What Everyone Was Thinking of the Debt Debate?

A Pew/WaPo poll over the weekend asked people to give the one word they believed best described the then-still-ongoing debate in congress over the debt ceiling and budget cutting issue. The results are:

The disgust was shared by Democrats, Republicans and Independents, and people reported that their impressions of both Obama and the Republican congressional leadership had worsened (from their already low levels.)

That no one is impressed with the specter of a bunch grown men and women squabbling endlessly is probably unsurprising — if we saw what congress was up to more often we’d probably have this reaction frequently. However, it seems to me that there are two things which make this go-round particularly bad.

First, Americans are not happy with the set of options put before them. They don’t want to see the debt going higher and higher, they don’t want to see their taxes increased, and the don’t want to see programs they see as essential cut (though they do feel sure that there must be a lot that could be cut.) I wouldn’t by any means say that we are in a no win situation. It would be possible to close tax loopholes and perhaps even make some very small increases in rates on certain income brackets without hurting the citizenry or the economy very much. Similarly, while just about any spending that is cut will inconvenience someone, there is a lot that could be cut without doing serious harm to the country. Both of these are probably going to eventually need to happen, but in the mean time people are simply reacting with dislike to all the options put before them.

Second, we seem to have an unusually bad crop of political leaders right now. Obama seems perfectly happy to sit on the sidelines criticizing the Republicans without providing any useful leadership — and even his own partisans seem to finally be starting to notice. And among the GOP we seem to have a mixture of the unrealistic on the right and the hopelessly mealy-mouthed in the center. In some ways, Paul Ryan took a fairly statesman-like approach, putting together a budget with some vision after two years of the Democrats failing to produce any budget at all. However, in part due to the warring factions within the GOP and the naivete of some of the Tea Party members in regards to fiscal issues, no one on the right has been able to provide unified and sensible leadership during the debt ceiling fight.

It seems hard to imagine that the left has much useful to say in the months and years to come on this topic. Their preferred solution of taxing only the rich while spending like crazy simply won’t work as our nation’s demographics become incapable of supporting the kind of entitlement programs we already have, and even if they were to have the courage to tell the American people the truth (that their vision can only be supported in the long term by raising taxes on the middle class) the American people do not seem to like the idea.

Where we ought to be seeing some real understanding and leadership is from the GOP — if only it could manage to put forward some leadership that has both principles and understanding at the same time. Right now most of our leaders (both in congress and among the potential presidential nominees) seem to have one but not the other when it comes to fiscal issues. The niche of speaking honestly, clearly and sensibly to the American people about budget issues, and helping them understand and support the kind of actions that will be necessary to get us back on the path to a reasonable deficit, is one that remains to be filled.

20 Responses to What Everyone Was Thinking of the Debt Debate?

  • Is this different than it was in the Ratification debates, or in the debates leading up to the Civil War, or the debates of the Greqt Depression, or civil rights debates in the 1950s, or the welfare debates of the 1990s?

    A people needs time to debate and argue. Leadership rises in the midst of the argument. anything else leads to tyranny.

    I’m unconcerned. This is as it should be. It is messy and, at times, unpleasant but, while Putin style leadership is solid and reliable and Pelosi… Um, I meant “Chinese” one party rule is debate free, the Republic absolutely requires sibling squabbling to function.

    Frankly, we would be better off if Americans understood how messy democracy is. But THAT could only be accomplished with civics education and we don’t do that anymore.

  • Since when do we live in a ‘democracy’? The word is not mentioned in the Declaration or Constitution. As for the “debate,” agree that the sausage-making is unappealing but necessary for so-called “consensus.”

    In the end, however, all principles were sacrificed for a mushy compromise that satisfied neither the right or left. As political theater, it was passably entertaining but predictable in the 11th hour ‘deal’ that emerged. Rarely did the rhetoric rise above mediocrity and often sunk to the banal.

    No one ever asked the simple question: If we are cutting the budget then why do we need to borrow more money? Logic that escapes all but those who know neither the emperor nor his loyal minions are naked.

  • Is this different than it was in the Ratification debates, or in the debates leading up to the Civil War, or the debates of the Greqt Depression

    Well, hopefully things won’t get as bad as in each of those cases.

  • Mr. Green, I know full and well that our system of government is a “republic,” but, in contemporary usage, our form of government is articulated as a “democratic republic.” We can go back and forth with semantics if you like but I suspect you know what I mean.

  • Mr. Veg, of course I do and so stipulate. However, far as I know, true democracy has never been tried, nor has true Christianity.

  • I’m with you. Every time a people get close to democracy, everything goes to hell in a hand basket. California is probably as close as any place in the US has gotten and their referendums have utterly decimated their economy and their social fabric. When a society walks too far down that road, heads acquire a mysterious capacity to come popping off.

  • I think the American people are wrong. John Boehner behaved in a dignified, wise, and patient manner. Barack Obama, on the other hand, was petulant, incredibly foolish, and in general, behaved like a spoiled teenager who’s parents took away some of her allowance for crashing the car.

    The truth is, Americans in general are also acting like spoiled children, here. We act as if money grows on trees, as if we can spend trillions of dollars we don’t have, and send the bill to our kids. Let’s not pretend this is someone else’s fault.

  • For what it is worth, while it is true that our system of government is a constitutional federal republic, I don’t think that the use of the term “democracy” as shorthand is particularly misleading. In fact, technically a democracy can be defined to include both direct democracies (which actually are employed all the time, just not for actual governments) and indirect democracies (i.e., republics).

    In any case I agree with prior comments regarding the deficiencies of direct democracies. While no system is perfect, the US system has overall served fairly well. I would suggest three constitutional shortcomings, however, that simply were not properly anticipated by the Framers.

    First, I do not think the Framers ever anticipated the use of Congress’s commerce clause powers as a warrant for pretty much any type of federal intervention that a current Congress might prefer. Many blame the federal courts for this, but I actually think the expansive understanding of that clause is hard to avoid given the language.

    Second, the 14th Amendment’s extention of property and liberty rights vis-a-vis the states was poorly expressed. The federal courts basically had to legislate via guess and speculation to place some flesh on a skeleton.

    Finally, the Framers never anticipated the power they were giving to the so-called “least powerful branch.” IMO this is because they did not anticipate Marbury v Madison and its implications. This is not to suggest that M v M was wrongly decided — I don’t think it was (I think it is the only logical outcome given our constututional scheme) — it is just to point out that the result of not anticipating the potential power of federal courts was insufficient remedial checks against the judicial branch. While Congress has jurisdictional limitation and impeachment powers, these instruments are too blunt to effectively counter judicial activism.

    Just my two cents.

  • Hello, it’s me again. I agree with you on our lack of quality leadership. I think I like Plato’s(?, maybe it was Aristotle…) take on this, that our political leaders shouldn’t desire the position, but should take the position reluctantly at the request of the people because they chose him/her to be a good leader. There is way too much moral hazard (skewed incentives) when politicians want to be politicians, but that’s not what I want to get into…

    You say… “Their preferred solution of taxing only the rich while spending like crazy simply won’t work as our nation’s demographics become incapable of supporting the kind of entitlement programs we already have, and even if they were to have the courage to tell the American people the truth (that their vision can only be supported in the long term by raising taxes on the middle class) the American people do not seem to like the idea.

    I think what matters here are real goods (and services) and the employment-to-population ratio. Do we have the real goods to support the population? and how many people are working to provide the population with those real goods (and services)? Taxes and spending (in this case) are just a means to allocate real goods and services. Taxes take away my ability to command them and spending (that goes into my pocket) give me more ability to command them.

    I think if we keep things the way they are now, fewer people will work to support the aging population who will continue to command the resources given to them by the entitlement programs, which means less overall resources for those who are working and more for the aging, unless we manage to grow the economy at a rate that grows both. The only way we would need to tax the working population more is if our deficit were so large it was causing high inflation. I think you know my views from our debates on this.

    The burden that will fall on the working class is not higher taxes but a smaller “slice of the pie” than previous generations were able to command, unless we can grow the economy. So, essentially, our decision is one of ‘How much do we allocate to the aging?’ and ‘how much do we allocate to the working population?’. That’s not an easy decision, but one that government will make actively or passively.

    However, all generations are suffering from lower than possible output right now because we refuse to employ all of our available resources despite our ability to.

    I also don’t agree with your assessment that the left simply wants to tax the rich and spend like crazy. They do want to tax the rich more, but they to are looking to reduce the deficit and have agreed to cuts in entitlements. My perception is that they would like to see a more equitable distribution of wealth. Is that what you are against? If you aren’t, then how do you propose we make it more equitable without taxing the rich more?

    That being said, I agree with your assessment of our politicians. I think we certainly need more courage, honesty, and humility in Washington from both parties.

  • yes it was a full throated debate– as it should be– I’m personally glad they don’t all just go along with each other—and I don’t agree with all those negative terms given as the response of the public– I don’t mean that I don’t think people said that–I am sure they did — I think people pretty much define everything the way the media has presented it to them. The media tells us for some extended time that we are depressed sad and lonely and then asks how many of you are depressed sad and lonely, followed by “the sky is falling 85 percent of Americans are sad and depressed and lonely”!

  • Democracy should be a pressure valve not a way to actually run government.

  • What do you mean?

  • When the American people vote for divided government, which they usually do, they can expect the debates that ensue to be full-throated and often unedifying. Politics is not a college debate with applause for all concerned at the end. Big issues are never resolved in the political arena without a huge amount of struggle, and that is precisely what we are seeing now. People outside the arena often will call for people to agree on a solution and work together. This is said usually because most people have the charming conviction that all reasonable people would naturally agree with their ideas if voices were lowered and sweet reasonableness were the order of the day. This of course is a delusion, and why most people find close observation of the legislative process unsettling.

  • “The United States can pay any debt it has because we can always print money to do that. So there is zero probability of default” said Greenspan on yesterday’s NBC’s Meet the Press

    I’ve been at this “insanity” long enough to remember that Greenspan was on the wrong side of the run-up to the S&L crisis. Then, I was mildly surprised at his retooling as guru/Fed Chmn. Now, this.

    I ‘heart’ it. Give the Congress, Obama, Geithner, the Bernank, etc. more power to ruin us.

    B’ruck Omama can phone President-for-Life Mugabe and ask him to email the PDF file SOP on printing up hyperinflation.

  • I’ve been at this “insanity” long enough to remember that Greenspan was on the wrong side of the run-up to the S&L crisis. Then, I was mildly surprised at his retooling as guru/Fed Chmn. Now, this.

    No. You. Don’t. Dr. Greenspan was the proprietor of a consulting firm in New York from 1954 to 1987. He was an advisor to Richard Nixon’s presidential campaign in 1968 and chairman of the Council of Economic Advisors for a period of two years and change (1974-77). His modest forays into public life antedated the corrosion of the loan portfolios of savings banks. At the time he assumed office as Chairman of the Federal Reserve Board of Governors, fully a third of the country’s savings banks were distressed. The supervisory staff of the Federal Reserve Board is responsible for examination of a selection of commercial banks. Savings banks were not and are not a part of their portfolio.

    The Federal Home Loan Bank Board was responsible for supervising savings banks. Edwin Gray was the chairman of the Federal Home Loan Bank Board. He tried for years without success to interest both Congress and the press in the deteriorating condition of Federal Savings & Loans. What was Greenspan supposed to have done?

  • A.D.: I was referring to Congressional Committee testimony that Mr. G. offered as a privately compensated consultant in support of the bankrupt S&L’s being granted lending authority to lend on commercial real estate developments, ADC lending we call it. That massive insured deposit funded boondoggle magnified the costs of the FSLIC/RTC clean up by a factor of 10 or 20 times.

    You did not have to type so much. You previously provided full evidence of your ignorance.

  • Dial it down T. Shaw. Personal insults never strengthen a person’s argument.

  • I apologize. But, . . . He jumped me.

    It is frustrating. This country is rushing to ruin and we have to endure and answer data mining ideologues in Never Land 24/7 repeating liberal talking points . . .

  • My regrets.

    Dr. Greenspan offered congressional testimony on 27 February 1985 in favor of allowing savings banks to make direct investments in real estate projects. He also wrote memoranda to the Federal Home Loan Bank Board around the same time recommending that the practice be allowed. (The Board ignored him). He also wrote a letter to the board requesting for a client a waiver of their prohibition on direct investments. The client was Charles Keating’s bank. (The Board ignored that too).

    Dr. Greenspan testified in front of congressional committees 68 times between January of 1977 and July of 1987. Two appearances concerned savings banks, one on the effects of inflation and the other on regulatory questions.

  • A.D.: Thanks for helping me out here.

    Dr. Greenspan’s endorsement of the S&Ls’ magnifying their losses (covered by the US taxpayers) by twenty times over (to $200 billion, plus never-ending interest expenses – estimated now $500 billion and counting) was much more intelligent than this latest exemplar of brilliance:

    “The United States can pay any debt it has because we can always print money to do that. So there is zero probability of default” said Greenspan on yesterday’s NBC’s Meet the Press

    PS: Had the FHLBB seized insolvent S&L’s when they were insolvent (negative net interest margin from 6% APR, 30 year mortgages funded by 10% short term deposits), the FSLIC fund would have been quickly depleted and the taxpayer would have been on the hook for say $20 billion. Even a progressive must agree that a $20 billion loss is preferable to a $200 billion loss.

    Pursuant to Greenspan’s (and McCain’s and Cong. Wright’s, and et alles’) advice the costs to resolve brain dead S&L’s were magnified. The taxpayers’ losses were NOT from direct investments (that was way before Clinton repealed Glass-Steagall). They were defaulted commercial real estate (CRE) loans and acquisition, development and construction (ADC) loans advanced to build billions of square feet of excess/surplus commercial real estate space that were never rented, never sold and never repaid. Prior to that S&L’s could only make loans on one-to-four family residential with mortgages as collateral. FSLIC-insured deposits provided the relatively unlimited liquidity. A similar dynamic was extra liquidity provided by FNMA/FHLMC secondary market guaranties ($2.7 trillion guarantied, plus $1.8 trillion they hold) from 1999 to 2007.

    Capt. Nathan Brittles, “Never apologize. It’s a sign of weakness.”

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