Talks Over Debt Showdown Finally Underway, but Acrimony, Republican Divisions Impede Dealmaking

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In the hostage negotiations otherwise known as the budget deal, the movement on Thursday, that of the Republicans meeting with Obama and offering the idea of a limited extension of the debt ceiling with some thin conditions attached, is indeed progress. But don’t confuse progress with much progress.

It was critical for the two sides to at least stop posturing and start haggling. But it looks as any way out of this mess is going to be tortured. We look to be about to go European, with looming deadlines producing the most minimal deal required to fend off a train wreck. Securities prices would perk up for a bit, but as Mr. Market savvied up that these patch-ups had a pretty short life, the duration of his happy reactions got shorter and shorter.

In the meeting at the White House today, Republicans pitched the skimpiest solution possible, that of extending the debt ceiling limit for six weeks, till right before Thanksgiving, while keeping the shutdown going. White House spokesmen ‘fessed up that if the Republicans made that proposal “clean”, as in with no strings attached, the President would likely reluctantly accept it. Even though I am highly confident that this Administration would not default on Treasuries even if the debt ceiling constraint kicked in (see Felix Salmon for one good technical discussion as to why), the further damage to the economy of deeper cuts to other spending and probable default on other obligations would still do a tremendous amount of damage.

But even this bare minimum deal is going to take some wrangling to get done, and despite the talk of wanting to get the debt ceiling suspended by early next week, there are a lot of cats to be herded. That means the odds are good of bumping up against or even going a smidge past the big scary October 17 date. For instance, Obama wants only a clean deal, but the Republicans are sure to attach strings. So how clean is clean enough? Politico muses:

Obama may have little choice but to accept House Speaker John Boehner’s offer because it delivers what the president wanted: a debt limit hike with no ideological strings attached.

“If a clean debt limit bill is passed, he would likely sign it,” White House press secretary Jay Carney said Thursday. “The key is they don’t get anything in exchange.”

The big question for the White House and Republicans in Congress is the definition of the word “clean.” It may be that the White House has to look at yesterday’s shirt — presentable, if not just-starched — as clean enough.

The New York Times indicated that the Democrats deemed one provision the Republicans want to include, like keeping Treasury secretary from using accounting devices to forestall default, as a non-starter.

But look at how little relief this stopgap deal provides. It’s only six weeks of respite. The government shutdown remains on, meaning the toll to the economy rises in the fourth quarter, which is critical for consumer spending. Retailers bought for the Christmas season on the assumption the economy was on a slow path of improvement. That was already kicked in the head by the shutdown, and six weeks is going to do even more damage. And that is as good as it might get.

The Tea Party is bloodied but still unbowed. Expect them to try to put a spanner in even the minimal “get us out of the debt ceiling train wreck” deal because they want Obamacare included in the negotiations. The Republican leadership is trying to take that out of the equation, partly because Obama simply won’t accept anything other than the most token fixes, and the party bosses don’t want that to stand in the way of the big prize of the Grand Bargain.

I hate to keep focusing on the same issue, but it bears repeating: Obama and Boehner could not reach a Grand Bargain in 2011. The negotiating dynamics are vastly worse. Both sides have started engaging in low-level personal attacks. Both sides are going into the six weeks of talks (if that indeed is what is agreed upon) tired. The Tea Party is more fixated than in 2011 on sabotaging Obamacare. Now if the result of getting past the debt ceiling cliffhanger shows them to have been sidelined, that would be big progress, but we are far from knowing that. So what happens if we have six weeks of drama and again no Big Budget Deal, but this time the debt ceiling as a sword of Damocles?

So brace yourself for at least six weeks of ugly drama. And no matter how it concludes, there’s no happy ending.

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  1. XO

    Ugly drama, yes.

    It’s also pure theatre.

    As with the ACA being an insurance program — not a healthcare program — the government shut-down and debt limit talks are not what they appear to be.

    The government has shut down, but the employees will be paid, and the contractors will get richer, hand over fist.

    Before any Constitutional government can be replaced, it must be destroyed — leaving a vacuum to be filled.

    That sucking sound?

    It’s onlythe whisper of soft revolution.

    Go back to sleep, America.

    1. scraping_by

      You’re right, and it’s the same old play: The Well-intentioned Dolt vs. the Scary Clown. Or in this case, Clowns.

      Same script as 2012, and 2008, brought out for everyday use. Kind of like towels, starts out only for guests, then with a little wear around the edges, end up on the rack for the kids.

      The budget cuts are specific, ideological, and austerian. They have specific victims in mind, and a follow up campaign of ‘I don’t feel anything.’

      The only reality of divide and conquer; them today, you tomorrow.

  2. Steve H.

    So sorry to put in a whackjob comment, but somebody please prove me wrong.

    Charlie Munger said Harvard Business School required all first-years to take Decision Tree Analysis. Simple version: probability * payoff. I assume Obama was exposed to the tool.

    We know profits were taken betting against airlines immediately before 9/11. We know Eisman made big bucks shorting CDO’s by simply understanding them and assigning high probability of failure. Inside information pays well during crises.

    It is taken as possible that Congress will fail to raise the debt limit. What is being questioned is what mechanism Obama will use to redress the issue. What seems unquestioned is that he will not let the U.S. default on the bonds; he is a proven lackey of Wall Street. But he is the sole insider of his own mind. He is 100% certain of the outcome, if given the opportunity.

    I will assume that if someone knew the U.S. would default, their payoff could be… really big. As in, no more iterated games.

    Does Obama have any agency toward achieving the opportunity? He could whisper in Boehners’ ear, “John, don’t worry, you can stand tall and refuse to compromise. I’ll take care of it.”

    As Adrian Monk said: “For the love of God, stop me.”

  3. Steve H.

    My apologies, I’d send an email but I can’t find an address. I would really be comforted to know that the comment I posted reached you. If you choose not to post I’ll still love you. But I’m a tick tweaky, and I can’t tell if you’re receiving; the little wheel goes in circles and then something comes up about Google Analytics, which is the opposite of comforting.


  4. Ep3

    “The government shutdown remains on, meaning the toll to the economy rises in the fourth quarter, which is critical for consumer spending.”

    Yves, this tells me that it’s important to remember, both sides think that the great American economy does not need the government to run amazingly. They believe as long as mr market is happy, nothing can go wrong with the economy. In fact, maybe they are so bold to believe that if they fix the “debt problem” before Xmas, somehow stealing more money from old ppl and cutting even more “govt jobs” will make the economy explode, with growth. Or, maybe they are thinking that what they can do is inflict even more cuts to govt spending during a normally increased economically active time, that the high point of spending will cover up a collapsing economy (shaving 1% off of GDP of 2%. The media talking heads can then say “it’s still growth”.

    1. Adriannzinha

      Just a few select choice cuts of the government are needed for Mr. Market to achieve Goldilocks bliss…

      The Fed of course to subsidize, bail-out, and service invertebrate bankers and criminal speculators while destroying the working publics earnings.

      The NSA with its tentacles to further help bankers with inside information via industrial espionage and of course, making sure the American public, or sheep as they’d likely describe us, are well behaved.

      The Military for foreign protection of said bankers as well as oil conglomerates. The domestic terror agencies like the FBI, CIA, with an assist from local police, to suppress those pesky protestors and social activists.

      1. from Mexico

        You have a wonderful way of putting things, of tying together all those loose ends.

        I like it.

      2. AbyNormal

        Agree with Mexico…You wrap a tight package. Thanks!

        We are not diplomats but prophets, and our message is not a compromise but an ultimatum.
        Tozer :-/

    2. C

      Really this is a fight about where to put the cuts. O and the D’s think that the economy will function fine, or at least survive, with across the board cuts. Ryan and the R’s think that the economy needs massive, even increased defense spending but further cuts to all social spending to work. Thus the fight is not about the top tier numbers only about who gets the pie.

  5. Z

    Of course, obama will “reluctantly” sign on to this deal. Because it keeps the pain on the american people with the government shutdown … making it easy to portray himself as saving the american people from further economic calamity while he reduces their ss benefits (and count on him making the government shutdown as painful on the american people as he can, except for on the vets since if there is one thing that our rulers fear it is getting trained ex-military people angry at them) … and it also keeps the possible debt default looming in the background.


  6. Schofield

    I fail to see Yves why you are so optimistic since this whole “hostage situation” isn’t just about government spending and healthcare it’s about a “Dominionist Tea Party faction” within the Republican Party using Trotskyist entryism techniques to create economic mayhem in the belief it will enable them to seize power:-

    1. Banger

      I think it is a mistake to believe the extreme right has enough unity to do much of anything. That faction is very divided and their own views are evolving rather than static.

      There are many competing groups who seek power and there are many rival oligarch factions trying to influence these groups–the result is chaos. The one thing they can unify on is to create more chaos on the off chance that they can spark a wider disorder–but what then? I don’t see how they can succeed to benefit–once disorder sets in I believe more disorder will follow because there are too many factions. We are a country that is radically divided.

      1. Schofield

        “I think it is a mistake to believe the extreme right has enough unity to do much of anything. That faction is very divided and their own views are evolving rather than static.”

        Well you might be right then again you might not but the whole country seems to run on a notion of “impunity”, that you can do what the hell you want with little understanding that life is set up on a dynamic basis that constantly aims at achieving balance and counters acts of impunity. Even understanding modern money systems is based on “impunity” notions by the majority of the population namely that only the non-government sector can meet money creation needs and the country needs impunity from government “stealing” this money and spending it on frivolous purposes especially on a “vast herd” of so called losers and ill-thought out projects!

      2. Yves Smith Post author

        I got lectured on that very issue by someone who is very progressive in the genuine sense, but is from a conservative religioius family (he quit the religion and got some of his sibliings to quit too). He talks a lot to conservatives and reads conservative blogs. He went on as some length to me how the position on economic issues of many of the people he reads and interacts with overlap only some with what the Tea Party wants. Many evangelicals believe deeply in charity and some aren’t opposed to food stamps and social safety nets oriented towards the poor, for instance (although Fox News and the propagandists try hard to turn them on the poor as undeserving).

        The evangelicals are a much bigger and diffuse voting bloc than the Tea Partiers. The Tea Party alone does not have enough votes to do more than bark. It’s only when they can recruit enough religious Republicans that they have any clout.

        1. Malmo

          I grew up in a very religious family–Presbyterian. I went to school with, and socialized with, after college and beyond, many wonderful “right wing Christians”. I fell away from the faith over a decade ago. I now consider myself an agnostic. I’ve lost many friends because of this sea change in my life. But what I want to say here is that most of these “right wing Christians” are compassionate, humane, and deeply caring people. They are pillars in their respective communities, and most that I’ve known have raised beautiful and loving children. And to be honest, most aren’t very political–at least in a radical partisan sense. They would give anyone the shirt off their backs too. Anyone. The caricature of Christians in the media is repulsive to me. The vitriol spewed against them, especially in the MSM, is equally repulsive. It might shock some, but life is a hell of a lot more complicated than left v right. A lot.

          1. skippy

            Contrary view. It is not the individuals or local cortex injection facility that is relevant, it is the upper echelons that weld their collective equity to nefarious means.

            Still I remember the public cheers for good sorts of all stripes, during the ME wars, kill’em all and let gawd sort it out.

            Skippy… the hate is always just – under the surface – as one recent commenter aptly displayed. Caveat, level of devotion is a multiplier.

            1. skippy

              Additionally I know quite a few self proclaimed neoliberal sorts, who on a personal level, are quite gregarious and affable. Yet they help perpetrate the Big Lie ie did it all myself, its all mine, failure is due to individual weakness, I am the center of the universe, if things don’t go my way is because of the government stealing from me or ham stringing me from reaching my full potential, ad infinitum.


              Anxiety Machines: Neoliberal Capitalism, Depression, and Continuous Connectivity

              by JD Taylor


              Skippy… great title imo…

          2. Benjamin

            I was also raised Christian, and my opinion is very much the opposite of yours. My experience is that much of the compassion is window dressing, and you don’t have to dig very deep before the bile starts rising to the surface. And no, I wasn’t raised in some crazy Catholic family or in one of those fringe snake churches or anything like that.

            I’m intrigued you think MSM villifies Christianity, since the country is something like 85% Christian. It would be very much against their best interests to risk alienating so many potential consumers. If anything they go out of their way to emphasis that groups like the Westboro Church don’t represent the whole.

            My position is somewhat different. While groups like that are minorities, most American Christians possess at least a small fraction of that crazy. Go to any random church on any random Sunday and you’ll hear at least half a dozen crazy things before you go home. I remember 10 years ago my family doctor getting on the stage before the sermon and encouraging the audience to support DOMA. And no where in my life have I heard as many gay jokes as in a church youthgroup. These are people who say ‘judge not lest ye be judged’ and then proceed to spend every second of every day judging everyone and everything and casting disapproving glances at everything they see.

            As for their charity, the increasingly mad anti-gay laws in Uganda are in large part being driven by Christian missionaries. And then you have the complete self-indulgent farce of protestant expeditions to Italy. Yes, those are actually a thing. They convince the congregation that preaching in the Vaticans backyard isn’t an exercise in utter futility, fleece them for money, and then send a couple dozen people on a glorified Mediterranean vacation. I’m not clear how much of this is knowing deceit and how much self-delusion.

            1. Malmo

              I didn’t mean to imply that Christians are perfect. Far from it. I remember my pastor saying our church was not a country club for saints but rather a hospital for sinners. The point being that there were many still broken and flawed people among the flock. There was certainly a varience of behaviors and attitudes among those at my church. The younger and or newly born again types were many times a bundle of contradictions. The older, elder types, at least outwardly, displayed a much more temperate persona that was far more grounded than most of the former types I mentioned. I would add that I was raised Presbyterian, and that likely influences how I view Christians. We used to cross church with Episcopals too. Emotionalism was never a part of my experience. I had some experience with Baptists, and from my memory they seemed much more outspoken and partisan. Still, my larger point, is that most of the Christians I rubbed elbows with were not overtly political. Those who were to a greater degree political varied in their orientation–some left, some right. My family was pretty far left, so perhaps that has skewed my view on this too. At any rate, whether Chritian Presbyterians or Christians from other sects, I still maintain most are not stridently partisan. Most are like everyone else in this machine–busy with figuring out how to get by financially; figuring out how to raise their families; trying to deal with wage slavery; vegging out after a long days labor. That’s the majority report whether Christain or non Christian in the world of the rat race.

          3. diptherio

            Thanks for that, Malmo.

            When people say “Christians do X…” or “religious people are Y…” I have to fight the urge to slap some sense into them. I’ve known a-hole Christians and awesome Christians; Christians who use their religion as a bludgeon to assault others, and Christians who use their religion as a microscope to examine and refine themselves. Turns out, Christians aren’t any more homogeneous a group than, say, white people (or NCers for that matter).

            We have all had our own experiences with Christianity and Christians, but many of us seem to mistake the part for the whole and the anecdotal for the universal. Not a helpful tendency, if we are actually interested in truth (as opposed to ad hominem attack).

            Now, let’s all join hands and pray:

            Lord, save me from your followers (and from my own black-and-white thinking about them).

        2. Fiver

          Neither TP’s bark nor Dial O God’s bite could extort a cab home but for jackal leadership evaporating before them as if Moses led the way – they do get better really being their roles every time out, don’t they? Meanwhile, the real government is busily hatching its various plans almost entirely in secret, as you noted in your TPP piece.

      1. jrs

        I found this to be a well written article on who might really be behind the tea party (hint it’s probably not the banksters):

        “There is a sort of permanent ‘austerity’ built into the genetic code of neoliberalism, and this appears to be what the major banks and businesses want. The shock-doctrine austerity of the Republican Right, the Tea Party, on the other hand, is something quite different and more likely to be rooted in the drive firms with tight profit margins to reduce tax burdens and open business opportunities within the state, while simultaneously resisting a series of ‘threats’ (such as Obamacare).”

      1. Doug Terpstra

        Indeed, the TP is exploited by Koch-suckers, including the RP, as useful idiots for the staged crisis. This is not about theocracy; it’s a setup for the Grand Betrayal. And O is not about to let a manufactured crisis go to waste.

  7. middle seaman

    Forever is how long it will take to understand Obama’s decision making. Six weeks extension means absolutely nothing unless he plans to sell every one of us down the river. Even negotiating a sellout will take more than six weeks. Why doesn’t Obama let the GOP hand out to dry? They will consent to much better conditions.

    The whole GOP proposal and Obama’s interest in it is an insult to us the people. OK, let continue the shutdown. We are talking about more than a million people punish even more. The delay by six week is also a spit in the face forcing everyone to stay in constant anxiety.

      1. ohmyheck

        Quote: “I’ll take John Boehner at his word — that nobody, Democrat or Republican, is willing to see the full faith and credit of the United States government collapse, that that would not be a good thing to happen. But once John Boehner is sworn in as Speaker, then he’s going to have responsibilities to govern. You can’t just stand on the sidelines and be a bomb thrower.” Barack Hussein Obama 2010

        FFS. What the h-e-double-toothpicks was he thinking? Does he still believe this drivel?

        1. anon y'mouse

          my crackpot view about this is, if you are an American, the TPP probably has few effects because what the corps desire to do to these co-signatory countries is what they have already accomplished, de facto and de jure, over here.

          so, i’m probably wrong about that but they appear to want to hollow out all of these outer countries’ gov’ts the way ours has already been.

  8. grayslady

    According to an NBC/WSJ poll yesterday, 60% of those polled said that everyone in Congress should be fired. The political calculations of both parties have been way off the mark. The Dems aren’t going to come out of this looking any better than the Reps.

    1. jrs

      The approval ratings of both parties is dropping. Tell that to the huffpo bunch who squeal with glee that the ratings of Rs are dropping. Of course it is true that if people keep voting duopoly if Rs are dropping more than Ds (and they are) then that benefits the Ds – cue Kang and Kodos (what are you gonna do, vote for a 3rd party, it’s a two party system? Bwhahaha!).

      It’s also true that while that might help Dems in say the Presidency (so that we can elect another Republican under the Dem party ticket – woohoo what a victory!), dislike for Rs would have to be enough to overpower gerrymandering to change the situation in the House.

    2. jrs

      And yes how long until the entire ruling class is illegitimate soon? What if it just turns more people off voting, which is ok if all the choices are bad, but doesn’t exactly lend legitimacy to the government.

    3. Glen

      One wonders why the people conducting the poll cannot seem to come to the logical conclusion or at least ask the question, who do the Republican and Democratic party represent? It’s obvious to everybody that both now represent the 1% as opposed to the 99%.

      The 1% vs. the 99% still has to be a framing of our governmental failure which scares the pants off the PTB.

      1. Carla

        Thank you.

        But here’s a hint: They can’t come to that conclusion because they’re not PAID to come to that conclusion.

  9. Banger

    I think it is now becoming obvious that the leaders of both parties can probably agree on the following: there is no way to resolve differences at this time and best we can hope for is to kick the can down the road while making the proper noises to assuage the feelings of the radical right. Mr. Market seems to be banking on this general agreement. Mr. Obama gets to portray the RP as a radical party of wingnuts and Mr. Boehner gets to play the embattled moderate and the extremist radical at the same time.

    All this is happening because, as I’ve said here many times, the situation has reached the level where we are entering a period of high complexity and chaos in terms of political power. The corporate oligarchs are very divided and have lost their cohesion–many are supporting factions in the radical right that favor social and political chaos because of their own crank ideas (Koch brothers) or just playing a Machiavellian game that seeks to reduce the power of the federal gov’t to regulate or prosecute their criminal activities. And all this is in the mix with the usual lobbying groups which have multiplied in Washington and are all generally scrambling around for a foothold in this new crisis-to-crisis reality. Because these industries are in competition for fewer and fewer dollars and fewer and fewer bills they are now not very open to cooperation with rival lobbies and making alliances. How can any lobby hope to be heard when even the Pentagon has had to take major cuts due to the Sequester?

    The system is broken and we have seen this wreck coming and hopes to avert catastrophe are unlikely to bear fruit. I don’t see, even if there is some, “Great Betrayal” on SS and Medicare that even that will stop the general breakdown of order. The left is a non-factor, the center is confused and the right becoming even more confused so where is the leadership to get us out of this going to come? The feature of all these groups is that they’re all out for their own interests with almost no thought about the country as a whole.

    1. NotTimothyGeithner

      My favorite event of the new normal is Wal-Mart opening banking services and healthcare clinics. They are just going after the banks and the HMOs in a very public manner.

      My other favorite ad is a commercial T.RowePrice. Their latest ad features a dishwasher who opened a retirement account and became a success because of prudent investing and worked his way up to busboy. These people are so out of touch they are now pursuing customers among the poorest of the working poor.

      1. ambrit

        That T. Rowe Price ad is also a subtle bit of messaging to that companies core consumer base; upper middle class professionals. By showing one of the ‘less fortunate’ literally ‘buying in’ to the invest and prosper rentier myth, the company is validating the process itself, and absolving the rentiers from any blame concerning the real state of the working class life. “They all can be just like us! That ad demonstrates it. If they fall behind, it’s their own D— fault! They could invest just like we do.” Etc. Whoever thought up that ad did it right. Cheer leading for the ‘Home Team’ and demonization for those pesky poor people. Besides, now that I think about it, haven’t we seen a similar scenario before? Poor and working class folks scraping together all that they can to get in on the investing gravy train. Then a gigantic system wide financial collapse wipes them all out, while savvy fat cats walk away with enough left to live on well, very well. 1920s anyone?

        1. jrs

          Yea but the upper middle class professionals are not the rentiers and they would be hard hit in a market crash too (I dont’ say hit *as* hard but …). Those benefitting from it would be so much higher up on the food chain than them they can’t even see them from where they stand (yea Goldman Sachs, JP Morgan etc. – companies that play both sides of the trade and still get bailed if it tanks).

          So class analysis of the real self-interest of the professional middle class: it has a stake in capitalism, as how else to fund retirement etc. except by all those promised profits, and older people more so. But it has a greater stake in the survival of a safety net, decent jobs, good wages, a movement that speaks for ordinary people (such as unions once did), a society worth living in etc. – because that places on a FLOOR on how low they can fall (and they can fall).

        2. scraping_by

          The bootstraps mythology is part of the upper middle class defensive ideological fog, but it’s also the basis of the blue collar scorn of the poor that Reagan and his successors have ridden on all these years.

          The English Victorian division between the ‘deserving poor’ and the ‘undeserving poor’ has been updated to ‘work hard and save’ as against ‘free shit from the government.’ It’s been called the pus of Thatcherism, and it oozes out of every right wing distraction.

          Ignoring a lot of factors beyond personal control is a good sell. Enough stroking and workers don’t notice the close doesn’t make any sense.

          1. diptherio

            The boot-straps mythology is not confined to the right-wing. Yesterday I was telling a friend about Switerland’s proposed income guarantee. She told me she didn’t think it could work in the US because “we have too many free-loaders.” And mind you, this woman is a liberal/progressive (a massage therapist, for pity’s sake).

            Lots of people have bought into the “if yer poor, it’s yer own derned fault” mentality, despite all the evidence to the contrary…not just the “right.”

    2. James Levy

      You wonder if Obama’s hefty efforts to get us in a war with Syria was an analog of Seward’s efforts to start a war with Spain (or anybody, really) in 1861 in order to rally the nation and head the secession crisis off that the pass. Hell, Johnson knew the only way he could temporarily shut up the Right was to give them their war against the “Asiatic hordes.”

      So, should we be expecting a false flag operation to nullify the crisis? A scary epidemic, perhaps? How are the people in positions of power going to dig themselves out of this hole?

      And not to you Banger, but generally: the idea that letting this thing just slide with a “pox on both your houses” attitude is not adequate, because if this thing slides into default and continuing recriminations the human carnage will be worse than that Great Betrayal. At least in theory we can rectify the Great Betrayal down the road; in practice, if civil order starts to collapse the results will be an end to what little influence the people have and the institution of a police state that makes the current dispensation look mild.

      1. Banger

        I think you are right. Chaos, however momentarily liberating ends up creating more fear, more conflict and, usually, violence.

      2. Banger

        As for false-flag and all that–I’m convinced that the disorder has spread to the national security community. In a sense this was predictable. When we lose a sense of common purpose and just pursue our own selfish interests all common endeavors suffer. If you’re a bureaucrat elbowing your way into power, wealth and influence you don’t have much cause to make anything other than temporary alliances–and since everyone knows they are temporary alliances they are even more wary, more distrustful and rely purely on Machiavellian tactics rather than true concern for common objectives.

        The CIA for example, I doubt they have many people like E. Howard Hunt who finally, on his deathbed, confessed to his son that he was involved in the JFK assassination–I believe he waited that long because of his loyalty to his colleagues and the CIA and the country. Those considerations, despite entertainment media lies, are not common.

        1. neo-realist

          A CIA officer is loyal to his country because he mentions his involvement in the assassination of an American President on his deathbed, as if confession of such treasonous behavior made him a patriot?

          1. Banger

            I know that generation of officer–they were patriotic even if misguided. The national security state was convinced that JFK was a traitor himself for dealing with Khrushchev and Castro through back channels and for wanting to restructure and/or destroy the CIA. He was regarded by insiders as a loose cannon.

            1. Benjamin

              Uh…my understanding is that only a few people in the entire adminstration knew about the secret deal. It only became widely known years later. That was the case on both sides as well, Nikita was removed from power partly because of his perceived weakness during the Crisis.

              As for Hunt, I find the explanation given by his widow that his sons were just taking advantage of the mental state of a dying old man to make him say something they could profit off of much more likely.

      3. washunate

        I very much agree that the human carnage of civil order breaking down is devastating. So some food for thought I’ll send back your way:

        What I find interesting is the notion that you place this period of chaos happening in the future.

      4. sleepy

        I also think you could look to Lincoln’s statements on the potential for war with the UK during the Civil War. If, I recall correctly, he said that war with the UK would not just be fought on US territory, but spread to Canada and the docks of Liverpool.

        That may well have been diplomatic bombast, but I also think it served the purpose of potentially unifying both the South and North against their then hereditary enemy, the British.

    3. Glen

      I agree with your assessment of the situation. Events do seem to be beyond control.

      It will be interesting to see how Mr. Market reacts. One would expect the market to nosedive once there is a general consensus that even the DC kabuki is breaking down.

  10. Richard Lyon

    This process is moving the US government ever closer to a state of being totally dysfunctional. I very much agree with the idea that it is becoming like the EU. This should not be confused with stasis where at some point things start back up where they were before. These life support patches leave the body politic is worse shape than it was before. Policy becomes incrementally more austerity oriented and the economy is held hostage for even more.

    1. James Levy

      It may be that what they are hiding is that the economy has nowhere to go but down. A booming global economy with 7 billion people in it is ecologically unsustainable (in fact, it’s ecologically suicidal). A booming global economy will also quickly demonstrate the reality of peak oil, which the Power Elite wants desperately to hide.

      I dug up an interesting fact. If all the shale oil plays work out perfectly, and the US exploits them to the max, even with all our technological improvements the total yearly production of US oil, both traditional and non-traditional, will not equal the what it was in 1970. So we have less oil today, even under a ruthless drill baby drill regime, for 310 million Americans than we did for 200 million Americans in 1970.

      The Elite are waiting, as Philip II and the Duke of Medina Sidonia, in the confident hope of a miracle. If they kick the can down the road, certainly something will come up, some technological breakthrough that will pull their fat out of the fire. And if not, we have our “ranches” in Idaho, Montana, and Wyoming, our ex-Special Forces mercenaries, and our loot to fall back on.

      1. DanB

        I agree with you. First, a few years ago Paul Krurgam wrote that sooner or later a new technological breakthrough would reignite growth. Then he said to restart grwoth we need to be invaded by Martians -or was it the other way around? Second, this is a financial blog, a really great one working for the people, but it tends to overlook or not grasp the fact that Mr. Market is totally dependent upon Ms. Ecology and the laws of thermodynamics.

        1. susan the other

          Cavemen weren’t faced with the quandary of deflation. Even tho they had skins full of sea shells and they got drunk on fermented apples and behaved like big shots, the value of their lives depended on the world around them, and each other. We really have come full circle. Technology won’t be solving our problems for us as in the past; only sanity and cooperation will.

      2. jrs

        Perhaps, of course what we’d all prefer is honesty: ok folks (Obama can say the folks part I’m sure) we’re headed for ecological suicide and running out of resources, therefore we’re going to have to conserve, use renewables, reduce waste, have less and move toward steady state, and we’ll have to do some sharing of what resources we have. But yea it’s extent and pretend, grab what loot you can, and the elite all have their ranches and their security and they aren’t afraid to use it.

        1. anon y'mouse

          I don’t even think the average person would mind very much, as long as it was made clear that we are all going to look after each other, and try not to let anyone fall down. a re-definition of “fair” to equitable.

        2. James Levy

          Jimmy Carter said almost those exact words 35 years ago, and it got him permanently on the elite shit list. He was a bit premature, but if we had moved back then, we wouldn’t be facing the catastrophes we are likely facing now.

          The ethos of the elite today is every man for himself. The lives of millions depend on that ethos not having swallowed the entire body politic.

      3. Benjamin

        I seem to recall that one of the possible explanations for why we haven’t encountered intelligent alien life is that most civilizations probably wipe themselves out before achieving any kind of long-distance space travel or communication technology.

        What are the odds humanity will be extinct in 500 years?

    2. Schofield

      “This process is moving the US government ever closer to a state of being totally dysfunctional.”

      Well the mindset of the Libertarian Dominionist faction controlling the Republican Party is dysfunctional since it believes it and it alone has entitlement to impunity from taking non-subscribers views into account. That other well-known terrorist and hostage taking organisation Al-Queda thinks in precisely the same way!

      1. JustAnObserver

        Perhaps John Boehner and the other GOP “grown-ups” (if there are any left) should contact Neil Kinnock (ex UK Labour Party leader) and ask him for tips on how to deal with political extryist tacics of extremist groups. Trotskyists in the case of the LP and Dominionists/AynRandys for the GOP.

        I don’t know if anyone has studied the parallels but on the face of it, at least to me, they are quite striking at a tactical, if not ideological, level.

        1. NotTimothyGeithner

          I just can’t let this stand. There are no GOP “grownups.” They have been fascists for decades. Yes, Colin Powell is not a responsible, decent man. He is a pig. Chuck Hagel is a pig. John McCain, our former maverick, is and always has been a pig. Please stop laboring under the delusion that Aaron Sorkin fantasy characters are in any way real. Remember Chris Matthews is pushing a book about the glory days of politics which saw the shredding of domestic spending, massive military increases, deregulation, tax increases on the middle classes and poor, tax cuts for the rich (they didn’t raise taxes on the rich 14 times), and gutting of the environment.

          I know Harry Reid doesn’t mean it when he calls the GOP anarchists. He’s largely upset the GOP is being mean to him, but they are a real problem. They can only be dealt with like the dogs they are.

          This may be the most recent worst action of the GOP, but its something new every six months and we are met with calls of compromise and bipartisanship.

          The “extremist group” of the Tea Party which is a rebranding attempt of existing Republican voters by Republican elites. John Boehner personally recruited these people to run. Boehner is the last guy from Gingrinch’s young turks in Congress.

          Maybe you have forgotten because the Democrats had a fair amount of complicity, the GOP stole a Presidential election in 2000, launched a hideous and destructive war in Iraq and around the world, deregulated financial markets, and so forth. This is nothing new, and the Democrats spent most of this year trying to appease the GOP by running on a sliver of gun control, militarizing the borders, and pushing for another war while defending the hideous MIC all in the name of compromise.

          This drives me up the wall, but the status of the GOP as terrorists has been a reality for a very long time. John Boehner is not a grown up. The men of the glory days of the 1980’s were not grown ups. Nixon and his crew were some of the most vile men in this country’s history. When you compromise with these pricks, you aren’t being an adult.

          1. Fiver

            Obama had the opportunity to crush them. But for five years, by your accounting, he not only didn’t, but learned nothing in the process.

            No. He could still put them in the ground like a tent peg, but that’s not what he’s about. He’s about enabling the greatest theft of wealth in the history of the world.

            1. Doug Terpstra

              The GOP was already crushed and all but pronounced dead. Obama resurrected it almost single-handedly by charging hard right thru 2010. He needs their insanity as a foil and cloak for his own treachery. We are now seeing the rotten fruit of these machinations.

          2. Benjamin

            What’s your opinion of Eisenhower? My reading of him is that there was more good than bad, though his use of the CIA and setting the Cold War framework were atrocious.

  11. Chauncey Gardiner

    Mucho commonality among the “negotiators” here… all running a rearguard action to defend a debt-based monetary system and status quo that is missing two front teeth and the rule of law. Lots of dimensions to all this, some foreseeable and some not… too many for the space… but Yves’ final sentence is most certainly profoundly true.

    In the mean time, Luv his Art:
    and that of “Person 183”

    Art knows no barriers except this… you know?

  12. clarence pest swinney

    Wealth Ownership Of America
    It will take a 50% effective tax on all income over one million to balance the budget
    and pay down the horrid debt. Plus a Law that federal employees can accept nothing with a monetary value. That closes K Street and bribery of our officials. Social Security is solvent for decades by lifting the Cap as needed. Today, an income of 10 Million pays a 1% effective SS tax and it goes on down as income increases.

  13. washunate

    Is there any evidence that a deal hasn’t already been agreed to in principle? The debt ceiling has never not been raised.

    Ever. The list of authoritarian actions still funded through this ‘shutdown’ is larger than the fully functioning budgets of every other nation on the planet.

    And as an aside, everything that is going ‘wrong’ with PPACA/Obamacare is the fault of the Democrats, particularly the President. This is what it was designed to do – be another irrelevant wedge issue distracting from the actual issues. What suprises me is how successful this kind of obfuscation and distraction has been among the ‘left’ even when this is precisely what was predicted to happen back when the obot pundit class was busy smearing anyone stating the obvious.

    1. Fiver

      Agree. Do you think real power would tolerate this purported heist of the US budget? By the likes of the players we see? No sir.

  14. Ron

    The Republican Party at some point in time will be looking to the House Democrats to push through a funding bill the basic reason will be that Tea Party congressmen will vote NO on just about any funding measure so they can run for reelection based on there ideals of continuing the fight for smaller government bah bah. So the key players in this drama may be the Democrats in the House and how willing they are to give both Obama and the Republican leadership a gift of sorts and at what price.

  15. USGrant

    Why doesn’t Obama invoke the 14th admendment? The first sentence of section 4 plainly states pay your debt. Is he just punking or is there some precedent I’m not aware of?

    1. different clue

      Why doesn’t Obama invoke the 14th Ammendment? Why doesn’t he do one of several other things that have been written about here? Because he values default as a credible threat by which to achieve his Grand Bargain. The threat isn’t credible if people think Obama thinks he can avoid it on his own.
      Obama wants a 6-week extension of debt-ceiling lifting because he thinks he can use that yet-another carefully engineered 6 week climate of crisis to get the Grand Bargain along with his Democratic and Republican co-conspirators in Congress. Getting a whole-year extension would give the No Grand Bargain forces time to organize and pressurise against the Grand Bargain.
      6 weeks is not much time for the No Grand Bargain community to figure out how to disrupt and discredit in “town hall meetings” the spokesmouths from the Obama/Bayh/Bowles front group known as The Can Kicks Back, for example.

  16. John Yard

    The DNC has sent me mailer recently asking for contributions. My response was that there will be no contributions until these issues are successfully resolved without caving , without cuts to Social Security and Medicare.

    My ear to the ground ( Dem operatives I know ) tell me that DC is getting a lot of similar feedback. Particularly a lot of comments about Obama’s past weakness.

    If there is a cave they are aware there will be definite blowback on the Spring 2014 primaries.

    1. different clue

      If those comments about Obama’s past “weakness” were to be replaced with comments about waking up to Obama’s real-agenda
      treachery, would that have a stronger impact on the DNC?

      If all those commenters were to say that they would never give or vote Democratic ever again in any election if any form of Grand Bargain were allowed to pass, would that have a greater effect on the DNC?

      If people were to say that they would vote for the Tea Party if the Tea Party ends up being the group which obstructs the Grand Bargain Conspiracy to a quick death, would the DNC be even more concerned?

      1. Brooklin Bridge

        Those are all good questions and I suspect, if Democrats were cornered and forced to answer the questions, the answer would be an overwhelming NO to each one as the realization sunk in that they would be cutting off their cash flow from the lobbyists, not to mention their retirement gigs and talk circuits, and consulting gigs getting a small fortune per hour for the expertise of having a pulse.
        I don’t think there is even much effort extended towards dissimulation anymore. Just grab what you can while you can, who cares who’s looking. The only remaining Democratic fig leaf still bothered with are those amazing, jaw dropping periods of flat out lying which they refer to as speeches.

        Yes, they would prefer that people voted for them, but votes are no longer the drug to Democrats that they once were. They don’t really need them as much for one thing. Who else is going to make it on the ballot with a thoroughly corrupt DNC? Eh? No, what they are concerned with now are bales of cash. Big bales of it and lots of them.

  17. Jim

    Banger stated:

    The left is a non-factor, the center is confused and the right is becoming even more confused…”

    Part of the reason the progressive/left community is a non-factor today is because it has tended to see history, since at least the French Revolution, from primarily an economic perspective—largely ignoring the political(the gradual creation of centralized state power and the necessity of its present dismantlement) as well as the cultural(the necessity of self-transformation involving techniques largely independent of economic calculation).

    For example a majority of the commetariat at Naked Capitalism, has, over the years, been uncritical of the integration of labor into centralized state power–which then became the new status quo under the New Deal.

    Its continuing inappropriate nostalgia for this, then, relatively new logic of domination (which eliminated genuine class struggle between labor and capital and simultaneously initiated a concerted merger between Big Capital, Big State and Big Bank) resulting in greater and greater State/Capital corruption.

    This development has culminated today in the progressive/left community being seen by an increasing portion of the general population(who are gradually becoming more and more critical of Big Government, Big Capital and Big Bank) as apologists for the existing system of power that dates back in origin to 1933.

    Until the progressive/left community has the courage to seriously re-evaluate its old base/superstructure myth, (where the economic level has a supposedly greater power to bring about effects than say culture or politics) it has little chance of being capable of seeing or understanding how its supposed instrument of liberation—a Big State that supposedly could contain and regulate Big Capital for the benefit of all—turned into an active collaborator in a terminally corrupt system.

    1. Anarcissie

      It seems to me the Left Left has long since given up believing in the Big State. However, a lot of people who would agree with all or most of what you say wish for Social Democracy because they think that’s all they can get without a civil war, which they might lose anyway, given the number of authoritarian yokels who would be on the other side.

    2. James Levy

      Interesting, but when the organs of culture and mass communications are in the hands of Capital, and people see government as the only force that can counter the complete dominion of Capital, then it’s tough to tell them to turn to politics (also controlled by money) or culture (ditto) to solve their problems. If money means power, and it does, then the only way to turn this baby around is to make it impossible to have so much money that you have the power to buy elections and those running for election.

      Or at least that’s the way I see it.

    3. Fiver

      This is all labour’s fault? Wow. Must’ve been hubris, I guess, the working man going for global Empire and all.

  18. Brooklin Bridge

    Notice how, as usual, the Democrats are not saying a thing, not so much as a whisper, “boo.”

    They are simply waiting for Obama to tell them if this is the time to start selling the idea of how yummy cat-food actually tastes to the elderly especially if it comes in ever smaller cans.

    By fluke, I listened to Tom Ascroft’s, “On Point” this evening. It’s been years. Man are they pushing cat-food for all their neoliberal little well spoiled souls are worth. Tom Ashcroft, Jack Beady, and their guest. It all simply comes down to who’s role is to dissimulate a little more or a little less, but the thrust of the evening for each and every one of them was that the Democrats must give a little so the Republicans can save face. Give a lot would mean going after big banks or the military. Giving “a little” always means going after the safety-net, which as Wall St. well knows, is anything but little.

  19. Brooklin Bridge

    I realize Boehner and Obama were closer to getting their Grand Bargain last year, but it still looks to me as though they are both really determined – no matter the difficulties – to make it work this time round.

    I don’t think Obama will have the clout next year. He will be turning invisible as the next stooge is selected by the DNC for the ever gullible Democrats to imagine they are choosing someone (whirling the plastic steering wheel and honking the rubber horn). And I think he knows it. The term “Groping” was perfect in one of these posts to describe what both Obama and Boehner are doing. Like lovers blinded by desire and the knowledge they will not get many more chances at it, they are flailing wildly to connect and crazy as it sounds, I think they will. The Senate intervening would be purely to put Obama’s cat-food treachery back in the middle, dead center, of the table, lest Boehner get confused in his stupor haze and imagine Obama is after his bod.

    1. Doug Terpstra

      Exactly right, but there are still those here who think this crisis really is driven by the TP and that it’s really about ObamneyCare.

    2. different clue

      Why didn’t he? And why doesn’t he? Because he did everything he could to manufacture the same “crisis” last time in order to make the Bush tax cuts permanent and to try getting the Grand Catfood Bargain. And it partway worked. He got the Bush tax cuts permanentized just as he wanted.
      And he is determined to use this co-engineered crisis-conspiracy to get the Grand Catfood Bargain achieved this time. Only the TPs can stop the Republicans and the Shitobamacrats from getting it done.
      Why didn’t he? Why doesn’t he? Because he worked so hard to create this crisis for a reason. And as hard as he worked with his Republican co-conspirators to create this crisis, why would he want to lift it before getting his Grand Catfood Bargain? Stop thinking Obama is weak. Accept the fact that he is evil. Then your questions will answer themselves.

    3. Edward Allen

      An instrument of the 1%, the tea party is part of the problem, whether or not most of its supporters recognize the fact. “The Great Betrayal,” more likely as the bipartisan “crisis” goes on, is an assault on the 99%. (This isn’t to say that the ACA is a square deal. What was and is needed is the phasing in of enhanced Medicare for All.)

      Incidentally, Joe Firestone’s exploration of options continues ( ).

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