to do with Bob Dole’s lackluster campaign). A lot of Republican voters listen primarily to Fox News and Democrats are the cause of all evil per Fox. The incumbent party always is held responsible for the state of the economy, and a protracted shutdown battle will inflict damage. But the Republican extremists are simultaneously convinced that they will be rewarded for their intransigence (and in their districts, they might well be) and are willing to go down in flame for the cause.

But what does this mean for the budget deal? I hate sticking my neck out, but Boehner could not deliver a Grand Bargain last year. Since then, the Republicans have added more demands to their list and the Obama does not appear any more inclined to yield on the things he regards as critical than he was last year. So I don’t see how a Grand Bargain gets done. It had been the planned-for end game: the budget drama was to serve as the justification for goring well-loved New Deal programs. But now the extremists want to go much further and Boehner is in the ugly position to have to defy his own party to keep them from acting like economic terrorists.

Now if I am Boehner, I have an additional calculation to make: when do I blink, and do I blink at all? As of October 17, the Treasury runs out of new borrowing capacity and has to operate with existing cashflows. Various forecasters have it hitting the default point on October 31 or November 1. In past big legislative fights, negotiations needed to be completed about ten days prior to a drop-dead date just to get a bill drafted and passed in both houses (although a mere continuing resolution or simple debt ceiling suspension would presumably be a simpler affair and would require less time). The point is that if both sides are going to reach a deal of any complexity, it has to by October 21 at the latest; if dealmaking goes past that, all that is likely feasible is a “stop the clock” or similar minimal measure.

And here it is, October 7, and the two sides aren’t even negotiating. No pow-wows, just posturing.

So Boehner could blink. He might feel it necessary to let the markets get rattled a bit so he can say he was forced to do it. Or he could act as hostage to his party and rely on Obama blinking, as in invoking the 14th Amendment or using one of the other devices discussed in the econoblogosphere to avoid default (Obama is too well tied into Wall Street to default on Treasuries. As much as he is discussing that as a possibility, I can’t imagine him actually allowing that to happen). But Obama would likely feel it necessary to have looked forced to take such extreme measures. And that means letting things go far enough that Mr. Market gets in quite a tizzy.

In other words, the negotiating dynamic looks sufficiently bad that both sides have reason to use the Market Gods to give them cover for taking action that would otherwise be costly in political terms. So the second half of this month could be a wild ride.

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  1. Massinissa

    I’ve never liked Boehner, and have never had any reason to, but I’m really starting to feel a bit sorry for him. He’s really screwed no matter what the hell he does. Perhaps he doesnt deserve my sympathy, but I can certainly relate.

    1. Jack Lohman

      Increase debt? So we can increase tax deductions for the Fat Cats that fund the elections??? I’m surprised that the politicians object. OR, will they “begrudgingly” give in? Even after the Fat Cats outsourced out tax revenues to China, after giving our politicians a piece of the take.

      Folks, this is called political corruption, and I won’t drink their Kool-Aide.

  2. $

    They were discussing the “Grand Bargain” on NPR news this morning. Had the feel of a rollout. Governing by crisis.

      1. Adriannzinha

        Govern by crisis? Check.

        I hear many people ask when this or that will collapse or when the big ‘event’ will happen. Frankly, it has struck me as an almost non-stop run of crisis after crisis. Manufactured crisis by and large, but nonetheless that’s par for course.

  3. tongorad

    Obama’s on a mission to be the anti-FDR, and it appears he will be successful. The Grand Bargain is a fait accompli.
    There is no viable opposition to neoliberalism in US politics. The bosses will continue to take all they can.

    1. middle seaman

      The big question is whether the grand betrayal is written on the wall or not. We must believe that it isn’t despite Obama’s ugly record.

      I thought that anti-FDR and anti-safety net is called right wing. Why use a four letters and meaningless word such as neoliberalism?

      1. swendr

        “Neoliberalism” is one of those words that only has meaning for a narrow segment of the population. I imagine, in it’s current incarnation, it was originally tossed around by critical theory types and soon adopted by less scholarly people who understood that it represented most of the market reforms that they despised: e.g. privatization, “free trade”, and deregulation. I don’t think I’ve ever heard it used in other than the pejorative sense. To me it’s jargon, and many people use it to make whatever they’re saying sound important (present company excluded, of course). It’s a sign that the conversation has taken an inward turn toward those who are already up on the language – not a bad thing, but a little alienating to some.

        1. John Mc

          Actually, David Harvey has written a history of the word and its meaning called: A Brief History of Neoliberalism.

          If one wanted a more nuanced understanding (beyond pedantic blog posts), one could google the title as such and probably get a free pdf version to read.

          (pdf) Brief History of Neoliberalism

    2. different clue

      I suspect that Obama, Boehner, Ried and the other Catfood Democrat Senators have pre-arranged this choreography in secret ahead of time to use the Debt Default Cliff to achieve the Grand Bargain. They must all be upset that the TP Republicans don’t seem to understand the plan, or don’t even care.

      If the TPs don’t take their apocalyptic eyes off of Obamacare, and we go into default, the Grand Bargain will look even worse to Grand Default’s millions of fresh nouveax-poor victims. Is it worth enduring the Grand Default in order to burn the political and economic ground enough to perhaps achieve a New Deal 2.0? Is it worth thinking about this in this way?

      The Great Powers of Europe didn’t mean to cause WWI. They didn’t expect it. But they created it. Deep deja vu doo-doo all over again?

  4. vlade

    Don’t understand US political system well enough, so here’s a question:
    Is there some vagueness that would let Obama to issue an executive order that would in effect ignore all this? If so, most of Republicans can be betting on Obama blinking first in this, and them then happily going after him (say trying to impeach – IIRC, impeachment in US requires only House).

    Of course, when one plays game of chicken, one always thinks that the other is rational and will blink first. Which often means no-one blinks. I’m just sooo glad that the cold war is over.

    1. GRP

      There is no executive order route to solve this nor is one needed. If Obama wants he can go the HVPCS route to fund the government. All the discretionary spending will have to wait until Congress approves it, but no catastrophes will result even if that doesn’t happen until after the 2014 electon, when the Democrats may regain the House. If he agrees to any Republican demands, it will be because he wants to, rather than because he has to.

    2. diptherio

      It depends on who you ask:

      The debt-ceiling crisis in 2011 raised the question of what powers Section 4 gives to the President, an issue that remains unsettled.[154] Some, such as legal scholar Garrett Epps, fiscal expert Bruce Bartlett and Treasury Secretary Timothy Geithner, have argued that a debt ceiling may be unconstitutional and therefore void as long as it interferes with the duty of the government to pay interest on outstanding bonds and to make payments owed to pensioners (that is, Social Security recipients).[155][156] Legal analyst Jeffrey Rosen has argued that Section 4 gives the President unilateral authority to raise or ignore the national debt ceiling, and that if challenged the Supreme Court would likely rule in favor of expanded executive power or dismiss the case altogether for lack of standing.[157] Erwin Chemerinsky, professor and dean at University of California, Irvine School of Law, has argued that not even in a “dire financial emergency” could the President raise the debt ceiling as “there is no reasonable way to interpret the Constitution that [allows him to do so]”.[158]

    3. from Mexico

      @ vlade

      Historically speaking, when the executive wants to spend money on something important, like making war or bailing out those who sit atop the banking caste, neither the Constitution nor any other lesser statute seems to hold much sway.

      According to John Kenneth Galbraith,

      The Constitution restricted the right of coinage to the Federal government. It expressly forbade the states to issue paper money. And, a far less convenient inhibition, it also forbade the national government to issue paper money as well. A motion to strike a clause permitting the government “to emit bills on the credit of the United States,” this being the way paper money was then described, was specifically carried by the 1787 Convention. It was to be a lesson on the flexibility of the Constitution, and also of its defenders, where the urgencies of money are involved. The Constitutional ban was informally abrogated by Secretary of the Treasury Gallatin in the 1812-1814 war; under the usual wartime pressures he issued Treasury notes, most of them bearing interest at 5.4 percent but some bearing no interest at all and in denominations small enough, the smallest being $3.00, to pass from hand to hand as currency. These notes were not legal tender for debts. That, perhaps, was the thin thread of constitutionality on which they hung.

      However,the Federal government does have the right to mint coins:

      In response to another recommendation of Hamilton a mint was established in Philadelphia. That its gold and silver coins would be the basic money of the country was widely agreed; the principal difference of opinion, indeed, was over whether the coins should carry the image of the goddess of liberty or of some appropriate contemporary politician.

      The Constitutional prohibition of the issuance of paper money would again be ignored during the Civil War, as Galbraith explains:

      Then during the Civil War all pretense was dropped. There is some evidence that undue association with money cultivates selfrighteousness, political obtuseness and an unattractively pompous manner. If so, Salmon P. Chase, to his deep personal regret Lincoln’s Secretary of the Treasury for he believed he should be President, is useful evidence. After an initial display of reluctance he asked Congress to authorize repeated issues of greenbacks, these again in the absence of any alternative for paying pressing wartime bills. The greenbacks were paper money without cavil. Then, in 1870, as Chief Justice and speaking sternly for a majority of the Court, he held the greenbacks to be unconstitutional, and later still, in 1871, when a different Court reversed this stand, Chase was firmly in dissent.1 The Constitution, nonetheless, was a turning point. Government experiment with paper money, the Gallatin and greenback episodes apart, lost force. American innovative and inflationary instincts were not, however, stilled.

      And of course when it comes to the Federal government’s most important function of all, bailing out alpha-bankers, the law presents no impediment whatsoever:

      Well before 1907, trouble in the big-city banks was an occasion for public action. In the panic year of 1873, the withdrawal of the hitherto wicked greenbacks was halted, and $26 million was reissued to provide reserves and ease tension in New York. In subsequent panics the Treasury deposited government funds to help the big banks withstand runs. In 1907, J. P. Morgan, who is celebrated by all historians for saving the Trust Company of America after declaring that the panic might as well be stopped right there, appealed to Secretary of the Treasury George B. Cortelyou for deposits to save the Trust Company. Resources subscribed for the rescue by other New York bankers, including Morgan’s, were insufficient. Cortelyou was not authorized to deposit public funds with a trust company. This was a detail; $35 million was promptly deposited in the national banks and just as promptly reloaned to the Trust Company of America. It was thus provided with the funds that persuaded its depositors that it was safe.

      The same was true of Hoover, who secretly set up the RFC to throw a suureptitious lifeline to the big NY banks:

      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

    4. different clue

      Obama does not WANT to avoid or prevent the default. It is his credible lever to get the Grand Bargain. He would rather see us go into default then see us raise the debt ceiling withOUT his Grand Bargain. He considers the Grand Bargain almost as important as Obamacare.
      And that is his weakness. He values Obamacare even more than the Grand Default. His brittle self-image is tied up in it. It is his precioussss yesss. . . . So if the TPs keep the focus on attriting Obamacare no matter what, then Obama will sacrifice the Grand Bargain and the debt ceiling both in order to save his precioussss, yessss.

  5. Adriannzinha

    For those alluding to a so-called Grand Bargain (or Betrayal depending on your political sensibilities), that’s exactly what is coming. It will be hailed as the great resolution, but slashing spending is really what this spectacle is and has always really been about. The obamacare angle is just a red herring for public and media consumption.

    1. damian

      Obama is a snake – you can smell it all coming – the grand bargain is all a vast control fraud – SS and Medicare will be sacrificed but it doesn’t make sense to me when people figure it out and Obamacare stayed in place and SS sacrificed – what is effect on the democrats? – the fact that the Koch’s forced this to happen means there was a deal in place with Obama already some time ago

  6. Brooklin Bridge

    Understood why you would not want to stick your neck out, but your bet/hunch/analysis is still very much appreciated.

    My take until now on the kabuki has been a conscious set up (this is the only way) that would have been finalized or orchestrated on October 2 when that walking mop of alcohol met with Obama; the fly on the wall overheard, “the only way we can pull the grand betrayal off is to scare the living day lights out of em, hic-up.” . Obama, “Ok by me, worth a try.”

    I like your version better, it’s more realistic and the outcome is vastly better, even if they will just be at it again in a few months.

    1. Banger

      Somehow, I don’t think that’s the end game for either side. I don’t know why I think that it just doesn’t make sense. Both sides seem to want a confrontation and a deeper fight–why that is I don’t know but it has something to do with a power struggle above their pay-rank, i.e., within the oligarchy.

      1. Lambert Strether

        Speculating freely, but I think it makes sense that if resolution does not come — that is, if the next round of looting from Social Security via a Grand Bargain is not sufficiently attractive to the oligarchs considered collectively, as a class — the pretext will be some honor-based insult, but the reason will be an oligarchal conflict over who controls some huge rental stream in our extractive economy. Oil, coal, water, transport, ag, credit. Somebody says “these marbles are mine” and kicks over the table.

        1. Banger

          The conclusion here seems to be that the Grand Bargain/Betrayal will be the result and that is the most rational choice. I’m only going by feelings here that something is seriously amiss–perhaps because of the failure of the Syria venture which showed me things are out of whack somehow. The oligarchs may want to go to the mattresses here with the American people.

          1. Brooklin Bridge

            Actually Banger, I was saying that I agreed that Yves’ point made more sense,

            “I hate sticking my neck out, but Boehner could not deliver a Grand Bargain last year. Since then, the Republicans have added more demands to their list and the Obama does not appear any more inclined to yield on the things he regards as critical than he was last year. So I don’t see how a Grand Bargain gets done. It had been the planned-for end game: the budget drama was to serve as the justification for goring well-loved New Deal programs. But now the extremists want to go much further and Boehner is in the ugly position to have to defy his own party to keep them from acting like economic terrorists.

            If you read this, it parallels your point that something bigger – further– than the Grand Bargain is going on.

            But while that may be true, it doesn’t obviate that the Boehner’s and Obama’s intent is, or was, but still is if possible, to exploit the occasion for the big golden rings of SS and Medicare, or at least as much of them as they can get. Simply because things have gotten out of hand, even if it is tectonic plates shifting, it will not prevent them from trying if there is any humanly possible way of getting the dastardly deed done.

        2. ambrit

          Mr. Strether;
          Curious it is, but, when I read your point about the factions in control of various rental streams, I immediately thought of the society back dropping the original version of the film “Rollerball.” (A good example, alas, of art anticipating life.)

        3. sue

          “destabilizes” is the operative theme…as Lambert, others, express. Table doesn’t have to be “kicked over”-just “destabilized”..or appear to an unaware American public “kicked over”…

        4. different clue

          What if the TPs themselves kick over the oligarchs’ tables,
          for reasons of spite and pride? Just as the Hitler Nazis slipped their oligarch leash after being installed by the oligarchs, perhaps our TPs might be slipping their leashes.
          They may be out of any oligarch’s control.

          If we go into default with no Grand Catfood Bargain achieved, could it be a sign that the oligarchs are loosing their rooting as the ice-floes they stand upon break up and grind around?

      2. Sanctuary

        I agree with you. For some reason, I’m increasingly not sensing a “grand bargain” as something that results from this. Though, I don’t put much past Obama, I think he may actually feel that he stupidly allowed this tactic to be normalized in 2011 and now feels he has to put that genie back in the bottle. Also, for the sake of his 2nd term, he feels that by publicly breaking the Republicans he reacquires political capital and avoids the lame duck label a bit longer. From a political point of view, nothing the Republicans are offering is a “get” for him to be able to even mildly sell to Democrats. They’re all Republican priorities. He doesn’t even get any revenues. There’s no way that Democrats would be able to survive next year if he agreed to any deals like that. Most of the people who voted for him the 2nd time did so by holding their nose and looking over and seeing something much worse in Romney. But if he is going to just enact the Romney platform anyway, you really couldn’t even use the tired trope next year of “I know we’re not great but the other side is worse.” People would see they still got the “worse” even when voting for the “not great” side, and stay home.

        1. Banger

          Makes sense to me–but the point here is that everything is opaque with this administration–I don’t know anyone who has presented a credible picture of what they are up to.

          1. different clue

            I may be wrong, but I strongly feel that the Grand Bargain was what Obama and Boehner both secretly wanted all along here right from the start, and Frankenstein’s Tea Monster was built to achieve it. But Frankenstein’s Tea Monster
            has broken its chains and is running amok around the laboratory, and Boehner Obama don’t know what to do about it.

  7. thelonegunman

    this is the rethug gameplan: push to default, blame Obama and Dims… Barry will use exec authority to work without consent to honour debts… Rethugs will cry ‘exec overreach!!! We must impeach!!!’ and they will continue their ‘back to the 1990s cause we don’t have any better ideas’ line of thinking…
    if they can’t win or steal elections, they will simply be domestic terrorists… sorry, but any elected official who holds the domestic and world economy hostage to get their demands met is just that…

  8. diptherio

    One good thing that might come from this is convincing more people that our political system needs to be completely re-vamped. The system we’ve inherited is so obviously rife with perverse incentives that only the most deluded of founding-father-worshipers can still believe that it is the best of all possible systems.

    Of course, the system won’t re-jigger itself or allow itself to be re-jiggered, but maybe if we have enough of these kind of cock-ups a critical mass of people will see the light and simply stop going along with the system. From my perspective, exit is the only acceptable response to a political system such as we have now. If the PTB continue to act like narcissistic teenagers, the spell of authority might stop working on enough people so that we can actually begin creating something else.

    First rule of the New Order (suggested): No one who desires power is allowed to attain it.

    1. different clue

      Under this scenario, those who desire power the most will pretend to want power the least, and will trick their way into it.

  9. Mcmike

    Is there any evidence to support the notion that tea party caucus members of congress are actually driven by principle, particularly to the point of self destructive zealotry?

    I mean, thats well and good for the proles perhaps.. But i am more inclined to a madman strategy, than to any sort of genuine ideological motivation. (I.e. See the story about rand pauls open mic).

    When it comes to congress, Never ascribe to ideology what you can attribute to cravenness.

    On a different note: could a selective treaury default be worked, that defaulted only on, say, the debt to social security?…

    Hello, shock doctrine!

    1. ambrit

      Zounds! That is a truly devious and frightening scenario. I for one would not put it past this present crop of “politcos.”

    2. different clue

      Social Security payments could still be paid by incoming Social Security reciepts. If the governators tried diverting those receipts away from Social Security, people on blogs and etc. would describe exactly what they were doing. Could the governators explain such diversion away?

  10. DanInChicago

    Isn’t this what all the TeaPartiers want – to blow up the US Government so that they can realize their survivalist fantasies?

    At it’s heart, if the Tea Party is so vehemently against debt, do they care if there is a default which raises the cost of borrowing? Nevermind whether this is sound thinking….

    1. Mcmike

      Is there any evidence that the “tea party” is actually against debt, in any consistent, coherent, across the board principled sense?

      It seems to me the only thing they are consistently, coherently about is being against other people than themselves.

      1. Banger

        Somehow the words “Tea Party” and “evidence” don’t seem to go together. Who knows what is going on? I’ve followed the extreme right for a long time and talked to people in that movement and the bottom line is this: the main motivation of these people is a reaction to modernism and the idea of cultural relativity–most of these people need a solid and consistent set of moral imperatives to follow. The changes we’ve seen in racial, sexual and religious “tolerance” deeply upsets most of these people. But the main source of irritation is the idea that these people should be required to help or support people and ethnic/racial groups they are deeply hostile to. They believe these “other” people should sink or swim on their own merits–there’s little sense that these are fellow Americans, as far as this demographic is concerned most black people, say are foreigners. They have trouble with illegals who they believe come to this country to take their money and, interestingly, they have respect for Asians, who they perceive as hard workers.

        Because this demographic feels the political establishment is not listening to them they are perpetually in a state of low-intensity rage. A collapse of the federal gov’t outside the military would be a welcome event and they are incapable of understanding that their own lives would be affected. They are so angry that they would rather cut their income in half if they knew their enemies would suffer more.

        1. Mcmike

          I’ve been paying attnetion to the right for a while myself. And there is ample evidence that while they claim to need a steady set of moral imperatives, they actually just want to be told what to think, and to have a group of fellow haters to belong to.

          I agree that they have become unstuck from any sort of emotional and cultural anchors, and thus susceptible to demagoguery. The constant betrayals by their puppet masters only makes thier rage increase.

          But after watching them yo-yo on issues – as the party in power swings on a pedulum – like deficit spending, tail-wagging wars, states rights, judicial activism… eventually self-contradicting just about everything they claim to hold dear as sacred principles… it becomes clear in fact that they have no actual moral stability, and will pretty much say anything.

          As long as we keep government out of their medicare.

          1. James Levy

            I’m going to be crass here, but I think the consistent thread among right-wing Republicans is that if nig&*@s want it or are for it, I’m against it. The fact that most poor people in America are white, and a large chunk of them rural folks from “the heartland” is totally irrelevant. They must suffer so that the coloreds get nothing. If State’s Rights makes that happen, they are for it; the day State’s Rights favored blacks, they’d be against it. That, and a consistent belief that the political ideas and victories of any other group are not unfortunate or misplaced, but illegitimate. Democrats aren’t wrong–they are evil. Today we see Democrats waking up to this hatred and embracing a “back at ya” attitude that is largely new to most people. I think many educated and economically comfortable Democrats want a rational, more conservative alternative to the Democrats to maintain the status quo that has been, up until recently, so good to them. But the Republicans were the first to reject reason and compromise, and I think more and more Democrats are being pulled kicking and screaming to a similar mental place.

            This crisis is real, even if the budget battle is kabuki, because you can only pump up this level of vitriol so often before violence ensues.

            1. Banger

              I think what you say makes a lot of sense. I don’t think it’s only the racism that fuels right-wing rage I think it is the modernist project as a whole that has people who require simplisic rules to live by going insane. It is the whole Western Humanist tradition and, here’s the amazing thing, even basic Christian virtues as expressed in the Gospels and elsewhere that they willing to throw out with the bathwater. Rule by force, violence, intimidation is there forte.

              Those who don’t share the right-wing agenda are just barely interested in political affairs and offer little resistance to a clearly fascist-leaning right-wing largely, because they don’t want to think about it–too unpleasant.

              Perhaps a default will sharpen some minds.

              1. DikaiosLogos

                If modernity were the issue, wouldn’t economics be front and center.? Ayn Rand is profoundly modern, you know? Me thinks racial upset counts much, much more than a reaction. To modernity.

                1. Banger

                  I don’t know–it’s hard to tell. Most people on the right I’ve known over the years aren’t that racist–they are to some extent but I believe most people are at least partly racist and fear the “other” however that is made up. Modernity means not having anything solid to rely on–this is very difficult psychologically particularly for people that have not developed either intellectually or emotionally.

            2. ambrit

              Mr. Levy;
              I would suggest that the violence has already begun, but initiated by the “organs of the State.” The myriad examples of police misconduct and militarily unnecessary violence bespeak a violence as first resort mind set within our State. It is quite possible that the conspiracy nuts are correct in claiming that the State is trying to provoke armed resistance. Then the huge expenditures of manpower and treasure in building the American Police State would be retroactively validated. The fatal flaw with this thinking is that the fomentors of this plot have forgotten, if indeed they ever learned, that the first thing to go out the window when combat starts is the plan.

              1. different clue

                And the counter-State resisters might have all kinds of creative knowledge and uses of weapons. I once read somewhere about how VC fighters in S Vietnam prepared for American helicopters which came over and over to certain places this way: they would have crossbows and fire a crossbow bolt between the rotor blades. That crossbow bolt would be tied to a length of monofilament fishing line. The other end of the monofilament fishing line would be tied to a thicker stronger length of twine. The other end of of twine would be tied to a length of something else etc.etc. and tied to a length of heavy chain last of all. Eventually the turning rotor would wind all that up to the heave chain and the helicopter would drag itself down.

                That could work against the black helicopters here just as well as against the Huey helicopters there.

        2. neo-realist

          They do sound like the pure raw dog Southern Strategy demographic that Nixon and Buchanan targeted over 40 years ago–a chance from their vantage point to deliver a fatal if not knockout blow to the groups, organizations, policies and people they hate.

          Also there is this segment apart from that group–an oligarch faction that wants to totally destroy the New Deal and the capacity for any Great Society type programs to be resurrected (However, I tend to believe that happened as far back as the Reagan administration).

          I do believe, Obama will sell his Grand Betrayal as the stalemate breaker with the Democratic base and a an opportunity for Republicans to save face an come to an agreement.

          1. different clue

            Hopefully the TPs will say that Obama’s Grand Bargain is no subsitute for killing Obama’s Obamacare. Perhaps they will block Obama from simple spite. I hope Boehner really DOESN’T have the votes, just as he pleads for us to understand he doesn’t.

        3. sue

          Banger-you are eloquent in observation-however, it is crucial to comprehend that historically, during 30’s depression era, there was a parallel to “tea party” corporate sponsored phony movement, to distract from Wall Street economic destruction.

          It is also necessary to perceive the only reason for TP sky is falling wailing and moaning over deficits and spending, is similar penchant for distraction from accountability for economic disaster, for corporate “contributors”-masters. You know-those who caused it.

  11. Banger

    At some point a year or two ago I was convinced that we were headed towards a low-intensity civil war. I think this may be the beginning of it. The RP has firmly identified itself as a regional party of people who tend to live in the South, small cities, far suburbs who are mainly white and angry. This anger is stoked every day by a cunning network of propaganda organs with carefully aimed and market tested slogans, false rumors take as fact aimed, not at convincing anyone, but arousing anger and ever more drastic behavior. The tip-off was that implementing the ACA would have catastrophic effects and pave the way for socialism/communism or whatever the fantasy is. Those of us who see the ACA as a noxious pro-industry bill are ignored–we don’t exist at all because the target is a Black Man with a funny name.

    I think I understand now a little of what is going on in terms of timing. This is the time, right now, for the right to directly seize power and call the shots. They have mobilized a large number of highly enthusiastic supporters through their propaganda machine, they are not ever going to increase their numbers the way things are going because their appeal is limited by the very divisive demographics I mentioned. This would be the logical time to strike.

    But what is the motivation? Who exactly benefits? This is what we have to work out. Supporters of this putsch are not going to gain anything, Wall Street is not going to benefit, the national security apparatus will prosper either way, small business will suffer, who gains? My tentative answer is that a certain segment of the billionaires and their minions believe that a radical change in power-relations will give them the whip hand to design whatever society they want–with drastically cut wages and salaries and a move towards the neo-feudal future–meaning the very rich will not longer be even theoretically be bound by the law and can, in fact, BE the law in the areas of life they are able to seize and control. Thus a reluctant worker can, say, be flogged for insubordination, or an attractive female worker can be forces to have sex with executives and so on. From what I know about the ruling elites, captured by Kubrick’s movie Eyes Wide Shut this sort of world is what they crave. This might explain why the business community seems to be sitting on the sidelines during this crisis. On the other hand, as most people say here, that this is a Kabuki show that will lead to a predetermined result of big cuts in Social Security and Medicare–I’m not sure that makes sense–and it just doesn’t feel right for some reason. I think this really is an attempted coup that will radically change the course of history.

    Does anyone else feel this way? Here, the consensus is that there is no difference between the DP and RP and I used to think that as well but have changed my mind because I know how intense the anti-government feeling are in areas outside major metropolitan cities and the two coasts.

    1. Mcmike

      Nothing new about the narrative.

      The notion that Obamacare is the manchurian candidate for the marxists takeover has been replayed a bazillion times. Alternating with the idea that some tinpot dictator halfway around the globe posed an existential threat to our nation.

      Conservativism is a mental illness, that thrives on having its lizard brain tweaked with fear.

      Nothing new about that at all.

      What is new though is that the tactic has indeed reached an apex of exponential escalation, and power of its practicioners grown accordingly.

      It is indeed a billionaire’s power play. But then there’s nothing new about that either.

      Again; hello, shock doctrine.

      1. Banger

        I don’t agree with the conservateivism=mental illness idea. That ignores the long history of conservative intellectual thought that is part of the fabric of the Western intellectual tradition. This brand of rightists are not conservatives, they are a mixture of libertarians, genuine nihilists who simply want to destroy society because they like chaos, religious conservatives who want to bring on the Second Coming (re-read Yeats), and finally the cynical billionaires I’m alluding to. They want a radically new world that resembles some combination of early feudal Europe, the Wild West, and the sort of traditional Mediterranean political arrangements exemplified in the Godfather movies.

        1. Mcmike

          re “conservative intellectual thought.” That train left the station, and has become a laughable oxymoron.

          Perhaps I should have, nevertheless, qualified my statement with “what passes for modern comnservativism, but is in fact merely a fear-and-rage addled regressive mental illness coupled with infantilized arrested emotional development” or somesuch.

          But since they all call themselves “conservatives,” and none of those old-line intellectual conservatives protested the hijacking, the meaning has been changed on the ground.

          Someone notify OED.

          As for “what they want.” Aside the billionaires, I am not sure it is clear wat they actually want, they are simply having a tantrum. Witness: “keep government out of my medicare.”

          This is not a worldview, this is a temper tantrum instigated by the pied pipers of talk radio and fox news.

          1. Banger

            Yes it is so. But this temper tantrum is now carefully and beautifully organized and has become truly dangerous for, perhaps, the first time since the Civil War. As individuals I get along with right-wingers very well–I live in the South after all. Here it is a tribal thing–not anything thought out.

            1. Lambert Strether

              “Temper tantrum.” That’s infantilization, a classic demonization strategy. I prefer to think of Republicans/TPers/Democrats etc. as fully adult moral agents imbued with purposes that I oppose (which goes for the Democrats, too). Since I’ve had that strategy deployed against me, I’m not happy to see others deploy it. How it’s done, in a situation not unlike our own:

              Your purpose, then, plainly stated, is that you will destroy the Government, unless you be allowed to construe and enforce the Constitution as you please, on all points in dispute between you and us. You will rule or ruin in all events.

              1. Mcmike

                While I acknowledge that to generalize about “conservatives” is too broad (as is it inaccurate to ascibe similar motivations to politicians as to their supporters)… [but we are in a short form medium here.]

                In the case of the broad swath of tea partiers, fox news adherents, birthers, rush limbaugh dittoheads, et al, I believe it is in fact entirely correct to diagnose them broadly as arrested in thier emotional/psychological development. A condition exploited by the right wing powers to indeed literally infantilze them.

                This is not some rhetorical tactic on my part, I am merely calling them as I sees them. If I had a magic wand to set this country back on course, I would very literally see what I could do about getting the lot of them on the pyschologist’s couch.

              2. Banger

                Banger “temper tantrum” wasn’t my words but I think it has some validity because there is no underlying philosophy or morality that underlies TP concerns. To be a Christian and a Randian is impossible because the two ethics are direct opposites. You can’t get more anti-Christian than Ayn Rand. That people claim to believe in both means that they are, literally, mad.

                1. Banger

                  Sorry–I don’t know where the “Banger temper tantrum” came from–I’m actually feeling mellow today.

                  1. Lambert Strether

                    “this temper tantrum is now carefully and beautifully.”

                    But it’s about the concept, for reasons stated, not you personally. I would never try to harsh anybody’s mellow!

            2. James Levy

              A real problem is that the South has always had a “might makes right” culture and we have refused to confront and disarm it. The Southern elite after the Civil War and the Bull Connor types during the Civil Rights era had to have been publically humiliated and emasculated because, and I’ll take all the gruff people can dish out, that’s the only language many if not most Southern whites really understand. They get dominance and submission. That’s why Scarlet O’Hara is only happy when she gets raped. It sets her mind at ease. And that’s why they fear and loathe blacks, because their presence as putative equals messes up the order of dominance and submission that is so dear to Southern hearts.

              1. ambrit

                Mr. Levy;
                I would take that generalization of yours about Southern Whites and apply it to literally everyone. To demonize southern white men, not that it isn’t easy to do mind you, distracts from the fact that this phenomenon is encountered nationwide. Anti-Muslim good old boys in Boston, Supremacists of every colour, disdainful elitists everywhere, the list is endless. This kind of cognitive dissonance is a Human trait. The beauty of it all is, the ruling elites can always find an “other” to focus the inchoate rage bubbling away deep down in anyone and everyone who feels the slightest bit helpless against, thus distracting from what they, the elites, are doing.
                We recently had two extremely hard fought and ‘problematic’ elections in the city I inhabit. A Black Democrat versus a White Independent, and both runs seriously flawed. The black man, running for reelection, won on questionable grounds. The local take on this? Black and White, from my personal conversations with people from both camps agree that “Corruption is equal opportunity.”

    2. Gil Smart

      This is a really good question. The Koch brothers are funding this – what is it they want. And it’s got to be the idea of disaster capitalism – they’ll rebuild things in a manner that’s friendliest to their business interests after the smoke clears (assuming it does clear).

      To throw them a bone, the Tea Party right really does believe that government is out of control, that spending is out of control, that government will never pay down (let alone discharge) its debt, and that all this mortgages the future to finance the addictions of the present. That’s part of what they believe, anyway. But that’s not the Koch’s agenda. They’re happy to nurture this sentiment, but only if it helps them. So that’s the key question – not what your Tea Party neighbor wants, but what the people bankrolling the movement want.

      1. Banger

        But what is Koch up to? Remember the brothers are part of a network of similarly minded oligarchs. What are they after?

        1. Synopticist

          This is a fascinating discussion and thread, and I’m enjoying reading it, but unfortunately too busy to respond in the depth I’d like to.

          But in short I’d say “watch the Kochs’.I see the Kochs as representatives of the most powerful oligarchic faction in the US, thanks in large part to their republican manipulation. They seem to be leaning toward a default, from what i an gather, which indicates to me that they see an advantage for them and theirs in the resultant chaos.

          The thing is, these guys will have a PLAN. They’re exceptionally smart, resourceful, well prepeared, ruthless, and they play a looooong game.

        1. Art Eclectic

          What do they want?

          We can only guess, but looking at behaviors and patterns my guess is that they want:
          1. The total anhilation of the “establishment” Republican Party. They want control over the party apparatus and they’ve pretty much got it now.

          2. A constitutional crisis. A reset of the balance of power between Executive and Legislative branches. Which is why I don’t think a “grand bargain” will be reached. Obama isn’t going to give and weaken his office permanently and the Tea Party isn’t going to give and take a deal. Some kind of executive order will have to be issued, leading to a Tea Party eruption.

          3. A Republican in the oval office in 2017 – achieved only by making centrist moderates on both sides miserable via austerity. They’ve lost the youth vote permanantely due to social conservative stances, so their only hope is to drive vulnerable independents and moderates into deep poverty and blame Dem policies and governance for it.

          1. sue

            Obama has already “weakened his (party’s) position permanently”-view coming election cycle. Clintonesque, his are DLC (democratic leadership council) corporate politics-easily seen as such.

            In very nearly every way, he is the antithesis of what he presented voters, America, and the world-international peace prize recipient indeed. Couldn’t be more obvious-simply in viewing whom he places on phony “commissions” to “study” proposed legislation-provide him what he wants in the first place.

            His “professional left” is professionally educated and totally aware-unlike “fundamentalist followers” of the right. These are not conservatives-they are true fundamentalists who intend to destroy democracy.

            When debating these zealots it is telling to question whether or not they intend
            democracy, as their behavior is totalitarian-completely undemocratic.

            Obama full-well intends to destroy FDR “new deal”, as did Bush-Cheney. It is obvious, should he not be able to accomplish, republican administration following his, will. Yet as acknowledged-this appears to aim to devolve further than gilded age.

        2. Linden

          I tend to think that the rubes have gotten away from the oligarchs on this one. The right-wing machine has been pushing its line for at least two generations now, and the cynical people who started it as a way to build their own power now have a bunch of people on their hands who actually grew up believing all their crap is the absolute truth.

      2. NC provos

        It seemed implausible that the Kochs would actually countenance a default by the country they bought fair and square. Anyone who stole that much needs to keep a lot of money in Treasuries, for transaction and precautionary balances as well as diversification. So are there any signs of portfolio adjustments?

        Last month Koch funded the 7.2 billion purchase of Molex at a 40+% premium. That diversified Koch into the auto, consumer electronics and defense industries.

        We need to find out more. We have a volunteer for the mission of seducing Janice Dollman and reporting back on her pillow talk. He is fully prepared for the mission and he has a cyanide pill for the morning after.

    3. anon y'mouse

      in the abusive relationship, the D’s are the Stockholm-syndrome afflicted spouse (when it’s good, it’s good. but when it’s bad, he’s been drinking), the R’s are the rowdy, rebelling children just lashing out at they don’t know what. neither has the sense to just pick up and move out.

      1. Banger

        If, as most of us agree here, both parties are controlled by oligarchs then why would the parties act in the way you describe. I think the consensus here is that the conflict is Kabuki or good cop-bad cop with the end-game being major cuts in safety net spending. My idea is that there has been a major falling out among the elites and we are headed towards a chaotic period until there is a re-alignment. What do you think? Does this make sense?

        1. anon y'mouse

          sorry, not politically astute and have no truck with the higher echelons of society. lifelong ghetto dweller. I just state it as I see it. these are the roles they like to play at this time.

          the flip side of that is, in the times when R’s overcome the childish fit phase, the D’s still get to play the hostage wife role, who was “too indulgent with the children” while the R’s take the role of angry, justice-dealing father. Ward Cleaver come home to set things aright, but with “tough love” to overcome female parental indulgence.

          that’s not deep. it’s obvious. it is the rowdy child growing up to be the abusing father. whether it is an act for -all- involved, I don’t know. there are, like mystery cults it seems, inner and outer rings (perhaps many of these). the public members are and believe one thing, and are fed their own line to keep them rolling along (in BOTH parties). the inner core knows that this is just a show, just to get the number-power of loud, rowdy backers. that their ideology and intentions are entirely different than what is known. that both sides have already agreed on an endpoint and the rest is “making it look good for the rubes”.

          if anything, this shutdown stuff was intended to cause the amount of hysteria it has in order to justify whatever it is that the Owners want done. perhaps the hysteria has not reached some critical size yet. perhaps they are having a problem clearly tying this issue, of fed workers and bills going unpaid, to grannies living on catfood. perhaps THAT is the only thing that is slowing this down. that they can’t clearly say destitute grannies are taking money out of the mouths of defense contractors. they need more savvy advertising execs to spin this in that direction.

          note: I am a clueless former ghetto dweller.

        2. Lambert Strether

          Unless it spins out of control. Just because the two legacy parties are part of a single system doesn’t that plenty of their members don’t hate each other; they do.

        3. sue

          Banger-they are still hiding the spoils (CDS)=paper debt accrued, intending to
          profiteer all they have literally created and foisted off on an unsuspecting American public under FDIC auspices.

          Numbers I have seen involve well over $600 trillion “derivatives”, 95% owned by 6 U.S. investment banks, 80% hidden in “City of London” (Wall Street parallel) secrecy jurisdiction.

          I believe (follow the money) such level of anger-animosity-divide is necessary to distract from reality of what they have done. But we should all remember in these people’s actions, it is win-win-win-win. No single cause-win is intended.

    4. lambert strether

      I Don’t see it. A putsch with a declining social base? Who’s the man on the white horse? Not to say it couldn’t be tried, 20s Germany style but I think they’d get beten like gongs. They don’t control the media, for strarters.

      I think a slow breakup is more likely, Jesus-land style….

      1. Banger

        They don’t control “the” media but they control their media. If their cadre believe everything they hear on Fox and the radio recognize that alternative narratives are pro-Islamic and pro-socialist they’ll act. I don’t think they care if most people don’t agree with them (the extreme right) they are true-believers and are ready to act in whatever way they are directed to act. They truly live in an alternative universe as we could see if we listened to what Cruz and others are saying.

        I actually usually avoid disaster theories. I have tended to make the case that the power-relations are stable in Washington–that a lot of what we see is Kabuki. But in the past few months I’ve changed my mind–I see this political situation in Washington as unstable for the first time since the late sixties. I can’t tell you exactly why, it just feels that way.

        1. Lambert Strether

          Sure, they’ve got FOX. But that’s not enough; it resolves to “A putsch with a declining social base”?

          Enough, if they’re desperate enough, to take a shot. Not enough to win, IMSHO. And if they want their own island, I say give it to them and good riddance.

          1. James Levy

            They don’t want an island–they think all of America is theirs, and that the blacks, Jews, gays, Natives, most Catholics, and all the pointy-headed intellectuals are a bunch of ingrates, usurpers, and polluters of “their” country. These people are quite willing to take the country down, because their mentality reflects, I fear, a Protestant-inflected version of the “dead ender” mindset of the Nazis in 1945. If America dies, well, then it wasn’t up to its God-given mission and deserves to die. I’d say that’s the basic belief system of 20% of our population. And even if we could put down this highly armed, highly motivated, and utterly ruthless (because God is on their side) segment of the population, we’d never get over it. Because this time, you wouldn’t have aristocrats like Robert E. Lee and Joe Johnston with the social standing to order their men to lay down their arms and cut the crap. This time we’ll have to root them out village by village, ranch by ranch, across half the continent.

            1. Banger

              Scary. For the first time in my life I sense this is now a direct possibility. I think the number, btw, is more than 20%, more like 35%.

              The key is they are highly motivated and the rest of the population is confused. A certain percentage of the remaining people, including other ethnic groups, will just gravitate to where power is. We have to remember that there is almost no faith out there in our public institution other than the military–which should clue us into what sort of values Americans hold.

              1. Synopticist

                I was concerned, in the run-upto november 2012, that the elction result would be inconclusive enoough for a low-level civil war type of situation to break out.

                Perhaps if Obama had won the electoral college but not the majority of votes, or if there were a bunch of legal cases over disputed results in different swing states. I’m pretty confident this crisis isn’t anywhere near as bad as that would have been.

                1. Doug Terpstra

                  I saw 2012 as a clear cake-walk setup for O very early on—too crucial for the present end game. All the con candidates were a slate of cartoon villains, 2D cardboard cutouts in a shooting gallery, and the last Con standing was a Mormon fat cat, guaranteed to dispirit the theocrats. The fix reeked, even from nosebleed seats.

              2. Gaianne


                Thank you for opening this line of inquiry. This has been the most important thread in a long time.

                I agree that things are feeling different these days. I have no particular inside-Beltway connections, but that is not the only place that the new mood is showing up. For example the media itself has been going off-message in various (though different) ways–a plain sign of chaos in the Messaging Departments. Even Fox News has occasionally lost its thread. This is new and suggests confusion higher up.

                The fizzled Syrian War is an indicator. In the planning stages for over a decade, the color-revolution stage finally gets the greenlight, but then the whole thing falls apart. For a while all the elites had bought in, but then, following some modest foreign push-back, the deal falls into chaos. A blessing, yes, but it shows that the elites no longer know what to do and are fighting over the next phase of the plan. The plan itself may be falling apart.

                Time is certainly running short. Steve of Virginia keeps posting over at Economic Undertow the chart of recent (last decade) oil-price history, and the ceiling and floor keep converging, and are looking to cross in about a year. That represents game-over for the market in energy: After that, energy will be distributed (By whom? To whom?) in ways that do not depend on markets. Nobody knows what that will be, but certainly the elites are aware of the problem and are in a panic.

                What and who are the elite factions? That is the key question for 21st-century kremlinologists. (A kremlinologist is someone who studies the workings of an opaque government, based on is visible signs and actions; the word harks back to the days of the Soviet Union.) Obviouly bankers (Goldman Sachs) and oil interests (Koch brothers), but as already noted, the instability itself hints at more than two factions. The assassinators of Kennedy were mainly military (air force) and intelligence. Up until now, they plainly sided with the bankers, but has that changed? The neocons were the focus of the push to Syria, but they could have gotten nowhere with out real support. Who was that support?

                I do not know how to get answers to these questions.

                Let me approach this from a different direction: The US has off-shored most of its industry, but still produces food. But the American approach of industrial agriculture requires a functioning market in food to pay for itself and a functioning market in energy to provide necessary inputs. When the second fails, the first will go away. The bankers will become redundant. So will most people. The energy sector is looking toward a command economy based on control of real resources. Command will be mediated through a new scrip or fiat currency that they themselves will produce and control. Unless the bankers can shoehorn themselves into this process they will be gone. The nexus is military (to secure resources) and energy sector (to exploit them). Agriculture becomes attached to these as a service industry. Anybody outside this nexus is expendable.

                The key challenge to this approach is the need to eliminate a lot of people. How is that to be done? What we are seeing in Washington reflects the lack of agreement on that point.

                The bankers know they are about to be cut out of the deal. They are fighting very hard to prevent that. US Default does not matter if they are properly positioned for the next phase. But are they? Seemingly not, not yet.


                PS. I don’t believe the Koch brothers are anti-NSA, mainly because they are very much going to need each other.

                1. sue

                  Here’s how “that is to be done” (elimination of much population)-during total destabilization, the large issue is “ORDER”. Distribution of food and resources is as you and others describe.

                  What people are missing is, when food and energy resources are withheld, looting is standard fare. Stores can only be looted once-they will not be re-supplied. This creates huge opportunities for DISorder. As local militias attempt to establish “order”, they will utilize arms to perpetuate themselves, no matter how benevolent intentions.

                  After certain number of months or years military will be desired to establish form of “order” allowing some form of life for those remaining. Those who have
                  acted militantly will be dealt with in final form. Those remaining will applaud, and fall in line with master desires.

      2. sue

        history, Lambert-Wall Streeters have already “tried it” before-here’s that history:

        “The Plot To Seize The White House”, by Jules Archer, foiled by “the fighting Quaker”, Marine General Smedley Butler, twice decorated Congressional Medal of Honor-this during 30’s depression era when bankers plotted to overthrow FDR. Fortunately, Butler’s integrity was unassailable, unlike Bradley Manning-Snowden propaganda rolled out today. At that, Butler was nearly discredited, but for high ranking officials and less controlled media. Big fear factors in those days were communists and fascists-worked clear into 80’s.

        One of those “wins” involved is fear factor control of compliant populace=terrorism. Meanwhile, lies associated with 911 are as obvious as “lone gunman” JFK propaganda.

    5. TimR

      If I had to speculate along those lines (which I’m not qualified to), maybe it would look something like this: one oligarchical faction is the group involved with the JFK assassination, and has been pulling major levers of executive power ever since- taking down Nixon, limiting Carter to one term, working behind the scenes during Reagan, etc. etc. Whether directly in power, or secretly involved in other administrations, always working to have leverage and often having full control. (See Russ Baker, for one, for specifics –

      Then, you have the Kochs/ Peter Thiel / libertarian / “Underground Reich” (term from Dave Emory, faction. This group is (perhaps, again from Dave Emory) behind the Snowden/Greenwald affair, working to destabilize the Obama administration (and US power – see fallout to tech companies, US reputation abroad, etc.) Emory speculates also a connection to BND, German intel. Obama may be either working with, or hemmed in by, the first faction. The Koch/”Underground Reich” faction may be working on multiple fronts (Greenwald, Tea Party, Republicans) to pull off this coup you intuit. But this is just my best guess if I had to come up with some answer to your question.

      1. sue

        During 50’s it was called “John Birch Society”=fomented by Koch Bros. progenitor. Eisenhower felt it necessary to fire WWII general-member of John Birch Society, with whom he had fought WWII. Then Eisenhower warned of “military industrial congressional complex”. “Congressional” was eliminated from context.


    6. different clue

      I feel some rightness in what you are saying. The TPs are not “your father’s Republicans”. They are focused on Obamacare in part because it is Obama’s achievment. They aren’t going to be diverted by any Grand Bargain. They want to take down Obama’s Obamacare.

      Boehner can’t be happy with his TPs. ” Nice doggy, niiiice doggy . . . Down boy, Down! Stay back! Get away from me!”

    7. LucyLulu

      Banger wrote: “Does anyone else feel this way? Here, the consensus is that there is no difference between the DP and RP and I used to think that as well but have changed my mind because I know how intense the anti-government feeling are in areas outside major metropolitan cities and the two coasts.”

      I also live in the South and know people who belong to the TP, have had extended political “discussions” with them, some even being my friends. I couldn’t agree more, and have posted the same earlier. This time there is a very destructive intent to the process, more extreme than in the past. They really are willing to default on the debt and keep the government closed. They see it as being progress. Government is evil, trying to steal what they’ve worked so hard to get, to give away to the lazy, corrupt, and undeserving. Obama is “the spawn of demon seed”, an actual quote. He was recruited by the Rothschilds, the Trilateral Commission, part of the New World Order, Islamic Caliphate, take your pick. For a secret Muslim jihadist, Obama has sure killed a lot of his compatriates. Logic isn’t required.

      What does the TP want? This is a soft coup. They want control. Compromise is a failure. The specifics are less relevant, its fascist control they want, to the extent control is possible in an anarchy. Initially the demand was the repeal of the ACA. Then it was a one year delay. Then it was their number on the budget, which was agreed to. Irresponsible spending? The shutdown has increased spending, and they granted federal workers additional paid vacation, counter to their beliefs re: government workers w/extravagant benefits. So they changed to piece meal government, the ability to choose the government to be implemented. The EPA? Fuhgeddabutit. If the TP prevails, one can guarantee that “lesser of two evilism” won’t be seen in the same light.

      A snippet of the mentality, from first post on sticky threat at Denninger’s Ticker forum:

      Complaining about illegal immigration is a complete waste of your time since any associated deleterious effects are symptoms of an out-of-control Ponzi-state, not a cause. (They’re simply a tool; if it were not them, another would be found, or created.) Upon amnesty, illegality is no longer an issue, and they’ll all be 100% bona-fide Americans with every bit as much granted entitlement to suckle the welfare tit as your average indigenous Octomom and double-dipping public pensioner leech****.

      The majority of House Republicans secretly agree this is nuts, but are willing to present a united front. Some are afraid of being primaried. Turnouts for primaries are not representative, skewed towards those with strong opinions. Business doesn’t feel much threatened by government shutdown. Threat of default is very different indeed but isn’t being taken seriously, at least in this country. Did anybody else see LaGarde speak at GWU yesterday? She says global reaction is less sanguine, perception of US legitimacy is being undermined.

      I no longer believe the Grand Betrayal will be deemed acceptable, nor even offered prior to CR and raising of debt ceiling. Obama, rightly so IMO, has decided that if he gives in, the remainder of his presidency will be more of the same, gridlock outside meeting demands associated with crises. Standing his ground is Obama’s only hope for a semi-functional government. I’m not sure the TP has yet entertained the possibility they might not prevail. How this turns out? Ideally the Republican Party will do the required housecleaning. As Yves predicted, it may be a wild ride indeed.

      1. Banger

        Really like your comment—very well put.

        This is not merely a U.S. issue–the implications of what are going on here are huge and the forces at work are global and beyond the usual political games.

    8. sue

      Banger-again, you are accurate-especially when considering history-this from 30’s depression era;

      “The Plot To Seize The White House”, by Jules Archer:

      foiled by twice Congressional Medal of Honor recipient General Smedley Butler;
      McArthur was Wall Street’s man-rode down on veterans protesting in DC..

  12. clarence swinney

    The Republicans know Affordable Health Care is going to be success
    Therefore, they want it delayed until after the mid-term election.
    They are mainly responsible for out financial disaster of Debt.
    Clinton left Bush a Surplus and CBO said had Bush followed Clinton policies
    we would have had a $10,000 Billion surplus in 2010. We would have paid off the
    $5800B Debt. Clinton left Bush an $1800B budget which could have been less than $2500B
    not the Bush $3500B. Two dumb unneeded wars and huge tax cuts for the richest of the rich.
    The Tea Party Republicans must kicked out of our government before they do more damage
    to enrich their backer, David Koch.

    1. Banger

      The key to understanding this political moment is to focus on power-struggles–they are a constant in human history and this one is now different. What is missing is a relatively free press that would actually report on the real power struggles in Washington. I say this as someone who has observed Washington close up and noticed that the real story is rarely told unless you read between the lines.

      I see here a struggle of not two but many competing factions that have paralyzed Washington. I think we are entering a period of chaos. I really have to say I don’t understand what is going on–I have some vague ideas but it seems like the situation is very confusing.

      1. GDC707

        Indeed. So let’s game this out. If we go with the ‘Titanic Struggle Among Oligarchic Forces” scenario, who are the players? It is vital to know this. No secret that the main puppeteers on the right are the Kochs who control massive interests in Energy, Chemicals and Paper products. A smaller stake in electronics. A reasonable assumption is that at least some elements within the vast Oil and Gas sectors are sympathetic to the Koch cause, largely because of their coinciding opposition to regulations in general and environmental ones in particular. Regionally, their base of power is concentrated in the south, midwest and a few enclaves in the West.
        Now, in supposed opposition, the apparent foe would have to be the FIRE sector (Finance, Insurance, Real Estate.) These, as we know all too sadly are allies of the President and demonstrated that most vividly in their recent visit to the White House. I have noticed that the one area of politics that I tend to sympathize with right wingers is their strong dislike of the TOO BIG BANKS. Trotting out Lloyd Blankfein and Jamie Dimon to argue the Administration’s case does nothing but feed the flames of right wing hatred, IMO.

        The questions we need to ponder are 1) who gets hurt the most by a US govt default? It is evident that Treasury bills are the absolute Mother’s Milk of the Banks and Wall Street. Their direct interest in this crisis is crystal clear. But we are talking about credit and as I understand it there is no business in America and most of the world, no matter what sector, that is not hugely dependent on US credit in the form of various promissory notes issued by the US Treasury. And what about all those forms of corporate welfare that we have all been howling about for so long? Many large corporations are drop dead dependent on this largesse. If the Treasury goes belly up how many of these co’s will collapse? And on what side of the “Oligarchy War” do they fall into?
        2) How many of these various segments have actually unsheathed the sword and are engaged in the behind the scenes battle? I’m with Lambert in that the key players probably represent a small % of elite America. But that doesn’t mean that the remaining few can’t effect cataclysmic consequences. The analogy of the Civil War is relevant here. Very, very few people on either side anticipated or advocated the cataclysm of that war. Indeed, it was really only a tiny but fanatical minority- the slaveholders, who were ready to endure whatever it took to maintain the slavocracy, including war. The players on the right today include a rogue’s gallery of Jesus nuts, Gold bugs, Exceptionalistas, State’s Righters, Gun Wankers, Free Marketeers, Limbaugh Lickers and good old fashioned hippie hating Rednecks, – and all these hunchbacks are conversant in the language of Apocalypse. 3) What power does the President have to allocate the economic pain? Can the Executive determine who gets what remains of the pie post default? Does he have a club to punish those states/regions/industries/companies that plunge the nation over the cliff? On this point I have no clue and would welcome any informed comment.

        1. Lambert Strether

          And the Kochs, IIRC, recently purchased the governments of OH and WI.

          Interestingly to consider the oligarchical infighgting as Big Energy (Kochs) vs. Big Money (FIRE sector) vs. Big Data (Silicon Valley), and I suppose we might add Big Weapons, for Lockheed et al, and the arc of military bases across the South, and Big Media. All the Mr. Bigs have gone to the mattresses!

          Perhaps these systems have been in a self-sustaining mutual cycle of exloitation of the rest of us for some time. For whatever reason, the agreements have broken down, and now there are turf wars. Where’s Michael?

          1. Banger

            It would be nice to maintain a list and then connect them up. I would add to the usual suspects the national security bureaucrats (people often miss the fact that most of this is now in the hands of private contractors), and organized crime which according to Misha Glenny makes up 15-20% of world GDP and, of course, the international community that has an increasingly large contingent of lobbyists in Washington. We could go on and on, in fact.

            The issue here is that for some reason the balance seems to have broken down–I have no clue why.

            1. Lambert Strether

              Me neither. Something is scarce that is no longer scarce. Insurance given climate change? Something huge, trillions of dollars huge that somebody at “the commanding heights” would see, say, 10 or 20 years from now… but affecting values presently? Just not sure. I would have liked to have been a fly on the wall at Davos or Aspen or that Bilderburger confab….

          2. GDC707

            I went w/ Big Energy vs. Big Money because it is those 2 sectors that have been quite public about their alliances. Kochs behind Cruz et. al. (The NY Times article details their plans since the election.)

            And of course when Goldman Sachs is lunching at the White House and then making statements in the Rose Garden warning of dire consequences if the ceiling is not raised, well it’s easy to see how they line up on the issue.

            Defense industries clearly would be FOR raising the ceiling. Their contracts are in the past and they expect to be paid. They have made a lot of plans assuming that money is going to be there. These are big whales with a lot of dependent moving parts-supply chains, subcontractors to pay, etc. You don’t just stop on a dime, not without a lot of disruption. Plus, they tend to be engineering type conservatives. Most don’t give a fig about deficit ideology. Especially as deficit spending benefits them.

            I guess my question is, do the Kochs and their compatriots consider themselves immune to the fallout from not raising the debt ceiling? Is the chemical industry somehow innoculated against govt debt issue? Is paper? Is coal? I don’t know. But if they are vulnerable to debt ceiling disruption, could a hardball playing Executive maximize their pain?

            Another thing to consider is that Big Oil, Coal, Nat Gas, the refiners, frackers utilities etc. are feeling rather threatened lately. Climate activism and more important the evolving maturation of renewable sources is, justified or not, throwing a scare into them. I come from oil patch country and word is that there is a lot of negativity toward solar anything- electric cars, hybrids, rooftop solar electricity generation. Utilities are starting to feel the bite and are lobbying legislatures to remove requirements that rooftops solar be compensated for the juice they feed back into the grid. I can’t say that this a major factor in their actions vis a vis the debt ceiling, but it may be one more thing feeding into their jingoistic paranoia. You know, losing control . .

            I understand that this may all be Kabuki and the whole exercise is just the latest ploy to nab the greasy pigs of Social Security and Medicare. But you never know . . .

            1. GDC707

              Oh, and furthermore, the Big Oil vs. Big Finance (Money) matchup has been the operational play for Presidential elections at least since Elder Bush (Old time Texas oil man) then Clinton (Rubin-Summers) then Lil’ Shrub (new time Texas oiler) and finally Obama who drove the getaway car for every bankster in the Northern Hemisphere and parked them at his White House. So there’s that, too.

                1. Doug Terpstra

                  Silly me. I thought big oil and big money were inseperable, like oil and war and finance. But what do I know?

                  1. GDC707

                    Doug, I’m not saying that Oil and Finance are mortal enemies or at each other’s throats 100% of the time. But politics is often a battle between economic sectors and the interests of Big Energy and Finance do not usually dovetail. Each may view Presidential elections as “their turn” to put “their” puppet on stage to pay close attention to “their” problems and required favors.

                    Plus, having been forced to hang around Oil types I can say their conservatism is pretty rough edged and more given to Tea Party type paranoias than I imagine a New York style big financier would be.

                    So, divergent interests and styles – Koch style bomb throwing vs. kleptocratic, stability and status quo seeking financial elites is how I suspect this behind the scenes, internecine battle is playing out.

          3. sue

            “turf wars”-

            Close family defense contractor- insider informed us 2001-bushcheney defined absolutely no “research and development” contracts to states with democratic governors, in those states who voted against them.

            This led to Boeing moving “administration” to Chicago, from Seattle.

    2. different clue

      Obama and his Catfood Democrats are equally responsible for our debt. He and they destroyed chance after chance to let the Bush Tax Cuts die a natural sunset death.

      He conspired with the Republicans to engineer faux crisis after faux crisis on purpose in order to apply Shock Doctrine pain to get his Grand Bargain. He conspired with the Republicans and the Catfood Democrats ON PURPOSE to make the Bush Tax Cuts permanent ON PURPOSE in order to starve the government of revenue in order to set the stage for engineered crisis after engineered crisis. This is Obama’s method. ON PURPOSE. Obama’s other achievement besides Obamacare is making the Bush Tax Cuts permanent ON PURPOSE.

      1. Doug Terpstra

        And still too few see the thru the emperor’s transparent cloak. Time after time after time Obama demonstrates an uncanny facility for fooling most of the people most of the time, a consummate Machiavelli. What we are witnessing playing out now, brinksmanship on the global stage to end the last of the New Deal, is the reason Obama’s second term was preordained.

      2. neo-realist

        I don’t consider myself an Obama apologist, but as far as I know, he didn’t make the Bush tax cuts permanent. I do recall that in the latter part of 2009 or 2010, he extended them to cut a deal to extend unemployment benefits and or COBRA. Other than that, his long game is helping SS and medicare circle the drain in order to get his “rewards” at the end of his presidency.

        1. different clue

          The Bushcuts had been passed with natural sunset dates. They kept getting extended with sunset dates further out. The last time this was set to happen, it was branded with the scary name “fiscal cliff”. As I vaguely remember, the bill passed after that included making almost all the Bushcuts permanent with no sunset, and a “sequester” if a more formal budget could not be passed. Obama signed this bill. I think he did it because it made the Bushcuts permanet unless repealed. He did it to keep taxes coming into government reduced to the Bushcut level in order to precipitate more crises to have more chances to destroy SS/Medicare.
          If Obama and the Catfood Democrats had wanted the Bushcuts to sunset and our taxes to go back to Clinton rates, he and they could simply have refused to act on any budget bill till after the Bushcut Sunset had been reached and triggered.

  13. Dan Kervick

    I don’t see how this ongoing political process between ends up anywhere good. At worst, we get a draconian government payment crisis that leads to a sharp and sudden loss of aggregate demand along with a certain amount of market panic and loss of public and global confidence. At best we get a continuation of the ongoing stagnation with the sequester beaked in permanently and grand bargaineering of additional cuts.

  14. Ep3

    To everyone, it may look like a plan hasn’t been developed. But I don’t believe these persons are that slow or limited in options as we think. They have staffers that their whole job is to plan out events ahead of when they happen. They are not trying to lay out the pieces of a debt plan; they are trying to lay out the pieces of a propaganda plan. The plan has been decided. Now they need to figure out how to make it happen.
    Also, in regards to the great betrayal, I was trying to do some basic math in head to figure out the savings from making cuts to our beloved programs. What I am thinking is that any cuts to SS are actually double what the number is. And the key is the effect on the trust fund. For example, say benefits are cut 1%. So for current beneficiaries, they get 1%. But that also means that the funds that are owed back from the trust fund are cut 1% as well. Since future retirees will get 1% less, so then that the trust fund can shrink one percent. Actually, a benefit cut would be a triple savings; 1% from current and future retirees, and the trust fund. But my problem is that none of this is mentioned anywhere. Maybe I am dumb. Maybe this simple math is assumed to be part of the savings. But to me, that one percent cut from the trust fund is monies stolen by govt mismanagement. The trust fund is supposed to be to pay future retirees when the shortfall occurs. But if they make benefit cuts, which cut back the amount the trust fund is supposed to repay, that is stealing and lying about the principles that the trust fund was created for. If the trust fund is to only pay SS, then the only way to properly handle the trust fund is to NOT make cuts to what it is to repay. If the fund is unable to fully repay its current benefits then other methods need to be addressed to make up the shortfall. But to cut the amount of the trust fund, that is stealing and lying. The trust fund is to pay SS benefits. Not to pay for oil wars and wall street bailouts.

  15. curlydan

    I agree with your conclusion. The market will be the mover here. Once those treasury prices start dropping, they’ll get something done. If Obama blinks before that, the middle class moves from the frying pan into the fire.

  16. Casteelk

    The check is finally sitting at the dinner table. After passing the check back and forth like a scene from the “Odd Couple”, the owner finally comes out requiring someone to pay the bill. Everyone at the table stares at the owner waiting for someone else to pick it up. Eventually they all get kicked out and not allowed to come back.

  17. Deloss Brown

    The Times has a wonderful investigative article about how this situation came about:

    And Paul Krugman was very cogent about why they’re doing this in his blog of October 2, “Health Care Panic Again”:

    And let’s be clear: the health reform fight has always been about more than health reform. Liberals have long viewed health reform as the opening wedge, a sort of proof of concept, in a campaign to strengthen the US safety net and reduce income inequality; that was basically what I was urging in Conscience of a Liberal, which gave its title to this blog.

    Conversely, the right has long opposed health reform for exactly the same reason: it might, in the public’s mind, legitimate further government intervention to increase economic security.

    1. different clue

      If liberals really believed that Obamacare was designed to open the wedge for Free Choice Medicare or for Single Payer, then those liberals are stupid. Those liberals are quite the brill-yunt inDUHlectuals.

      Obamacare wasn’t designed to open the wedge. Obamacare was designed to poison the chalice for decades to come.

  18. Kim Kaufman

    Heard somewhere on the radio this morning (not NPR) that Lew was on a Sunday yakker saying Obama would not use the 14th Amendment. As a mouthpiece, I doubt if he would say this if Obama was going to change his mind in a few days. Is Obama afraid of impeachment over it or does he really likes this stalemate as the only way to get his Grand Betrayal?

    1. Dan Kervick

      I think Obama has decided to play chicken on the debt ceiling, and is convinced he is going to win. The message from the WH the past few weeks has been along the lines of: “There is no escape hatch if Congress fails to raise the debt ceiling: no trillion dollar coins, no 14th amendment option, no special high coupon bond sales, no payment prioritization options – nothing. If Congress doesn’t raise the debt ceiling, the government defaults – period.”

      They are pounding that message, and are counting on the markets and the elite media to run with it and put the squeeze on the House. Obama isn’t about to hand the Tea Party the bullets for the impeachment gun by engaging in some grandiose display of unilateral executive action.

      1. Fiver

        While Obama has certainly earned an impeachment for myriad breaches of law and Constitution in both the domestic and foreign policy realms, I see no grounds for such action given the US has been in a State of Emergency since immediately post-9/11, and the far-right members of the House have explicitly stated their intention is to obstruct the normal, legitimate operations of Government.

        The real question is why Obama rules out potential options at the outset, thus cuffing his own hands? Surely it cannot be fear of setting a precedent, given this Admin’s willingness to claim the right to spy on, disrupt, kidnap or kill anyone in the world, including Americans at home, it deems deserving, in secret,and with no possible legal recourse through the Courts.

        Obama can end the game tomorrow, if he chooses. What is the “why?” behind his abject refusal to at any point take these extreme right clowns on?

        1. different clue

          Because Obama would rather get a default than not get his Grand Bargain. And if the TPs keep saying “keep your Grand Bargain. Give up your Obamacare”, then Obama will instruct whatever relevant servants and authorities to declare us in default. The reason he will not use any of the Presidential escape hatches that have been written about is because he does not want to prevent default. He wants to force the choice of default or Grand Bargain, and if he can’t have Grand Bargain, then he would rather have default.

          And if the TPs can’t shut down Obamacare, then they would rather have default. I know the choreographers wrote out all the propaganda and shock doctrine moves. Can they get the TPs to stop stomping on the script and kicking their fellow dancers?

          1. Fiver

            The banks claim even a technical ‘default’ would have an impact greater than the meltdown of ’08. I suspect that’s true in the sense that banks can make it true if they wish – but the damage to the US dollar as reserve currency would, I believe be terminal, perhaps not immediately, but final nonetheless.

        2. Dan Kervick

          Because if he indicates that he is planning to use one of the debt ceiling escape hatches, the Republicans will have no political incentive to raise the debt ceiling, and the dysfunction will continue. They can satisfy their base by refusing to raise the limit, and then spend the next several months yelling:

          “The dictator Obama is now coining his own money!”


          “The dictator Obama is unilaterally issuing debt in outright defiance of the law!”


          “The crony dictator Obama is not issuing lifetime perpetuity interest payments to his pals at Goldman Sachs and in the Chinese government!”

          1. Fiver


            They can say all these idiotic things, but nobody will be listening the moment Obama pulls the plug on their juvenile antics. Obama has always had the power – he’s just refused to use it domestically/politically since sworn in back in 2009.

            1. Dan Kervick

              I disagree. If Obama mints the coin or plays the 14th amendment card, there will be a massive political upheaval – full on Watergate blow-up, but with a lighting-quick ignition this time.

              1. Fiver

                OK, then – but I’d suggest there’s a reason why these obstructionists have been so successful, and it perfectly matches the mental image of Obama backing up, backing up, all the way into the sea.

            2. LucyLulu

              I agree that Obama would like a Grand Bargain, and that Obamacare is non-negotiable in Obama’s eyes. I disagree that he wants a default, or thinks he needs one to get his grand bargain. I don’t think he will use any special powers to prevent a default however. I think he honestly believes that the 14th Amendment doesn’t grant him authority, a reasonable reading, and that the platinum coin would cause a crisis of confidence in world markets. Obama is not a leader that pushes his weight around or makes bold decisive moves. He believes that only Congress can raise the debt ceiling, which is basically true (see my post above).

              He probably is counting on reasonable Republicans to save the day. So am I. Senate Republicans aren’t a problem. Nobody there is talking about default not being a problem, that avoiding it, and any consequences other than immediate fiscal discipline, will only require making small interest payments.

              The only explanation that makes sense it that members of the Council on Aging have drugged the water fountains in the House Republican Caucus. Little old ladies can be wicked bad when crossed.

              1. different clue

                I suspect you are right to an extent. I am not sure that Obama really “wants” a default. But I still think he would rather have a default than to give up his Grand Bargain. His Grand Bargain is just as important to him as stopping Obamacare is to the TPs. What he and the Catfood Democrats want is for their Republican class allies to pre-negotiate the Grand Bargain in secret while giving into a “clean” re-open government and raise debt-ceiling in public. The Catfood Obamamcrats certainly want the public appearance maintained that they stood up to TP blackmail. A secret agreement they can all trust eachother to keep on the Grand Bargain would give the Obamacrats that cover to re-enact in public the negotiations they have already held in secret.
                Will the TPs allow that to happen?

  19. Brooklin Bridge

    It’s possible the Boehner is scaring himself as much as anyone else. If the pictures we see are any indication, he looks ready to literally keel over from intoxication and this would put him at a distinct disadvantage in trying to get just that combination of things that would advance his career without ending it. I realize that most of his decisions are made by others at this point; it’s amazing Boehner can stand, but regardless of his handlers, he is still subject to making mistakes that add up and being almost in a coma simply can’t help.

  20. Fiver

    Good piece and good comments.

    Barry Ritholtz estimates a 1-month shutdown would take the “Market” down 20%-30%. And as Yves indicates, any real pressure re the “debt ceiling crisis” can be assumed to have an effect in that range as the clock ticks down, and so long as time does not expire, to cap the downside.

    That suggests to me an entirely different dynamic is at work here than the one Yves lays out here, or the scenarios I put out in comments on a previous piece looking at the situation as a strictly political calculation – which for me generated no outcome that doesn’t see Republicans finally jettison the far-right well before the next general election, if not prior to the mid-terms. That possibility runs this way:

    Bernanke and the Fed are quite obviously boxed-in as to QE. They have blown bubbles across the asset board, they know it, yet they also know if they stop, they get a substantial correction in the present that proves they have been completely wrong for the last 5 years, on top of the previous 15 years. Note that QE was dominating the financial press, with more than usual coverage in broader media. The choice for new Fed Chair was part of that discussion.

    Now I, for one, have maintained for some time that the Fed, Congress, and Admin (with a similar dynamic in Europe) had created a “Market” in which political or monetary decision points are laid out months in advance. These have become the “Market’s” (meaning the biggest insider players)throttle, to either goose or toggle back as desired.
    For instance, Bernanke’s “surprise” taper, and un-taper announcements, the prior “debt ceiling crisis” and “shutdown crisis” and of course, elections. Once these political tactics, and Fed (or ECB)policy choices are known, usually with dates fixed by law or by deliberate and sustained “leakage” to media, the biggest players can in effect manage exactly the sort of economy and “markets” activity we’ve seen.

    Wall Street wants infinite QE, which is impossible, period. Anyone interested in either a return to “fundamentals” or real structural reforms wants QE eliminated, but this is deemed “impossible” by Wall Street. The only way to satisfy Wall Street, and yet “save the appearances” as the Greeks of old told it, is for controlled corrections of enough magnitude to convince everyone the “froth” has been drawn down, and therefore QE, or some other instrument for piping big bucks to the banks and their network of speculators is legitimate and necessary.

    How many more “shutdowns” or “debt ceilings” or major Fed policy statements are there between now and 2014 and 2016? There would be none had Obama used his authority the first time around, or this time out. The fact he hasn’t, without spelling out any credible rationale for not taking that route, speaks volumes. Only by allowing himself to be taken hostage is Obama a hostage, and the only way any of this extreme right nonsense works is if Obama takes himself hostage.

    An enormous amount of money has been made by the already-wealthy from Fed policy since 2009, and was especially visible after fiscal stimulus was exhausted. This policy can only occur if the Congress and Admin are incapable of enacting real economic programs. The far-right’s mission is not to “kill entitlements” though they’d welcome that, no, their mission is to obstruct – and if Obama again allows it, if we get that “credible” correction, followed by a new round of QE and another major rally higher, then we can expect the same play one more time at least.

    So, on pure politics, Obama and the Dems could have and should have destroyed the far-right much earlier in the game, and they still could if only he would fight – but there are reasons to suspect he may not fight, but rather just play the role ‘hostage’ with his chums in Congress (both sides)until the results in 2014 force either Reps or Obama to cashier the “refusenik” far-right for good, as one thing is certain in my view, and that is that the extreme right’s time in the sun is over by the next Presidential election, and very likely post-2014.

    1. Banger

      I love your comment because it gives a sense of how complex this political situation is. Most people don’t grasp this. There are plots and plots within those plots and conspiracies everywhere and they are increasing not decreasing. The outlines of the crisis are sort-of covered in the press but the underlying dynamics are not. We are, frankly, left to speculation–but it is necessary speculation. Someone must ask the questions we’ve been asking and try to find something that makes a bit of sense here.

      We are in a new era, I believe. I sort-of understood the old one–this new one is stunningly complicated and, as I’ve said, we seem to be headed for chaos unless strong hands get a hold of the tiller and, as you said, Obama doesn’t seem made of the right stuff.

      1. Lambert Strether

        The stronger hands will get hold of the tiller no matter what — assuming, for the sake of the argument, that there is a tiller, and it’s connected to the rudder — but as to which hands those are, I can’t say. If the factional splits go all the way up through the oligarchy, we might not even see the hands.

        1. Banger

          Ain’t life fascinating? What a world we live in! I think it can only be truly grasped through the power of imagination because it’s hard to make any sense of it any other way.

      2. Fiver

        Thanks Banger. I think the sense that we no longer understand the world is widespread and growing every day, and it’s not just the rate of technical change – it’s the collapse of morals and ethics unseen since the rise of the Nazis, and at a time when the world cannot waste so much as a minute not addressing crucial features of sustainability. The alienation resulting is profound.

    2. Doug Terpstra

      “The only way…this works is if Obama takes himself hostage.”

      Yup, just like the black sherrif in Blazing Saddles, putting a gun to his own head: “Nobody move or the ni___er gets it!”

      Well played, Obama, well played. Gets the crackers every time.

      1. LucyLulu

        The only way it works is if Obama pays a ransom. So far he has refused to do anything until the budget and debt issues are resolved (for 6 weeks, long enough to THEN offer the grand bargain, which may not be what the right wants from him). It was him standing his ground which caught the right by surprise, an outcome they hadn’t considered.

        When stocks plummet 30% or default appears certain, somebody will blink. The rich will make sure of that.

        A question for those who are more financially savvy. Is it true that if payments could be prioritized (Geithner and Lew have both said no, due to IT issues, if in doubt, go to, then the US would still be deemed to be in selective default? And would that mean all debt would be immediately due, along with interest, and an automatic spike in interest rates?

        Excuse my ignorance, this would be my first sovereign default &#244&#244

    3. sue

      “How many more “shutdowns” or “debt ceilings” or major Fed policy statements are there between now and 2014 and 2016? There would be none had Obama used his authority the first time around, or this time out. The fact he hasn’t, without spelling out any credible rationale for not taking that route, speaks volumes. Only by allowing himself to be taken hostage is Obama a hostage, and the only way any of this extreme right nonsense works is if Obama takes himself hostage.”


      superior comprehension

  21. TC

    Article II, Section 3 of the U.S. Constitution (“[The President] shall take care that the laws be faithfully executed”), meet the 14th amendment (“The validity of the public debt of the United States, authorized by law, … shall not be questioned”).

    By this meeting the debt ceiling is a non-issue. Jack Lew and Gene Sperling should be hauled before Congress and made to recant their recent claims the President will not invoke the 14th amendment, and be made aware of the risk they face impeachment if they don’t change their tune, thus sending a certain, forceful message to the President, as well as burying the Tea Party.

    1. LucyLulu

      And if he does invoke the 14th Amendment, the Republicans will likely impeach him.

      The next section reads:

      “The Congress shall have power to enforce, by appropriate legislation, the provisions of this article.”

      Congress, not the President.

      31 U.S.C. 3101(b), legislation passed by Congress in 1996, specifies the use of the Congressional Budget Process to raise the debt ceiling.

      A more compelling legal argument than the use of the 14th Amendment, IMO:

      1. Hugh

        The operative word is “enforce” not countermand or rescind. Any new legislation on this subject would have to pass through a Senate controlled by the Democrats and a Presidential veto. The House could always impeach, but the trial would take place in the Senate which, again, is controlled by the Democratic party.

        1. Fiver

          Exactly. We have to remember how the Republicans under Bush treated the Democrats. They violated the spirit, rules and wider laws more times than anyone can count, and did not offer Dems anything but the boot for 8 years. If the argument made was that Obama shouldn’t use this power because Republicans might in future do the same is meaningless, as we can already be sure they will. Obams does not balk at something so grotesque as the Tuesday Kill List, yet refuses to throw Republicans under the bus given several opportunities? Too much for me.

        2. LucyLulu

          When it says Congress has the power to enforce the “full faith”, it doesn’t mention the President having any such power. The president only has powers given him by the Constitution if I’m not mistaken, which is to sign the checks written by Congress, metaphorically speaking. Congress has the (sole) authority to deposit funds in the checking account. Separation of powers thing. It was further clarified in legislation that the debt could not exceed $14.3T (as of 2010, legislation is amended to reflect change in amount with each debt ceiling increase) subject to periodic changes as provided for in Congressional Budget Process described in Rule XLIX of the House of Representatives.

          Read the CJR article. It may explain it more clearly than I have. It points out the dilemma this presents as the President is also required to spend funds as designated by Congress, though the lack of a current budget or appropriation bills throw an additional wrench into the mix.

  22. different clue

    You know, if Obama can’t get his Grand Bargain, he might settle for selling all the TVA Dams and TVA Land to private buyers, and selling the BPA dams and Columbia Dam and Grand Coulee Dam and HooverBoulder Dam and all the other dams and all the Interstate Highways and all the National Forests and all the National Parks to private buyers as well. And all the marble blocks in the Washington Monument and all the books in the Library of Congress and all the pictures in the National Gallery too.
    Maybe he and Reid and Boehner and the Catfood Democrats can get the TPs to go along with that deal.

    1. sue

      sell-off of publicly purchased-provided infrastructure was always part and parcel of “The Shock Doctrine”-what is necessary is a “rationale”, to win-win-win-win.

  23. Hugh

    “But now the extremists want to go much further and Boehner is in the ugly position to have to defy his own party to keep them from acting like economic terrorists.”

    Our ruling classes, the rich and elites, the Democrats and Republicans, are economic terrorists. We blew by the “acting like” stage years ago.

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