|Waiting for the monsters|
It’s obvious that Republicans and conservatives are cynically using debt worry as an alibi for proceeding with their pre-existing project of underfunding and weakening the welfare state. That’s why their abject horror over the debt demands dramatic spending cuts but abhors any tax increases. If debt was their truest concern they would demand both spending cuts and tax increases, especially since taxes are at their lowest point (measured as a percentage of GDP) since the 1950’s, due largely to George W. Bush’s irresponsible tax cuts. It’s equally obvious that much of their (let’s call it) inconsistency is simple pandering and demagoguery. It’s easy to score cheap political points by attacking and misrepresenting Obama’s cuts to Medicare. It doesn’t hurt, of course, that seniors are a dependably Republican constituency. And the debt panic is suspiciously recent. Many Obama-era deficit saints were Bush-era deficit sinners. All the current Congressional Republican leaders – Paul Ryan, Eric Cantor, John Boehner, Mitch McConnell – collaborated on George W. Bush’s long-term assaults on the budget: his huge tax cuts, his two unfunded wars and a his huge, unfunded expansion of Medicare. It’s amazing the fiscal and moral Republican purification that a Democratic administration can bring.
It appears that many of the newer conservative members of Congress, particularly those on the Tea Party right, do honestly fear and hate the debt monster. (Though, once again, steadfast contemporary conservative support for George W. Bush and his fiscal irresponsibility does bring into question the sincerity of that fear and hate.) But these same farther right reaches of the Republican Party are command central for present-day debt madness. In fact, there seems to be a definite correlation between fear of the debt and the inability to coherently address it. Apparently, the closer you study the monster the more he befuddles your mind. And the larger and more evil he appears. Before the rise of communism, right-wing Americans were convinced that the nexus of evil in this world was the Vatican. After 1917 that nexus moved to the Kremlin. For a while after 9/11 it seems to have moved to Mecca or Teheran, though hopes that it would be buried beneath the rubble of Baghdad seem to have been disappointed. Now it is incarnated in the American social insurance state, safely ensconced in the west wing of the White House, well kept and fed by Barack Hussein Obama and his minions, while its bastard child, the voracious debt monster, roams the land, wreaking devastation and terrorizing good folk.
And conservative paranoia is intimately connected to conservative moralism. If it’s dangerous for a family or a small business to be in debt, it must be dangerous for a government, too. But it’s not just dangerous, it’s downright immoral. We are stealing from our children! We are profligate! We are squandering our moral inheritance! But, as Paul Krugman has said, “Economics is not a morality play.” Government can borrow money (presently it can do so at extremely low rates) to stimulate the economy, it can print money, it can easily tolerate ongoing debt, it need not pay back its debt, it can address aggregate issues – like unemployment and decrepit infrastructure – that do not avail of moralistic solutions. Let us accept that blinkered moralism and Puritan apocalypticism are not sound bases for fiscal policy. Neither are cynicism, pandering and demagoguery; but these are unavoidable elements of democratic politics. Simpleminded moralism and apocalyptic paranoia, on the other hand, seem to be unavoidable elements of American conservative politics specifically, particularly among the staunchest members of its populist base. Indeed, the moralism seems essential. Consider that during recent times of high unemployment, even when there was 1 job for every 5 unemployed workers, leading conservatives resolutely argued against extending unemployment benefits because doing so would reward and encourage indolence. The paucity of jobs did not excuse anyone from taking all the responsibility for his or her economic situation. Economic facts simply could not contend with the need for moral enforcement.
All these dark confusions obscure the truth about the debt, which though it is a real problem, is neither a deadly nor an insurmountable one (see Neil Irwin’s great summary). The next twenty years will bring real budgetary challenges, mostly caused by rising medical costs and the retirement of the baby boomers; some relatively minor adjustments to social insurance programs may be needed, but nothing like the radical transformations such as those proposed by Paul Ryan’s Medicare voucher-ization plan. Indeed, even though the current baseline predicts large deficits for years to come, the debt (as a percentage of GDP) seems to be stabilizing for the foreseeable future. And contrary to conservative mythology, there has not been an Obama-directed spending surge. And once the economy is back to full capacity, tax revenues will increase, while spending designed to ameliorate and cushion against recession – automatic stabilizers such as unemployment insurance and increased Medicaid – will discontinue. In the mean time, investors are gobbling up US Treasury bonds – even 10 and 20 year bonds – at ridiculously low interest rates. The world is practically begging us to take its money. Absent self-inflicted wounds, such as forcing a debt crisis by failing to raise the debt ceiling, no debt crisis is imminent. We are not turning into Greece, hysterics aside.
But there’s one more noteworthy component to the overwrought Republican debt terror: abject irresponsibility. That is the deeper meaning behind the fight over the debt ceiling. The Republican House has effectively just abandoned the debt ceiling as a bargaining chip by voting to suspend it until May 19, (a move some conservatives perceive as tantamount to abandoning conservative principles altogether!). But for weeks past, just as in the summer of 2011, conservatives had threatened to not increase the debt ceiling, and their justifications reeked of irresponsibility. Imagine the following scenario:
The Republican House and the Democratic Senate and President agree that for the current fiscal year the government should spend 3.8 trillion dollars and raise 2.9 trillion dollars in taxes. The deficit – the missing 900 billion dollars – must be raised by the Treasury Department by borrowing from private investors. But that deficit, that 900 billion, that new debt, will become part of the federal government’s ongoing debt, which is already at 16.3 trillion dollars, bringing the new total debt to 17.2 trillion. But then imagine there is an obscure law, called the debt ceiling, which limits the total the government can borrow and which is currently set to 16.4 trillion. And further imagine that the Republican House – the same Republican House that agreed to the 3.8 trillion in spending and 2.9 trillion in revenue! – threatens not to raise that debt ceiling unless the Democratic President agrees to spend substantially less than 3.8 trillion.
Well you don’t have to imagine that farcical fiscal scenario, it actually happened! If that is not irresponsibility, then what is? Obviously Republicans thought 3.8 trillion was too much, even when they voted for it. It turns out they thought it was so dangerously excessive that they were willing to threaten the country with a default on its debt in order to force Obama to spend less this year and for years to come. If they had made good on their threat not to raise the ceiling, they would have forced Obama to break one of two laws, either by not spending all the money the budget mandates (money he is legally obligated to spend) or by borrowing more money than the debt ceiling legally allows. Is it irresponsible to pass two incompatible laws? Without sufficient funds the Treasury Department would fail to pay all its bills, including redeeming existing debt and paying interest on that debt. The U.S. government would default; it would become a deadbeat. Not because no one wanted to lend it money, not because it simply ran out of options, but because part of the government – the only part controlled by Republicans – refused to abide by the implications of its own decisions and its own laws. Republicans are terrified that we’re about to face a debt crisis, and there is a real danger of that actually happening, but only because of Republicans. Behold the party of raging absurdity.
The consequences of the Republicans turning Uncle Sam into a deadbeat are too painful to imagine. All over the country and the world investors, financial institutions and governments would be less willing to lend the government money. Paul Krugman:
Failure to raise the debt limit – which would, among other things, disrupt payments on existing debt – could convince investors that the United States is no longer a serious, responsible country, with nasty consequences. Furthermore, nobody knows what a U.S. default would do to the world financial system, which is built on the presumption that U.S. government debt is the ultimate safe asset.
And if maintaining the current debt ceiling would fail to cause a debt default then it loses much of its force as a bargaining chip; it becomes, in effect, merely a government shutdown. (I say “merely”, because, per Krugman, even though a shutdown would mean big trouble, its destructiveness would pale in compared to a default.) Some conservatives protest that not raising the debt ceiling focuses the national attention on the debt, even if there is no danger of a default. But does anyone believe the nation would fail to notice a government shutdown? Why then would Republicans resist a debt ceiling raise and not just bargain hard during normal budget negotiations? Both require Republican acquiescence. There is a difference and it’s a revealing difference: failure to raise the debt ceiling forces the president to unilaterally choose which spending to cut. This is the key irresponsibility. Failure to raise the debt ceiling would hand legislative budgetary responsibility from the legislative to the executive branch. The Constitution envisions members of Congress haggling back and forth until they agree to specific spending; it does not imagine Congress handing a block grant to the President and saying, “Spend as you please.” But the party of smaller government is also the party of older, white people, that is, people who really like receiving Social Security checks and having Medicare pay for their medical care. Republicans do want to cut spending – and in the abstract so do their constituencies – but they don’t want the blame for what will certainly be terribly unpopular cuts. And this is the deeper problem: their constituency is just as irresponsible as they are. During the fiscal cliff negotiations last December, Republicans demanded that Obama propose deep spending cuts but they refused to specify what those cuts should be! They’re just not willing to take responsibility for their policies, but they are willing to wiggle through a loophole in the Constitutional separation of powers – that’s what they’ve made of the debt ceiling – to avoid that responsibility.
There are even some conservatives who would actually welcome a default, who would refuse to raise the debt ceiling even though they concede such a refusal would cause a default, because the final result would be to shrink government. As reported by Rachel Bade, “The fallout from a debt ceiling breach is the lesser of two evils, they say – the greater threat being Obama’s proposal to increase the debt ceiling without corresponding cuts and reforms.” And as Megan McCardle put it during the debt ceiling crisis of 2011, “there is a sizeable faction on the right, and worse, in the GOP caucus, that is willing to default rather than make any deal at all.” At least these people don’t offer up lame alibis about the debt ceiling not forcing a default. At least they have the courage of their insanity. As Ed Kilgore put it in 2011:
the debt limit issue has been elevated among conservative activists to the level of religious frenzy and absolutism. . .
Indeed lurking just beneath the surface of much of the conservative hard line on the debt limit is an ironclad conviction that all sorts of economic havoc, including a much deeper recession, might be preferable to the continuation of twentieth-century “welfare state” policies.
But it does appear that cooler heads have prevailed, though there are still holdouts. It took the entire Washington Republican establishment plus leaders of the business community to convince enough congressional Republicans to abandon the threat of economic annihilation. But through most of the summer of 2011 and for most of this last January the party, including its leaders and its supporters in the commentariat, vehemently presented the foolish and nonsensical arguments analyzed above. Any party that can make such arguments and seriously consider such actions is a party which is not capable of properly running the government of the United States. We must hope the American people don’t return them to power before they have mended their ways. But are they capable of mending their ways any time soon? Republicans call themselves the party of family values, of traditional morality, but their actions in this matter have been empty of the self-reflection and accountability that are essential to genuine morality. They crusade righteously onward, so convinced of their own moral purity that they feel justified in any action. Here we see the most galling aspect of this whole embarrassing episode, and the most discouraging: They have no shame.
But Republicans have one more opportunity to act like grownups. In order to prevent conservative purists from pulling the debt ceiling trigger, Republican leaders promised to present a budget that balances within ten years. That would indeed be a responsible proposal (assuming one shared their inflated fear of the debt). But, alas, it won’t happen, and that’s because it can’t happen, the math just won’t allow it. As Jonathan Chait so well explains, if you won’t raise taxes and you won’t cut defense and you are politically incapable of cutting Social Security and Medicare you’d have to cut programs for the poor – Medicaid, food stamps, etc. – by something like 90%, which even Republicans would probably shrink from doing. The last time Republicans presented a putatively balanced budget, Paul Ryan’s budget from 2012, they had to fudge the numbers to make it balance and even then it didn’t actually balance until 2040. It’s quite likely that this new budget will contain at least as much sleight-of-hand. Maybe it’s not entirely fair to judge a budget we haven’t seen yet, but (as Chait explains) it strains credulity to imagine they can honestly make something happen by 2023 that they couldn’t make happen by 2040. Republicans are stuck between the rock of structural irresponsibility and the hard place of mathematical reality. Even if they could overcome the allure of cynicism, demagoguery, pandering, moralism, paranoia and irresponsibility and made a good faith effort to honestly balance the budget they would still be stopped by the inexorability of simple arithmetic. Conservative fiscal goals are simply incompatible with American political reality. And it is conservative failure to honestly address that simple fact that is the real failure of responsibility.