Saturday, April 09, 2011

Budget Brinkmanship

While the GOOD news of the government NOT getting shutdown this past Friday evening is that, well, the entire country is not collapsing, it's overshadowing the facts that there are still a lot of BAD news this nation has to deal with.  And it's not even about the hundreds of thousands of Americans who are gonna get hurt by the fact there's $80 billion of social services and aid no longer out there...

For starters, this game of brinkmanship with the nation's economy is not over.  We still have two other key budget issues ahead: the annual (or possibly bi-monthly) need for Congress to vote itself the power to raise the debt ceiling; and the looming fight over Paul Ryan's psychotic budget proposal for 2012 AKA Death To The Social Safety Net And Everlasting Life To Perpetual National Debt.

The immediate crisis is over the debt ceiling.  It's ostensibly supposed to mark the amount that the government can't borrow money.  In practice it keeps getting raised because the government needs the flexibility of borrowing money in order to pay the bills.  A good reason for that is because the government is less eager to find other revenue sources (SUCH AS TAXES) to be able to, you know, PAY FOR SH-T.

The first part of the problem is that the debt ceiling keeps going up.  Government can't trust itself to rein in its own spending - even the massive slash of $80 billion from the spending budget won't dent it - and so they keep finding themselves pushing the cap higher.  This becomes an even bigger problem because the Small Government Libertarians and (and their Teabagger poseurs who ride on the reputation of "fiscal responsibility") view it as Big Government excess.  And they want to vote against raising the debt ceiling again... which has to be done before July of this year.

And here's the biggest problem of all: if the libertarian/Teabagger contingent in Congress has their way - and it's possible - and they vote to stop raising the debt ceiling by July... that next sound you hear will be THE ENTIRE GLOBAL ECONOMY CRASHING TO A HALT.

This is serious.  If the debt ceiling is capped, it forces the creditors that have been lending the U.S. any money to start calling in their loans... their ENTIRE loans, not just monthly payments or something.  This means multinational banks, foreign governments, and others I haven't thought of for this list can declare the U.S. in default.  If that happens, things like Treasury bonds would lose value I think...  The next thing that could happen is that the U.S., in order to raise funds to pay those bills, would call in OUR loans to other nations borrowing from us, and cause the same financial crisis in their governments.  It would be a cascade effect: every nation scrambling to get their financial houses in order... and a lot of them CAN'T because they've been massively borrowing money as well.  And this isn't even going into how this would affect the private sectors: commodities markets will freak out; trade could get affected by sudden tariff increases or with governments unable to purchase goods; and global stock markets would crash as the faith in governments to maintain fiscal stability disappears, as things like government bonds lose value, etc.  (NOTE: I am not an economist, I am not entirely sure what WILL happen if this occurs.  All I do know is, based on how the economists dread this, it's Explode-The-Planet-BAD).

Now, this is the worst-case-scenario.  The good news about this is, even the Republicans are not this batshit crazy to pull that stunt... mostly.  The party leadership surely isn't: Boehner openly opposes the cap effort; Republican Senators clearly oppose it, and the Far Right media have mostly spoken against any move to cap the debt ceiling.

The bad news to that is, there may be enough Republican House representatives who ARE batshit crazy enough to go against their own party leadership on this one.  Because they are true Teabaggers who are clearly upset with the whole idea of Big Government and who think this is a way to bring it all down.  Or worse...

We're now in an era of Budget Brinkmanship: the idea that one side (say, Republicans) has to force things to the edge of a cliff of impending doom in order to get what they want.  It works especially well when the opposing party (The Democrats) genuinely believe in compromise in order to get things done, and who also fear being on the wrong side of anything (say, being on the side for tax increases, because Democrats really believe Mondale got creamed in the 1984 elections because of the tax issue... instead of Mondale being a weak campaigner going against a populist President...).  You saw it here with the shutdown crisis: rather than risk the calamity of an economic disaster of a gov't shutdown, Obama and Reid were willing to give up tons of spending for social services while the Republicans "promised" not to go after particular hot-topic services like Planned Parenthood.

What could well happen with the debt ceiling debate that's impending is that the Far Right in the House will push for an extremist position in exchange for their vote on letting the debt ceiling go up.  The extremist stuff could be another attempt to push a pro-life agenda on a nation that's not even interested in the abortion debate anymore.  Or it could be something else that would be disastrous for a majority of Americans, something the Democrats could abide parting with if it meant saving the global economy.  The Democrats, after a show in public of being outraged, would well concede the matter in the belief that 1) it will save the world and 2) the voters will forgive the Dems on the matter and blame the Republicans for their bullshit agenda come the next election cycle.  And the Far Right could well win another serious conflict, much to the chagrin of the American public.

But there's only so many times you can push someone to the brink.  At some point, the Democrats are going to have to wake up to the fact that there's little left they can surrender to the Republicans.  The debt ceiling debate could be one bridge too far: Obama, Reid, and the other Democratic leaders may figure to themselves "Screw it.  The Republicans are threatening to refuse to raise the debt ceiling, unless we give them EVERYTHING they want?  They wouldn't do it.  They wouldn't DARE push the shiny red button of global destruction like that.  If the vote came up, there's every chance they'll waver.  So let's not give them anything THIS TIME.  Let's see if the Republicans REALLY ARE crazy enough to kill the economy..."

On something as deadly serious as the debt ceiling (even considering how singularly small the vote looks on paper), the Democrats could grow a spine.  They could say, "Let's vote," and then have the Dems all vote quickly FOR the debt ceiling to go up, and let the Republicans stew as they start realizing that if enough of them vote AGAINST the debt ceiling going up it will be all on the Republicans' heads...

It's a tricky game, isn't it, of "Let's Blow Up The World."  At some point, the only winning move is not to play...

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