The Shutdown Talks Are in Chaos

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A lot of readers, when we’ve discussed the budget/shutdown/debt ceiling negotiations, have done the equivalent of declaring it all to be kabuki, that the fix is in.

While I have no doubt that any resolution of this impasse is certain to make matters worse for what is left of the endangered species known as the American middle class, what is going on in DC is not a pretty scripted stagefight. The negotiations are in a mess. Anyone who says they know where things are or what the outcome will be is kidding themselves.

This has all the signs, even from what little that can be seen with confidence, of a negotiation that has gone off the rails. From the New York Times:

Relations between the principals, which in this case was Obama and Boehner have broken down. Senators Harry Reid and Mitch McConnell are trying to broker a deal

Both sides have rejected each other’s version of what they think is a clean and simple deal. Obama insists on a clean continuing resolution (as opening the government) and a clean lifting of the debt ceiling. The Republicans were willing to only push out the debt ceiling limit to only to November 22, which Obama rejected. McConnell then offered to Reid to increase the debt ceiling through January and keep the government operating until March, but Reid nixed that. The New York Times reports:

The core of the dispute is about spending, and how long a stopgap measure that would reopen the government should last. Democrats want the across-the-board cuts known as sequestration to last only through mid-November; Republicans want them to last as long as possible.

The Democrats’ demand shows a newfound aggressiveness. Previously, they had favored a so-called clean bill that would reopen the government and lift the debt ceiling without any policy changes attached. With Republicans on the defensive, it remains unclear whether the Democrats are using a negotiating ploy to raise the likelihood that any final deal will include their priorities as well as the Republicans’…

The dispute may involve debt ceiling technicalities, but at the core of the fight is a more fundamental question: with polls showing that Republicans are carrying the brunt of the blame for the shutdown, can Democrats demand total surrender, or should they offer concessions to complete the deal?…< The Collins plan would maintain sequestration-level spending through Jan. 15, when formal budget negotiators would be required to complete a House-Senate agreement on spending and taxation over the next decade. That date was already a concession. Ms. Collins, along with Senators Kelly Ayotte of New Hampshire and Lisa Murkowski of Alaska, both Republicans, initially wanted to finance the government for six months at those levels. The initial proposal by Ms. Collins would also have extended the debt ceiling only to Nov. 15, but at the request of Senate Democratic leaders, she and Mr. McConnell pushed it back to Jan. 31... But Democratic leaders have balked, and they flexed their muscle Sunday with a group of Democratic and independent senators negotiating with Ms. Collins.

The reason this is not pretty is that things get ugly starting Thursday at midnight, when Treasury says the debt ceiling starts to bind. Neither side is even close to an outline of terms (what in the private sector we call a “letter of intent” where both sides agree on the key deal points and go off to draft detailed terms, which in this case would be the language for a bill). The Senate has cumbersome procedures, so a bill can’t be passed in a mere few hours. This means we are in time is of the essence mode. Yet we have acrimony on both sides (the Democrats believe Boehner has operated in bad faith, which is poisonous for negotiations, but they don’t want to dislodge him because any replacement is likely to be even more difficult to work with). We also appear to be not at all close to agreeing on an outline for a deal. The Republicans are upset at the Democrats

While the magic date of Thursday does not mean a default happens then, what it almost certainly means is the government goes into a more severe shutdown mode to conserver more cash, which will cause more disruptions. As bad as that is, the real critical date is around October 31-November 1. Even then I don’t see this Administration defaulting on Treasuries, it will sacrifice pretty much everything it can to do that. But some investors may not believe that, and if retail investors start exiting money market funds with Treasury exposures (even though fund managers have exited the particular bonds that would be at risk) we could see serious disruption to the repo market (money market funds are big investors in repo). Remember, a run is destructive whether the fear is well founded or not.

Now I don’t anticipate that things will go that far (and if anything were to get ugly, you could also expect this Fed to use its unusual and exigent circumstances powers to intervene). But it looks as if the Dems are willing to use Mr. Market to cow the Republicans. And as an aside, this should belie the commonly-touted Democratic cover for Obama that he is weak. He’s only pretended to be weak to shift blame to the Republicans for what he wanted to do when what he wanted to do entailed selling out his base.

At least as of now, the Democrat posture has become to add demands at a late stage. That is a Mafia bargaining tactic, when you believe you are making an offer they can’t refuse. The Democrats believe that they can push the Republicans because they are suffering a much bigger hit than the Democrats in the polls over the budget impasse. And the longer the delay, the only thing that it will be possible to negotiate and pass is something with hardly any moving parts. That also favors the Democrats.

Keep in mind also that market mood has played a big role in the seriousness of the talks. When the stock market has rallied on the hopes that a deal is on track, then the talks start to go awry, and when Mr. Market has gotten upset, the negotiators at least make credible noises that the discussions are on track. Who knows whether the Congresscritters are more worried about their own portfolios or those of their big backers, but either way, falling stock prices do seem to focus their minds.

S&P futures have been down about 11 points, which is not a freakout level move, and bond market trading will be thin today since it’s a bank holiday. So unless the stock market decays further during the day, I’m not sure Mr. Market will apply enough pressure to move the negotiations forward today. But another day of impasse risks a big increase in collective anxiety levels. Both parties are going to be under big pressure to have some sort of deal in principle by Thursday, even if they don’t have it passed by both houses and ready for Obama’s signature. If the two parties can announce a deal by Thursday, a likely date when it will be wrapped up, and how Treasury will manage things until the debt ceiling has been lifted, that would probably do. It would be messy but workable. But getting to there from where we are now is a very big task.

And some further things to keep in mind: this fight is in danger of becoming a cliffhanger, yet it is also planned to set the stage for the big deficit-cutting deal which the Democrats and traditional Republicans intend to cut social safety nets, most importantly, Social Security and Medicare. We’ve discussed at considerable length in earlier posts why trying to reduce government spending is not a good idea (we aren’t even close to the conditions where it might be warranted), how the projected Medicare cost increases, which are the lynchpin for the debt scaremongering, are considerably overstated, and how cutting deficits now will worsen, rather than improve, the government debt to GDP ratio. The rich might think that they will profit from this auto da fe but they are likely to suffer too.

But Obama and Boenher could not get a deal done in 2011, when conditions were much more favorable. The Democrats now see the Republicans as bad faith actors. In the last round of talks, where the Democrats rejected the Collins offer, the Republicans are making it clear they are feeling bruised and badly used by the Democrats. It doesn’t matter whether all these hurt feelers are objectively justified. What it does mean that if Obama and the Democrats win by pushing the Republicans against the debt ceiling wall and wrestling a capitulation from them, that short-term victory could well poison the negotiations over a Grand Bargain. Parties that distrust and dislike each other have trouble coming to any sort of agreement, particularly complicated ones. That is perversely the best hope for ordinary Americans, that Obama wins this battle and in so doing, loses his Grand Bargain war. But don’t hold your breath.

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107 comments

  1. Z

    I think what is happening here is that reid got involved and though he barely possesses a spine, he has been betrayed by obama in the past debt limit deals where obama has undercut deals that he has reached with the republicans in the senate to try to work where the democrats have the least leverage: the house, for obama to get his ss cuts and such. reid is not for ss cuts and in fact he has come out against them and has said in the past that they won’t happen. There may be enough dem votes in the senate to pass them … along with rep votes … but reid has a lot of power and he may be trying to sabotage obama’s plans.

    Also, it appeared that obama was willing to throw away his demands for increased tax revenue in exchange for ss cuts. Last weekend he was quoted in an interview as stating that “we need … well, would like … tax increases to do a large deal” or something to that effect. He chooses his words very carefully usually … that’s part of the reason he talks so slow … and he hadn’t mentioned insisting on tax increases for a while as far as I know. I suspect that he was willing to trade merely keeping obamacare to trade for ss cuts instead of holding strong to tax cuts because he couldn’t get a deal with tax cuts … I think that was part of the kabuki between him and the house: they demand obamacare repeal and he uses holding onto to it as a trade chip to cut ss.

    However, as soon as reid got involved now obama’s coming out this past weekend and reiterating his insistince on tax increases again. I think that’s reid … that he is not going to walk the plank in 2014 like the dems did in 2010 for obamacare. That if he is going to try to sell the deal, it will have to be on the shared sacrifice shtick. Or most likely imo, he’s trying to sabotage the ss cuts since he knows that the reps can’t get the votes necessary to raise taxes. Remember, reid has a hell of a lot of senior citizens that he supposedly represents in Nevada.

    Z

    1. Z

      I think that’s why you are hearing the reps complain about shifting demands: obama wants to deal from a position of weakness so that he can compromise to his much desired ss cuts, while reid isn’t going to go that route.

      Z

  2. sleepy

    Much as Putin did with Syria, given the technical malfunctions of the ACA exchanges and the tepid interest by the public, perhaps the House may well be throwing Obama an unexpected out that might soon begin to be seen as useful: delay the penalty 1 year for not signing up.

    That of course removes the mandatory requirement in any meaningful way, and Obama is most likely too wedded to his pet project to do that.

      1. Doug Terpstra

        ObamneyCare off the table? Oh no! Say it ain’t so!
        But wait, lo and behold! … from your FDL linkit does appear that “the Republicans have moved the goal posts from delaying Obamacare to getting a deal on spending and entitlement cuts.”

        Wow! Hoocouldanode?
        Of course this has never been about ObamneyCare at all (unless it can be made worse as a bonus — reducing corporate taxes and appointing credit agencies as gatekeepers for the unworthy). Both corporate parties want/need this insurance racket bailout first spawned by the Heritage Foundation. It’s a done deal; take it to Bank. This has always been about austerity for the middle class, cat food for seniors, and Soylent Green stimulus for Wall Street. That has been manifest from the start.

        WRT Obama, this time is not different. This time Lucy will not hold the ball steady, Charlie. This time the brinksmanship may well go further, even over brink if necessary, in order to give Obama plausible deniability for capitulation (you see? the insane bas-turds* made me do it!) —cover to inflict Shock Doctrine, to do what he’s been hired to do to reserve his seat on the 1% deck.
        ———-

        *not to say that the RP is not certifiable or that all are tightly on the same script; only that Obama is utterly predictable and if there’s any angle to play the bas-turds, he will. Punch and Judy’s strings are harder to see, but they’re there alright; and Jamie’s still smirking in the audience.

  3. middle seaman

    Americans’ best hope for keeping as is the worst safety net in the developed world is Obama holding fast to squeeze the last drop out of the Republicans. Are we talking oxymoron here?

      1. James Levy

        One really interesting thing we’ve learned in all this is what matters to Obama. It’s his name. So long as it is popularly known as Obamacare, and he thinks it’s a swell idea, he will fight like a tiger to keep it. He’s already shown more spine on this one topic in the last three weeks than he did in the first four years of his Presidency.

        As for whether or not this is all kabuki or a falling out among elites or a genuine case of Boehner and the House Republicans hating Obama’s guts and wanted him publically emasculated as happened in so many lynching’s past, I still don’t know. All three are not entirely mutually exclusive, as elements of all three may make up parts or the whole of this crisis (and it’s hard to argue today that it isn’t a real crisis–the “this is all kabuki” slant strikes me today as overblown).

          1. Paul Niemi

            I don’t want to be in the Kabuki camp, but I always end up there. Reed and McConnell, in the end, broker a deal. A bipartisan commission to turn the screws on us all is agreed to, and if Congress doesn’t agree to their recommendations sometime down the road, then automatic discomfitures take place. Where have we seen that before?

            I’m beginning to wonder if John Boehner is playing the pied piper, leading the Tea Party caucus to the road out of town. The Republican Party has always been mainly an incumbent re-election machine. The grass roots, visible at the National Convention every four years, are a troublesome accoutrement for the ins, who all joined the club by spending their own money to get elected to office the first time (but were well-financed thereafter). I doubt the elder incumbents like anything about the TPs sprouting from the grass roots and wouldn’t mind giving them a clipping. Also, being in the majority or minority is merely a matter of office location to people like McConnell. Yes, I agree something is going on beneath the surface, and it is possible it is as simple and cynical as that.

        1. Brooklin Bridge

          Agreed, a combination of factors is plausible if not probable. Be that as it may, the safety of the safety net hangs by a thread.

        2. Nathanael

          “One really interesting thing we’ve learned in all this is what matters to Obama. It’s his name”

          Yes. This is a really interesting point, isn’t it?

          Do we need to talk about the “Obama Torture Camps” and “Obama Murder List” and “Obama-Snooping” in order to get him to shut Gitmo and stop drone-murdering people and stop spying on everyone with the NSA?

          Do we need to campaign for the “Obama Stimulus” to get a decent stimulus package, or the “Obama Equality Act” to… well you get the picture.

    1. s spade

      The details of this food fight don’t matter, because Democrats and Republicans both want the same thing, which is to prove their loyalty to the corporate masters who have bought it. Thus, we can expect a magic last minute settlement in which the public loses and the corporate masters cash in.

      Baseball and football continue providing better action.

  4. Sleeper

    Perhaps there is hope after all if the negotiations are so poisoned that the Grand Bargain is impossible.

    It seems to me that a short term sequestration just kicks the can down the road. And maybe this is the plan as it will be another opportunity to blacken the Repuplicans closer to midterm elections.

    And as for a default on government debt – this might be a good thing since it has the effect of removing that arrow from the quiver for years to come.

  5. Ned Ludd

    I think there is a grammatical error in this sentence: “The rich might think that they will profit from this auto da fe is the rich, and they are likely to suffer too.”

    Wealthy investors who have bought credit default swaps may be actively working behind the scenes to throw sand in the gears of any possible resolution, in order to cause a default. George Soros has been blamed for profiting from, and helping to cause, the collapse of the pound in 1992. A lot of wealthy people suffered from this, but Soros out-smarted them.

    1. from Mexico

      Yep. That’s the beauty of

      the lack of transparency in derivative trading that now totals in notional amount more than $700 trillion. That is more than ten times the size of the entire world economy.

      http://www.forbes.com/sites/stevedenning/2013/01/08/five-years-after-the-financial-meltdown-the-water-is-still-full-of-big-sharks/

      With that kind of opacity, it’s impossible to know who the winners and losers from any particular market movement or event might be.

      1. skippy

        Trying to analyze human action, bio – tectonic environmental forces, entropy and a hole bunch of other stuff with ex nihilo axiom thoughts from century’s ago. Its like using an analog system to analyze quantum events in real time.

        Skippy… derivatives are quantum in nature… entropy will assert itself in the end.

    2. fajensen

      Ahh CDS … Wealthy Investors might think they have it made but, failing to fully appreciate what Unregulated Market means in practice, they may come up short when “Arne Anka” the other side of the bet did not in fact bother to post any collateral (and turns out to be a swedish cartoon character)

      …. But Hell, the Taxpayers will make good on that this time also, rite?

    3. Doug Terpstra

      Is this a faux debt crisis to cover the collapse of the greatest counterfeiting / Ponzi scheme in world history? Possibly; from everything I’ve read, a derivative debt collapse is mathematically inevitable at some point. There’s just not enough ink in the “Fed’s” printer to cover cartel members bad casino bets — compound leverage to infinity and beyond.

      This could be a desperate ruse, a cover story, to stave off the gallows and guillotine for the “elite” that only made everything worse after 2008 … and/or the final move in a Shock Doctrine power play, depending on the peoples’ (proven) acquiescence and the state’s (proven) capacity for violence. We do live in interesting times.

      1. Landrew

        Exactly right! I believe many of the largest banks are now beyond pretending to have capital. This is a cover for the collapse of the derivatives markets. They want the chaos, they demand the chaos so we give them everything that is left.

  6. from Mexico

    John Kenneth Galbraith in Money: Whence It Came, Where It Went provides some wonderful historical context which, in my opinion, enhances understanding of what’s going on as we speak:

    Soon there emerged from the discussion the proposal that a firm legislative commitment to the Keynes and Kuznets ideas be sought. Initially the commitment was very firm indeed. The early drafts of the Full Employment Act, as it was first called, proclaimed the sovereign and indefeasible right of every American to a job. And the government was called upon each year to specify and ensure the investment, public and private, that (offsetting estimated savings at full employment) would ensure such a level of employment. In any year when private investment did not supply the requisite total, the Federal government would be instructed to borrow and spend whatever was necessary to make up the difference. Initially the legislation named the total investment that most likely would be required — a round $40 billion. In 1945, a draft bill (the $40 billion figure having been deleted) was introduced in the Senate by James E. Murray 7 of Montana as S380. It was widely cosponsored by liberal members.

    Already in 1945 it was becoming difficult to be against full employment, although, in the end, a considerable number of legislators rose to the challenge….

    The House was then, as often since, far more conservative. And by the time the bill reached this chamber, the opposition had taken notice of the threat and organized to combat it. A scholarly analysis of the legislation was prepared at the behest of the National Association of Manufacturers and Donaldson Brown, a General Motors executive; it concluded that the legislation would enhance government control, destroy private enterprise, unduly increase the powers of the Federal Executive, legalize Federal spending and pump-priming, bring socialism, be unworkable and impractical, promise too much and be open to ridicule. This and similar material was distributed over the country as a whole, with exceptional attention being paid to Senator Murray’s constituents in Montana where it was put around in rural mailboxes and must have been a source of some puzzlement.8

    In consequence of this opposition, S380 was professionally gutted in committee and then opposed as too liberal by those congressmen who had been appeased by the emasculation. Thus it passed the House. The Conference Committee agreed to remove, as offensive, the reference to full employment….

    The victory of the conservative counterattack against Keynes — who, along with Henry Wallace, Stuart Chase and William Beveridge, was strongly featured in the debate as one of the devils to be exorcised — seemed reasonably complete.

    It was also Pyrrhic.

    These are just excerpts. The entire history, which can be found on pages 263 to 267, is well worth the read and the book can be downloaded for free here:

    https://anonfiles.com/file/7401950f3b2717503553dcfb8b51d10a

  7. Massinissa

    If nothing else, I hope this dispells the myth of ‘Democratic Weakness’, or of the one of Obama being an incompetent, at least at diplomacy. His competence at anything else is another story altogether…

    The Democrats are showing that, golly gee willikers, if they want to fight back, they WILL. They only never fought back before because they never WANTED to, not because they COULDNT.

    1. Jane Doe

      It demonstrate that all the artificial limitations that the President has created to generate the crisis may be failing and for once he may actually have to use power that he himself claims he does not have like the 14 amendment

      Claims he made to push the grand bargain

      It also demonstrates that past decisions were wrong as they led to now

      1. Richard Lyon

        The irony is that he is happy to claim virtually unlimited power to launch military strikes at his sole discretion. The helpless argument is very selective.

  8. Jay

    It’s difficult to take anyone seriously when they use “Democrat” when “Democratic” is the correct adverb. Like them, don’t like them, it’s the Democratic Party, not the Democrat Party, and a “Democratic posture” not a “Democrat posture.”

    1. from Mexico

      Is that what passes for argument in Obamaville, Democratland these days?

      If I couldn’t make a more compelling and substantive argument than that, I think I’d hold my peace.

    2. MaroonBulldog

      It’s difficult to take Jay seriously when he uses “adverb” where “adjective” is the correct part of speech.

      1. Jim Haygood

        Maybe he don’t like adjectives. And ‘Democratically Party’ has too many syllables (whatever them is).

        1. sue

          …then there’s Obama’s “professional left”, like our family..non-corporate..those whom he attempted to blame for his “problems” with his own constituency

      2. craazyboy

        We’ll have to see what the Democrators come up with for demolation that Obama won’t veto. Asking if you are a Republican or a Republican’t is getting nowhere.

        Keep an empty mind – this is how reprehensible government works, and we need to give our elected officials time to build con senses.

  9. Pwelder

    This fine review of the situation added a lot to my understanding – and I’ve been paying attention.

    One comment: IMO the punditry that counts on upsets in the financial markets to force a quick resolution will prove to be mistaken. The template they are looking to here is the first TARP vote in 2008, when sharp down moves did in fact lead panicky legislators to reverse themselves a few days later.

    The problem is that all the players have already seen that movie. There is nobody running significant money who doesn’t remember that episode, and the same is true of the great majority of current legislators and staff. The lessons they will draw? The money managers – at the very least, those not heavily margined – will recall that the spike down was temporary, and dumping into the news ultimately proved expensive. So Blackrock and Fidelity will sell out of money-market paper that matures ahead of what they see as the date of a likely resolution, but beyond that there won’t be much of a dump. The Congress – both the R’s and the D’s – will take from the 2008 experience that the Fed can and will do enough to hold the financial system together, any dislocations will be temporary, so there is no need to take less than the politics would otherwise allow.

    I’d like to be wrong about this, but it looks like the setup for a stalemate much longer than anyone now expects.

  10. Ché Pasa

    Default becomes likelier the richer it will make some of the key players.

    Sequestration and the Shutdown have had their uses, but Default is the holy grail. It’s been toyed with for years; now it’s so close they can taste it.

    Whose misfortune? Who benefits?

    That’s what this fight is about.

      1. Banger

        IMHO, that would be people who want the government to break down-the usual corporate a-holes will not profit from this. I think we are seeing the gradual breakdown of order and the rise of criminal gangs. Loretta Napoleoni wrote about some of this a few years ago in Rogue Economics but I think it’s gone way beyond that now. Organized crime probably earns 20% or more of world GDP (Glenny put it at 15-20% a few years ago and I think the trends are worse now).

  11. Ron

    The Rank and File tea party members will not support a new debt limit bill as there ambition has always been to reduce Federal spending and cut down the size of government. This is the basic issue facing the Republican leadership,they need the Democrats if they want to pass a debt ceiling bill and in reality should have never started down this path without assurances that the Tea Party House members would support them throughout instead they have been stranded. This could have a major impact on the Senate as the GOP brand continues to be dominated by Southern bloc Tea Party members and religious partisans ending our muting the National Media’s continued fantasy of calling the GOP a national political party. This is the basic political issue facing the Republican Party there Brand continues to become more Southern,Religious,small government and rural while the rest of the country moves in the opposite direction and sooner or later the national media will have to take up this story line.

    1. Jim Haygood

      ‘… ending our muting [mooting?] the National Media’s continued fantasy of calling the GOP a national political party.’

      Evidently the days when the Democratic Party tent included the unlikely combination of the northern urban working class and Southern Dixiecrats are lost to history.

      As Nicholas Strakon wrote in reviewing Walter Karp’s Indispensible Enemies,

      Knowing which side their bread is buttered on, the regulars of one party systematically cooperate with the regulars of the other party — their “indispensable enemies” — to foil the rising of mavericks in either party.

      http://www.thornwalker.com/ditch/indispensable_02.htm

      Save the duopoly!

  12. fajensen

    I think it is not really relevant how The Markets will react. Of course they make nice news items with the concerned speakers and analysts, the coloured quotes and graphs for stock and bond tickers, but, the value of all the securities trading on the regulated markets are just a percentage (if that!) of the OTC / Unregulated Markets – where the real meat and potatoes are hidden (for obvious tax- and margin- reasons).

    Last time i bothered enough to look it up (2012) ISDA claimed that the “value” of the “securities” trading on the OTC derivatatives market was about 60 times world GDP!

    What happens in the invisible OTC-market drives events in the visible world of the regulated markets. Mere “gravity waves”, maybe a few ppm’s of seapage, from that black hole of capital is already enough to move the regulated stock markets several percent on normal days.

    The thing is that the budget negotiations could trigger a cascading default in the OTC-markets *whatever* the outcome because it depends entirely on the way that the bets, the CDS, happens to be stacked and how much capital is backing the losing side – and nobody knows that.

    Quantum Finance: Bankrupt and Loaded at the same time until someone measures.

    1. Banger

      Yes, all that adds to the mystery. The fact, however, that this sword is hanging over us, yet no one fears tells me that there is something operating within the world financial system that maintains order. What is it? I think it is some kind of system of hidden agreements between sovereign funds, the IMF, WB, and big players in the financial markets. This would explain why these TBF banks are invulnerable to prosecution because they are, in effect, legitimate members of the world government.

      However, it seems like that arrangement may be breaking down with this crisis so, as Yves said, it has the feel of August 1914 only we don’t know who the real actors are.

      1. LucyLulu

        >>”The fact, however, that this sword is hanging over us, yet no one fears tells me that there is something operating within the world financial system that maintains order.”

        It isn’t that big players aren’t, or won’t, be concerned, it is that they still think there will be a last minute deal or intervention, as has happened more than once in the last couple/three years. If there is an actual default, including failure to pay ANY creditors, not just Treasuries (though granted default on these are more consequential), expect to see major market disruptions.

        Could Bernanke start buying up debt and expand the Fed’s balance sheet, essentially transferring the raise in debt ceiling to the Fed? Even swap out current $85B purchases for government debt if necessary? It could be justified under the same Emergency Powers authority used so liberally in the past. I imagine Republicans would be incensed though.

  13. DolleyMadison

    who even cares. The whole world has become all about rich people taking their boots off the necks of the rest of us from time to time to screw over other rich people. As long as they keep fighting with each other the rest of us can at least breathe for a few minutes…

  14. Brooklin Bridge

    That is perversely the best hope for ordinary Americans, that Obama wins this battle and in so doing, loses his Grand Bargain war. But don’t hold your breath

    Thin gruel indeed. This is the same as last year; we are saved – if we are saved – by the results of their own greed. The monkey can’t get the damned banana through the bars while holding it in his hand at the same time. Ugg. Frustrating for that elite monkey no doubt. But for us, it’s totally upside down good news because it is simply too thin a thread holding onto what remains of the New Deal to take any real joy from. Le Seigneur won’t be raping your daughter (doight de seigneur) tonight because he’s in a scuffle with some other nobleman over the right. Praise the lord!

  15. scraping_by

    The current ‘shutdown’ is actually a regime of budget cuts that are targeted, ideological, and austerian. They’re causing popular anger at the extremist Blue Hats, even though they’re okay by the Top Red Hat.

    A default on the artificial borrowing limit can be used as a pretext for cutting into transfer payments to pensioners. The astroturf demonstrations of the veterans yesterday may be nothing to the real anger of people who worked and contributed to this social insurance all their lives, just to have stolen to bail out banks.

    Barry is surrounded by people with guns. He’s starving their parents. What could go wrong?

    This latest episode of ‘The Well-Meaning Dolt vs. the Scary Clowns’ will probably end badly for the audience. Let’s hope the few people not in the script will help it end differently.

    1. Brooklin Bridge

      1) This does not look scripted; it looks like the train has left the rails as Yves points out.

      2) If they do get the safety net, and they probably will, the American people will likely acquiesce. They will grumble and barely a sound will escape through the MSM, but they will acquiesce. The degree of middle class discontent weighed against the perception of what they have to loose can still easily be controlled with current technology (propaganda, pseudo military police, MSM, etc.). But even if there are two different views on how we are getting there (a script vs. a food fight), there is only one ending long term and it is very bad (as in epic) and deeply wrong.

      It goes without saying that everyone will loose, even the very rich as they have in Europe, but that’s simply not what the elite are worried about now. They are in the middle of a rape. They will be satisfied and we will pay for it.

      1. Benjamin

        Not only will they acquiesce, a significant percentage of them will buy a few more boxes of ammunition and talk about how as long as they have their guns they are free men, and ever at the ready to rise to the call of defending their liberty if needed. They will continue to act as if oppression is a possible future development, and not already the current status quo. It’s fascinating how what they always claim is a right needed to protect themselves from domination is in fact a sop issue that keeps many quiet as long as it is pandered to.

  16. Paul Tioxon

    Chris Hayes said another remarkably honest thing when he said that he had no idea what was going on with the republicans and how the democrats would keep responding. He said that this was so unusual, and different, that he could not really make sense out of the whole shut down this time around. He said this to Ezra Klein who seemed in agreement, about not being certain what was going on. The traditional simple model of looking for who gets what, when they get it and how they get it, has been reduced to a institutionalized knowing, a sort of world weariness about the rules of the game, both sides of the same coin, with roles repeatedly played out the same way, with the same lines, but just different actors from one election to the next. On this site, there is the too frequent dismissal of political analysis for the dogmatic acceptance of politics as kubuki theater, a stage set Potemkin village, a choreography of oppression and corruption and not a dimes worth of difference between seemingly opposed political parties. Power is as complicated as a synthetic CDO, and deserves more respect than cranky old man gruntings.

    But when you render an analysis of this situation with the government shut down and the debt ceiling coming together in a crisis, there is not a valid guide from the past to produce a good explanation for what is going on. Uncertainty in politics is a sign of a multi-polar political conflict, instead of the usual 2 part set piece of collusion, with the pretend battle really a half hearted horse trading session behind the scenes.

    The ability to get what you want in the face of organized opposition is power. When no one is getting what they want and nothing is coming to any conclusion, then what we have here is an unusual situation. What is coming to the foreground is, the internal conflict within the republican party as the larger conflict, than the battle with the White House. What the president has stated as a goal is not to negotiate until the government is open and the debt ceiling lifted for an operationally significant length of time. So far, he is getting what he wants by not negotiating. Winning a negative goal is easier than accomplishing a concrete objective, such as de-funding Obamacare. His concrete objective can be seen as breaking the back of the republican tactic of shut down/default extortion, and placing it beyond any use in the future, if only the future of his administration. Changing the law about the debt ceiling would be the sign of the complete elimination of this tactic once and for all.

    The republicans have rejected their initial stated goal of Obamacare destruction. The president still won’t negotiate, so he has not changed his position. The uncertainty over this process arises from this being nothing other than what it appears to be: real political struggle unconstrained by electoral considerations of one side, the side that will not negotiate until the other side gives up on its goal of shutdown/default. I don’t know what will happen. I don’t know if the players involved know what they will do. This seems to be a real match with both sides intending to win. The structural uncertainly is due to both sides wanting mutually exclusive concrete goals, obsoleting horse trading to reach any conclusion. By not negotiating, the tactic of shut down and default will be sweated out of the political process, much like Volker raised interests rates to crush inflationary expectations of ever increasing wages to cover the cost of living rising. By using this means to an end on a regular basis, the republicans have announced an end to politics as usual.

    Both sides want to end the other sides power to as great a degree as possible. The Imperial Presidency is no longer important to the republicans, because it is clear that their base is shrinking and will not grow itself with new voters, who are the traditional punching bags of the conservative American voter. This will keep the White House out of their control for most likely, the next dozen years. Neutralizing the White House is important to the republicans claim on policy making and control over the mechanism of the federal bureaucracy. If the dems are to consolidate any power at all, they must beat back this attack on the power of the presidency before they can hope to capture both houses of congress. To rule, you need them all working together. Right now, the power struggle seems real, it is the politics of sabotage of the one branch of the federal government that republicans do not have a firm grip, unlike the right wing supreme court and gerrymandered congressional districts.

    1. susan the other

      I didn’t see a report on MSM on the Million Vet March which stormed the barricades of the WW2 Memorial and tore them down and then proceeded on to the gates of the White House with angry slogans, etc. Sarah Palin and Ditz Kruz jumped in front of this parade to enhance the Republicans’ position that it is all Obama’s fault. In the photos snipers were positioned on the roof of the White House ready to shoot.

      1. Cynthia

        What a charade. Let’s see these vets march on the Federal Reserve branches in New York, Philadelphia, Boston, Chicago, Atlanta and the rest where the real damage is being done. Let’s see them march in Bluffdale, Utah at the NSA data vacuum center. Let’s see them march at the Pentagon which engages in immoral wars against sovereign nations, resulting in death and injury to countless innocent people. Those kinds of actions would get my attention and respect. This, however, color me unimpressed.

    2. Brooklin Bridge

      Power is as complicated as a synthetic CDO, and deserves more respect than cranky old man gruntings.

      If President Obama gets his way and manages to cut and gut Social Security, Medicare and other vestiges of a humane era, the Democrats will be working to shore up power for the executive branch for the next Republican president, and snide remarks will have a lot less to do with it than old man grunts, for those…, along with the pain of old women, and the pain of those desperately trying to care for them, will be heard.

      And if the result is catastrophic in your miniscule foot-ball team play book, or in reality, or both, who you blame won’t matter a whit for it will be done and your “team” will be just as responsible as the other and far more responsible than the constituents your team is screwing over. Your nuances are purely for your comfort.

    3. Banger

      I think you understand some of the essence of the situation. As I’ve said, the whole thing does not make sense. Usually these matters are ironed out by fixers, bag men and so on. Powerful forces agree and deals are worked out and life goes on. This period, since 2010, has completely changed. Deals are not being honored, nobody trusts anybody, new players with lots of money and a take-no-prisoners attitude are playing the game and I don’t just mean the TP activists either. Washington is now snowed under by lobbyists and, frankly, gangsters both legal and illegal. The place is now in chaos–the wise men who usually were there to broker deals with charm and a few swift kicks are now gone. The fall of Larry Summers is an example of the loss of power of members of the permanent government.

      The relentless search for self-interest makes it impossible to cooperate–particularly with as many factions as there are today all clamoring for favors and influence.

      1. Paul Tioxon

        Banger,
        I think YOU replaced the “wisemen”. That group of unofficial official advisers to the president was an example of how much influence a small group of the WASP establishment had. Today, there are so many more platforms or power networks, than the CFR. We have read more than once on this site the effects of the counter-revolution of the conservative right wing of the republicans, as outlined in the Powell Memo. Today, Freedom Works, The Mercatus Center, AEI, CATO, Heritage etc. all have various and competing schools of conservatism. But the tactics of control of legislative bodies, via gerrymandering voting districts or changing parliamentary procedure remain tried and true methods of political power.

        What is really important about my message to analyze power on its own terms when the issue is political control of the US Government is to see what drives surface battles. Here is a clip of Dem Cong Chris Van Hollen from MD. The piece speaks for itself.

        As you know, in the US Senate, the call for cloture requires 60 votes to then call the actual vote on a bill, which will take a simple majority. In the lower house of Congress, the so-called Hastert Rule, which is not a rule or parliamentary procedure that must be followed, but more of a Grover Norquist pledge to metaphysical conformity to conservatism.

        http://www.thedailybeast.com/articles/2013/10/03/denny-hastert-disses-the-hastert-rule-it-never-really-existed.html

        However, about 2 weeks ago the republicans changed all that. The standing, writteng rules of the US Congress were changed. In the middle of a bill, the power, as they call it, the privilege, of each and any congressperson allowed anyone to call for any bill to be brought to the floor and be voted. You have to claim the privilege to do so and the speaker could not prevent the introduction of the bill to the floor to be voted upon. In the video, Con. Van Hollen explains how the Majority Party, the republicans passed a bill that changed the rules of the House to give the exclusive power of introducing a bill to the speaker of the house or his designee, in this case, Con. Boehner and ERic Cantor. Those two now control what bills can be introduced. The republicans in true gerrymandering fashion rewrote the rules of the house in final days of September to make sure that no one could stop them from demanding whatever it is they demanded in exchange for re-opening the government.

        http://www.nbcnews.com/id/3032608/vp/52288317#53270346

        Will the Senate’s Nuclear Option be next?

      2. sue

        Americans need to understand this, regarding Obama and elections concerning
        democrats; if DLC dems think they can get away with touching, in any way, “Social Security” and “Medicare”, they can find someone besides union members, middle-class families with 4 year or more university educations, nurses, doctors, university professors, teachers, to vote for democrats. They will need to begin an entirely new political party.

        And those are just samplings of our non-extended family…

    4. NotTimothyGeithner

      Its odd because the GOP and especially the “Teabaggers” both official and unofficial are misunderstood.

      -First, the U.S. doesn’t have political parties. We have tribal support groups.

      -The whole Teabag thing isn’t real. The modern GOP is an alliance of the traditional GOP which did very well among immigrant groups and African Americans due to the Southern Democrats. FDR made huge inroads, followed by JFK profiting from a blunder by a Republican (not Nixon) among African-Americans in 1960*.

      -The GOP was in a situation where the couldn’t win circa 1964. Here enters the Southern strategy.

      -Nixon wins first. Ford has real issues as President for a variety of reasons, and he is challenged both from a neo-Conservative element which includes Ayn Rand acolytes, proto-neocons, and newer wealth who supported Reagan and the Southern Democrats who no longer part of the Democratic Party formed the Christian Coalition in various forms. Since Ford was a safe local Congressman by his nature, he was not a traditional GOP stalwart (Bush, Taft)

      -Reagan won two terms and 41 won one. In the 82′ midterms, Reagan’s approval rating didn’t help the GOP. This is a key point, Newt and his cronies which would include John Boehner if he wasn’t in Congress yet took over candidate recruitment for the GOP. At this point, the guys running for mayor, the statehouse, and school board were chosen from a profile which would drive turnout while appeasing both the element behind Reagan in ’76 and the Christians. They are rebranded as the new GOP.

      -All this time, the old GOP is making concessions on various issues such as supporting Christians schools or getting the IRS to look the other way at churches. For many poor whites, there is a definite attraction from these institutions, and they get branded over time.

      -The reality is the voting power of the GOP is with these Ayn Rand acolytes, small businessmen, and the Christians (evangelical, super Catholics, Mormons and so forth). I think this might be understood. Even the language of Ron Paul supporters seems to revolve around the people taking the party. Democrats and liberals may mock them, but to ignore why people act because it may be stupid, does cause problems.

      -Ross Perot’s campaign helped demonstrate the weakness. The GOP ran the oldest guy they could find (Mumbly Joe**) because they didn’t know what to do. The beast existed. It one thing for a poor person to follow a rich lord in their own backyard, but its another to follow the lord in another region. The 90’s the Christians moved from personality driven politics of Falwell and Robertson to more bureaucratic operations. Falwell’s kids have more power and less power than the old man for this reason.

      -All this time, Jeb Bush was being groomed for power by the GOP powers. Down in Texas, this is a crazy story which involves machine politics, cookie moms, and Ann Richards, but George W. Bush emerges as the Governor of Texas who beat Ann Richards’ machine.

      -W. becomes President by virtue of theft, but he was close enough to steal it because he had united all realms of the GOP. The Christians loved his drunkeness. The Ayn Rand types loved his oil background. The neo-cons loved Rumsfeld, Cheney, Condi, and the weak-willed Powell. The traditional GOP elite loved that his grandfather tried to install a fascist government. Combined with the dotcom crash and the crummy economy for the bottom half during the Clinton years***, W. was able to keep these groups together. 9/11 helped. The GOP voters fought back on Harriet Miers and the SS privatization which the Democrats were rushing for compromise. W. has a folksy charm which appeals to people in the absence of a counter Democratic message. Look up Daschle’s SOTU response. He a prick who talks down to people.

      -We get to 2008, and what was the state of the GOP. Pawlenty and safe Republicans couldn’t see the light of day. The crowds were looking for Huckleberry and the guy from Law and Order. Romney despite running for almost a decade by this point couldn’t see the light of day. The primary calendar allowed McCain to win. McCain had been popular in New Hampshire for a long time, and the New Hampshire conservatives aren’t connected to the traditional GOP elite and they aren’t from the Christian-first element. McCain wins, and McCain picks his VP on the future GOP nominee or picking someone who will be a stunt. The stunt is popular with the GOP base.

      -Palin is off the reservation, and Palin herself is the result of GOP scandal in Alaska. Her outsider status made her the only available option to be elevated in Alaska. She’s not part of the club. Her popularity scared the GOP powers that be, and I think there was a drive to regain control of this element and prepare everyone to support Romney, former Governor of Massachusetts. This may be my conspiracy theory, but Boston is the sight of sports greatness, the Boston Tea Party, and the Massachusetts Governor’s mansion.

      -The GOP base is somewhat divided because there is no leader of the Teabaggers. They look everywhere. Glen Beck may be a joke, but he had a really big crown on the National Lawn. The GOP voters shopped around. Romney’s victory was largely on the back of early strength in Iowa and New Hampshire and the Western States because of the Mormon vote which are more important early to the GOP because of their delegate allocation process and schedule. Republican voters did NOT WANT MITTENS to be their nominee. If Santorum didn’t not have a prominent spot in the dictionary, Ricky might been their nominee. Could you imagine the mess?

      -Now we throw the current economy. Despite the stock market being nominally high, high stock prices don’t matter to the broke (Americans). Washington has created a situation where they can’t pivot away from the debt. Things are being cut. The Republican base which is heavily represented in Congress is looking around for whatever they can grab. Bad policy is okay when they can point to a new highway or assistance for a carnival at a megachurch. Right now, the financial elite are moving into charter schools which is Christian territory. The GOP alliance isn’t function together anymore.

      -To wrap up, the problem is the GOP elite going back to pre-FDR doesn’t hold the voting power. Two, they’ve created a situation parties where handing out favors is not happening. Three, the GOP base wants what they feel they are owed or can grab, but they are still Conservative tribalists and don’t understand what they want. They know they don’t want Wall Street or the Romney to class to win or to maintain the dominant position in the relationship, but they are bound to certain tenets such as sticking it to minorities/Democrats too and cutting taxes. They might love Obama-Care in theory, but they also know many of their voters are expecting the GOP to fight against any new fee/taxes and to stick it to the Kenyan and the Libtards.

      Both Hayes and Ezra make the mistake of confusing politeness with decency. Its really tough to be mean to someone’s face because of human wiring, but its really easy to castigate someone when you don’t see them. The problem is now they see Republicans electeds, and would you believe but a person who won elected office is just charming? No one wants to be conned, so the person they find charming must be good, and I think this feeds into the inability (not Ezra’s he is a lost cause) by “liberalish” elements to not recognize the GOP. John Boehner and the GOP elite recruited proto-Teabaggers and supported the Teabaggers, but the sentiment is that the Teabaggers are poor red necks being used by rich white guys because they don’t want to acknowledge that their Republican friends are just as vile or more so than the Teabaggers who are just usually stupid people who don’t know any better.

      The Republican Senators seem more reasonable****, but many of them entered political life prior to the Gingrinch proto-candidate.

      This isn’t a temporal event. This is the long term consequences of the Southern strategy coming home to roost. If there was no George W. Bush or if Jeb had been President or just the GOP nominee, I believe this might have happened earlier even with 9/11.

      I think I’ve hit all the major GOP events, and when you look over time, this is not to be unexpected. This isn’t a team in baseball where Spring is eternal. This is like the Hall of Famer who is embarrassing himself trying to play one more season. There is a whole thing with Democrats largely being non-entities in a practical way which has helped create the economic situation, but beyond Democrats being in the other tribe and an electoral concern, I don’t think they matter.

      *We forget things because we tell stories about our guys over time. Nixon was a lifelong member of the NAACP. The JFK campaign (i.e. Saint Bobby) used Nixon’s NAACP status as part of a negative campaign in the South in 1960.

      **References to pop culture!

      ***The net result of the Clinton years was wage decline and growing wealth inequality, not widespread prosperity which is why telling people how great the Clinton economy was doesn’t work.

      ****They are still Republicans which means they are all fascists, and anyone who suggest the Republicans aren’t all that bad and have some good ideas are awful human beings.

      1. FederalismForever

        Not a bad analysis, but you left out a major issue: abortion. I grew up in a hard-core Christian Evangelical Republican household, and I can assure you that this issue trumps all others for many in this tribe. I well remember an issue of Christianity Today which urged its readers to vote for Reagan over Mondale SOLELY because of the abortion issue.

        In fact, if you examine historical voting patterns, the Southern “shift” to the Republicans did not really pick up steam until after the 1973 decision of Roe V. Wade.

        The abortion variable can explain a lot. For example, no non-white-male Republican who has been voted into office in the South in recent years has NOT been strongly – even fanatically – “pro-life.” Bobby Jindal won’t even tolerate abortion in cases of rape and incest! Abortion also helps explain (in part) why Reagan did so well among Irish Catholics. This was a voting block that had previously supported the Dems in overwhelming numbers, but Reagan managed to get about half of their votes (it might have helped that he was part Irish). Finally, there is no doubt that Obama’s extremely pro-abortion stance really puts off many of the Tea Party tribe. They are regularly “educated” on all of the details of Obama’s voting record on abortion (going all the way back to his time in illinois) by people like Pat Robertson. Even if Obama were whiter than the driven snow, many of this tribe still would never support him given his strongly pro-abortion record.

        I am continually surprised by the lack of emphasis on abortion, and the over-emphasis on race, by many who attempt to analyze today’s Tea Party/Republican Party. For many, it’s not about race; it’s about Roe.

        p.s. You are absolutely correct about the JFK campaign using Nixon’s NAACP membership in the South. While a Senator, JFK also voted against Eisenhower’s 1957 Civil Rights Act.

        1. NotTimothyGeithner

          Abortion is a “safe sex” issue. The people most in need of abortions and who have the hardest access to abortions (If the Obama or Bush girls needed one, they could get them. Not them personally, people from their station) are single young women.

          They are the weakest people in society because they are alone and can’t overpower others. An older mother or older female might be in the position where she has “Sons of Katie Elder” situation. Abortion is just blaming the ills of society on the weakest person.

          Single young women are paid less, and if they don’t get the abortion, they have a kid. The face of abortion is scared, young girls who don’t have anyone to protect them, and its easier to pick on a little girl than the plantation owner.

          As for Obama’s race, I personally am of the opinion that Republican attacks are only shaped by Obama’s skin color. If Obama was white and still President (he’s far too banal to have made it in the primary process), he would be the target of crazy rumors like any Democratic candidate or office holder like Bill.

          1. FederalismForever

            You think ALL the opposition to Obama comes down to skin color? That’s an astonishingly reductive analysis of a very large swathe of a people. I’m surprised you would conclude that, given the subtlety and nuance of the rest of your analysis.

            I’m sure race places a large role in the resistance to ObamaCare. But, then again, many of this same group also fiercely opposed Woodrow Wilson’s IRS and Federal Reserve. In all three cases (ObamaCare, IRS and the Fed) there is a perceived move from local control to centralizing federal control. And this has ALWAYS invoked a strong response from these groups. It’s not all about race!

            Your abortion analysis is also overly simplistic. The fact is the United States has one of the most liberal abortion policies in the world. It is one of only four countries to provide a right to abortion through the third trimester (the others being Canada, China and North Korea). By contrast, every European country has enacted limitations or even restrictions on abortion after the first 12-20 weeks. Given how much power women have in European politics (especially in the Protestant countries), it can’t all be about suppressing the “weakest”. See:

            http://news.bbc.co.uk/2/hi/6235557.stm

            1. NotTimothyGeithner

              You could try working on your reading comprehension. I said the exact opposite about attacks against Obama. I didn’t say “opposition” because often its merely nihilism, but I pointed out if Obama was white he would be opposed for some absurd reason similar to the Clinton Administration.

              Instead of just looking at random words and responding, one might try to “read” what is written. I know its difficult in this society of CTRL F, but please, try to reach this goal.

              1. FederalismForever

                Um . . . the first sentence of your last paragraph is: “As for Obama’s race, I personally am of the opinion that Republican attacks are only shaped by Obama’s skin color.”

    5. LucyLulu

      “Both sides want to end the other sides power to as great a degree as possible. The Imperial Presidency is no longer important to the republicans, because it is clear that their base is shrinking and will not grow itself with new voters, who are the traditional punching bags of the conservative American voter. This will keep the White House out of their control for most likely, the next dozen years. Neutralizing the White House is important to the republicans claim on policy making and control over the mechanism of the federal bureaucracy.”

      Bingo! You’ve captured the essence of the underlying dynamic here. Republicans have supported an increasingly powerful presidency over the decades. With the shifting demographics eroding their base and their chances at recapturing the presidency, along with stronger than usual venom towards Obama in particular, they seek to strip the Presidency of its power. Obama knows the future of the executive branch depends upon the outcome, hence his refusal to negotiate. If he capitulates, Obama knows there will be future debt ceiling and shutdown threats by minority parties (whichever one is current minority) to win policies unable to be passed through Congress. For both parties, this is more about the resulting distribution of power between the Legislative and Executive branches than ultimate policy. (For the same reason, I’d expect the House to be refusing to fast-track TPP, though perhaps that’s expecting too high a degree of consistency.) If Obama can get the debt ceiling issue permanently taken off the table, I’d expect him to be willing to make considerable concessions in exchange.

      That being said, once the crisis is settled, at least this round, Democrats in Congress have their own division over policy. Obama, along with many other Democrats, is looking for a Grand Bargain that makes cuts to entitlements in exchange for lifting sequestration cuts, deeper ones which take effect in Jan, I think. These cuts are having immediate contractionary effects on the economy, and increasing reductions in fiscal deficits will further restrain the recovery of the real economy. Other Congressional Democrats, e.g. Reid and Bernie, want to preserve SS and Medicare and proposes raising caps on payroll taxes instead. I would guess this second group is outnumbered by the first, but don’t have facts or figures to support. Republicans won’t agree to a budget that doesn’t include reductions in spending, i.e. at least one of these, and some will consider both as the only acceptable and face-saving option. Of the two, Conservatives, secretly at least, prefer to see the less popular entitlement cuts and think they’ve already bent over too far on new taxes. Chained cpi will precipitate little backlash from the masses, being seen by them as trivial.

      A final deal will necessarily require buy-in from both parties. It appears it will be brokered in the more centrist right Senate. Would we like our poison now or later? I don’t believe the Democrats have the power to avoid both even assuming they had the will. Even if sequestration was the chosen option, cuts to entitlements would only end up temporarily on the back burner to come up again either later in Obama’s term or Hilary’s (not an endorsement, just current view of reality, albeit it’s a long way off and much can happen). One possible advantage (though can’t be counted on, nor part of Obama’s thinking) to taking our poison later is that legislation can be repealed if political winds later change. And I’m not as financially astute as many here and something I wonder and would like to ask those with more expertise, would chained CPI in a better economy be better for pensioners than no c-CPI in a worse economy?

      Like it or not, all of Congress buys into the ‘long term debt is too high’ meme (Grayson is only exception I can think of).

      1. Paul Tioxon

        Political battles within the government have to be resolved before the long term neo-liberal agenda can be executed. At the very least, the ticking time bomb crowd of hysterical debt cutters, aka austerity seeking pols of all stripes, want to get on with the business of restructuring Social Security and Medicare/Medicaid/VA Medical programs. Christine Lagarde in an interview over the weekend, linked the need to end the political stalemate with in the near future, entitlement reductions. Interview at 4:45 starts austerity discussion by Meet The Press David Gregory. What this tells me, is that the never ending war on Social Security is never far from mind.

        http://www.nbcnews.com/id/3032608/vp/52288317#53270346

        1. damian

          Christine Lagarde should spend her time promoting France into entitlement / social security reform and see if she is taken seriously there first – it would be amusing

    6. Nathanael

      Politically, this is like the 1850s.

      We’ve had quite a while with insane compromises cobbled together by getting “different majorities on different parts of the bill” (as was true of the Compromise of 1850), and it seems that that is no longer possible. We are now facing the “rule or ruin” slavers in the form of the modern Republican Party. What happens next? Well, I don’t see an Abraham Lincoln on the horizon, but whether or not we get one, the political landscape is going to be shattered and reformed with different constituencies.

  17. eVT

    Watched “Swimming to Cambodia” last nite………O Spalding, you,left too soon!……the material only gets BETTER!

  18. Punchnrun

    So the allosauraus and the t-rex are at it tooth and claw over the carcass. It’s a great fight, fascinating to watch, with the very survival of the loser hanging in the balance. Only problem, we are the carcass that both get to dig into when it’s over.

    1. craazyboy

      When It’s Over???

      I fear that when the current episode is over, it will be about where things are in the opening scene of the movie, “Jaws”.

      The young chick is swimming in the ocean, and wham, under she goes, then pops back up again. A wild eyed look on her face as she obviously is thinking (to me, anyway), “They are now using the Chained Chinese Price Index to adjust my future social security benefits?”

      But the movie didn’t end there.

  19. Brooklin Bridge

    Power is as complicated as a synthetic CDO, and deserves more respect than cranky old man gruntings.

    If President Obama gets his way and manages to cut and gut Social Security, Medicare and other vestiges of a humane era, the Democrats will be working to shore up power for the executive branch for the next Republican president, and snide remarks will have a lot less to do with it than old man grunts, for those…, along with the pain of old women, and the pain of those desperately trying to care for them, will be heard.

    And if the result is catastrophic in your miniscule foot-ball team play book, or in reality, or both, who you blame won’t matter a whit for it will be done and your “team” will be just as responsible as the other and far more responsible than the constituents your team is screwing over. Your nuances are purely for your comfort.

      1. Paul Tioxon

        Dear Brooklyn Bridge,
        I have bought you at least a dozen times that I can produce clear title records. By any chance, could you have been sold to anyone else? I will sue. My lawyers are waiting. This is really really for real and serious.

        Sincerely,
        Paul Tioxon

        1. Brooklin Bridge

          But Paul, my terms were so reasonable. I was sure you would find nothing but satisfaction. BTW, pay no attention to Cwaltz. None.

          And apologies. I was clearly not having a good morning.

  20. Sanctuary

    Actually, I think the rumored “deal” being offered by Reid of government reopening until mid December and a debt ceiling increase for 6-9 months, spells the end of the “Grand Bargain”. As part of that deal, Democrats have stated clearly they will only consider delaying the medical device tax and income verification for subsidies if there is a concession of equal magnitude from the Republicans. They know that the Republicans have nothing to offer that is comparable. They also are letting them know that they do not believe that they need to give Republicans any concessions for “saving face” purposes since that would only be supportive of extortion and the principle that shutdowns and debt ceilings are negotiable things. With a debt ceiling increase that only lasts into the middle of the midterm election season, it forces the Republicans to take another self destructive vote when they are in primaries against crazies. With all of that, it makes impossible a “Grand Bargain”. No Republican wants to vote on that in the mid term election season, as neither does any Democrat. I agree with Yves’ assessment that this poisons the well enough to prevent the Grand Bargain and believe we should still be vigilant against it, but I think it makes a Grand Bargain nearly impossible.

    1. Brooklin Bridge

      Music to my ears, but they’ll keep trying. It never ends now, we just get small reprieves.

  21. thelonegunman

    i predicted at the start in comments here and tweeted (richter pcked up on it) that the rethuglican end game was, in their eyes, a win-win: they would pushpushpush the shutdown to the debt limit, as they always wanted them tied together, and then, believing they have the dims (purposeful use of ‘i’) over a barrel would drive the bus over the cliff, blaming the entire fiasco on ‘the default dims’… their strategery was to have a cudgel to blast the ‘tax and spend and then default dims’ whilst claiming ‘we’re simply trying to bring a sense of ‘order’ to our spending (spending, mind you, congress had already authorized)… and if Obama, the con-law ‘expert’ president chose to go the route and arbitraritly lift the debt ceiling (so as to fulfill their obligation to honour all federal debt) they (the rethugs) would be able to cry ‘We have a dictator! an Imperial president! Executive Overreach – we must Impeach!!!’ and will simultaneously earn another ‘card’ to play in the coming elections…
    see: all this bullshit talk about running the government like a business is just that – bullshit… they WANT to run the bus over the cliff so they can ‘win’ in the coming election… because THAT is the most important point for them, NOT the well-being of the country

  22. Hugh

    They are all acting in bad faith. They are a bunch of cannibals squabbling over how we should be cooked. It is not good for us whatever their decision may be.

    As for Senate procedures, they are cumbersome only when Senators want them to be. Unanimous consent agreements, for instance, dispense with regular Senate rules and are in fact the way much of Senate business gets done.

    Then of course, as Hannah Arendt point out, those with a totalitarian mindset will pursue their totalitarian fictions regardless of reality or commonsense.

    Finally, we live in a late stage kleptocracy where the facades covering up the looting are crumbling and the viciousness of our rich and elites is becoming more apparent.

    None of these perspectives completely explains what is going on at the moment, but taken together they largely do. Various factions of looters are trying to gain comparative advantage among themselves before they turn their full attention back to the business of looting us.

    1. Carla

      “They are all acting in bad faith. They are a bunch of cannibals squabbling over how we should be cooked. It is not good for us whatever their decision may be.”

      Now you can take THAT to the bank!

  23. Ron

    The latest news seems to be that the Senate is trying to make a deal but they never have been the problem so unless the House leadership is willing to put the debt bill up for a vote based on the idea that Democrats will pass it then this makes sense. The Tea Party house members win since they will all vote no and say they did there best to slow down or stop government spending, nothing to see here move along. This is a good sign that the GOP leadership has run out of options and doesn’t know how to govern its membership in the House.

  24. LillithMc

    The shut-down and default was planned long ago by Jim DeMint, David Bossie, Ginni Thomas, Edwin Meese, Chris Chocola, Matt Kibbe, Michael Needham, Eric Erickson and the Koch Brothers. Information on Bill Moyer’s web site.

  25. optimader

    And so what actually happens when the “strongest” financial entity defaults? Globally.

    Everyone looks at eachother with a puzzled expression then avert their eyes?

  26. PBlacque

    Not to belabor the point, but you say “He’s only pretended to be weak to shift blame to the Republicans for what he wanted to do when what he wanted to do entailed selling out his base.” Yes and that is precisely why we think he’s WEAK… for selling us out… whatever his transparent tactics are…

    I agree with your last point … but it will give him cover for cutting more than he intended… the great betrayal is coming along with another recession.

  27. Chauncey Gardiner

    Wtth respect to geopolitical considerations and the effects this manufactured crisis is having on the US dollar as the global reserve currency, the silence of U.S. officials in response to China’s call for a new global reserve currency is deafening:

    http://www.bloomberg.com/video/china-calls-for-de-americanized-world-DfliVL12SUOfBJMxxBj2Ng.html

    http://www.bloomberg.com/video/china-is-calling-for-a-de-amercanized-world-NgW0zcJ5QNSORR8EJd~w3A.html

    … I wonder if we haven’t crossed the Rubicon?

  28. STEPHEN LAUDIG

    Things that are too large to fail are not [too large to fail]. They are too “large” to fix because the vesteds won’t change [think of any war that was ‘over’ in the sense that the outcome was unavoidable but yet continued until one of the contestants collapsed, e.g. the CSA, the Romanovs, the Ching/Republic structure in China, the Axis, the USSR, Yugoslavia. Catastrophic failing is the ‘fix’ in a cataclysmic, indeed cosmic ie. nemesis, sense. By handcuffing itself to the banks 5 years ago and not letting them ‘fail’ the elite guaranteed that it all goes into the toilet at once, political failure, financial failure and economic failure. Which is just as there is just one elite that is operating in all three areas. The reassuring part is that the US is more likely to fail as the USSR did rather than how Yugoslavia did.

  29. Fiver

    Politically, this has been a Kamikaze attack by the Kohn Bros “Tea Party” Republicans from the outset. The public, and importantly, the media was in no mood for another game of chicken after just witnessing an entire war plan run straight into a black hole of public enthusiasm. The TP label is shot. Whatever happens, this little band of warriors won’t be calling the shots in a pool hall after this. Maybe in some new vehicle sometime. Not now.

    Politically, Obama is in a position to tell his opponents to stick it without giving anything away – no matter what else happened, it’s clear the Republicans hit first, and they’ve managed so far to just survive their own attack in the subsequent polls. Further, Obama has suffered two very serious setbacks, first Snowden, then Syria. He had to look tough, but not crazy and could not be perceived with another.

    Personally, I conjecture that, after the Fed and Treasury took responsibility for such an enormous chunk of the finance economy, they have had to essentially manage markets ever since. It’s not like they haven’t previously been involved with how all this stuff works in terms of technical operations, practices, strategems, conflicts of interest, risk analysis, currencies, whatever. It’s that they now had a tangible, legitimate reason to work with Wall Street banks more closely as a commonality of interest in high asset values, bubble control, useful corrections, technical growth, no inflation and another trillion or two cranked out in QE ’til something gives.

    One of things learned was that “crises” are very useful indeed. Disaster Capitalism, it turns out, was read by the bad guys as well as the good guys. So we’ve seen in the US and Europe since 2009 the mushrooming of “crises” in finance, sovereign “crises”, etc., that have, courtesy of the role of governments, been rendered public and imbued with great importance. The Fed’s big policy decisions, elections of key political players, and these multiple attempts to “wrest control” of government away from government have generated the atmosphere(s) for most of the big moves by markets for several years now. That means opportunity for corruption throughout the process. Given the sort of revolving door interpenetration of State officials and their other selves working at financial institutions (Goldman and the NY Fed for instance), criminal conduct can be blessed by the State so long as some public purpose (managing markets in the “nation’s” interest) is served. These are the guys that drove stocks up over 500pts in a couple days, based on a proposal rejected outright by Obama – in other words, not a serious offer.

    So I see two sets of drivers for these efforts by TP to “extort” Obama, and Obama’s cuffing himself in terms of options. They’ve worked this for a tremendously lucrative 4 years. But the last year has seen the most important gain in public information that proves State crime ever, with Snowden’s assistance, leading directly into a failed effort to go to war. And now, the public, though it has no admiration at all for Obama, has seen enough to wave a “bye” to the TP as a force. I’d be surprised to see any further can kicks, now with the public really not interested in any more garbage, but it’s not impossible.

    They don’t need one with the 2014 election now in sight, and QE humming away taking markets closer to the Sun – it would be courting a total humiliation, including loss of seats, if the TP tried to go this route again a short time down the road. The public pushed back and it’s registered. If only they would really push.

  30. Ep3

    Sorry yves, this still sounds like kabuki. Every time they have one of these talks, some random senator shows up with their plan, which distracts from the main negotiating teams.
    Also, this just smells like a plan to ratchet up the danger and fear and disruptions just so the American ppl will sell the farm to return to their lives of consuming & spending. We both know that if the fed intervenes, it will ONLY be for the benefit of the wealthy powerful. But recall that every time they have gone to the negotiations on this budget impasse over the last years, they have pushed the fear factor farther and farther into dangerous lands. That tells me that the plan has always been to scare the American ppl enough to have them give in to SS and Medicare cuts. You have used this term before yves. It’s in torture, where u abuse and neglect your captive until they are so punch drunk that they agree to anything just to make the torture stop. But the concern is the ameircan ppl don’t know when to cry uncle.

  31. Novista

    No, it’s not kabuki — maybe kyougen or bunraku. A pox on both their houses.

    Horse’s head bargaining, how droll. Who on Main St. cares.

    Maybe it’s time to crash; either now or later, will be the same. Not as though there haven’t been defaults in the past, no matter how you parse it. 1933 — when they could not redeem the Liberty Bonds at par. And August 15, 1971 with two revaluations of the dollar after, set the state for what we’re experiencing now.

    The last 40-odd years haven’t been the American Dream but the American delusion. And reality bites.

    That old normal was an anomaly, never to return.

    Ever since 1936, when I was born, I’ve watched things going downhill. And I’m tired. The America I ws born in isn’t there any longer. And I grieve for it.

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