Saturday Night with J.T.

We need a little J.T. right about now.  This is his song "Never Die Young" when it was new.  In a more recent video he said that he wrote this ten years ago and still doesn't know what it means.  A great song anyway.  Never give up.  Never grow old.  And never never die young.

Have A Great Weekend

Update early Saturday: On the most fateful weekend for this country in quite some time, the New York Times chose to print a story lauding the House TPers for their political victory in turning a simple act of legislative housekeeping into an international crisis, in order to hack away at the federal government they hate, but that so much of this country and so many of its people absolutely need.  But these people are not operating as politicians, let alone governing partners.  They are extortionists, holding a gun to the head of the entire world economy.  Their philosophy of government is theocratic dictatorship.  Their actions are in any other context criminal.  In this context, their actions are even worse crimes.  They shouldn't be lauded.  They should be arrested.  And that goes for John Banal, Eric Cant and now Mitch McConnell.      

This blog is supposed to be about dreaming up the future.  And while that process is still happening out there (as in the three books I highlight at Books in Heat), the drama going on in Washington is emphasizing the nightmare side--"it's not dark yet, but it's getting there."

Some of what we're facing is being repeated often enough that it's sinking in.  On Friday, this will probably become even clearer as federal officials talk more about what really will happen should the debt ceiling not be raised by Tuesday.  For instance, if the federal government chooses to pay interest on the debt plus Social Security, Medicare and Medicaid for August, it will have no money left over for anything else.  It can't pay soldiers and sailors overseas, or for the fuel and technology they use, and can't even pay to bring them back.  It can't pay federal employees--and we profoundly hope that would start with members of Congress.  Even scarier for some folks, it can't pay federal contractors.  The FAA is already dealing with this, thanks again to GOPer zealots.  How about food inspectors?  Air traffic controllers?  The federal government would be paralyzed, which soon would paralyze state governments, and on down.  

The economic ripple effects would be immediate.  The amount of money withdrawn from the economy just in August will likely be enough to plunge the country into recession.  Unemployment will rise in September, as people are layed off by contractors who aren't getting paid by the federal government, etc.  And that's before the downgrade in the credit rating--leading to instant losses to pension funds, home mortgages, etc.  The spiral quickly continues and may encompass the world in the first elective Depression in recorded history.

Meanwhile, Capitol Hill is an utter mess.  John Banal couldn't pass his plan with members of his own party on Thursday, and as the sun slowly rises in DC, it's uncertain whether he will try again on Friday.  Instead of worrying about the country, he has to worry about his job as Speaker.  This failure was caused by some TPers actually acting rationally in a political sense: everyone knew that even if the Banal plan passed, it would be instantly voted down in the Senate.  So why should they go on record voting for a plan they didn't believe in?  They'd be damn primaried!  So forget about the country there too.

So besides dire and detailed warnings from Treasury and perhaps the White House, what exactly happens Friday is uncertain.  But what seems likely is that the result will be still no solution in sight.  No plan.  Which leaves Saturday.

A plan to hike the debt ceiling and cut the deficit without hurting the economy right now, which Democrats and enough Republicans could support--not a bad year's work, but they have to polish it off on a hot summer Saturday.  And if no plan emerges, then President Obama will have to ask directly: do you all have the votes for a simple raising of the debt ceiling?  And if the answer is no, he is going to face a big decision, which (many voices were saying Thursday) might involve something like the scenario I outlined for last Sunday: President Obama directs the Treasury to pay the nation's bills and ignore the debt ceiling.   Unless there is real progress by Saturday night or Sunday morning on a viable legislative way out, the 14th amendment option may turn out to be the only option.  For the drops in the stock market all this past week could very well turn into a panic on Monday.

Expect to hear the President at least once this weekend, and probably twice.  Once to say clearly that the Republicans in Congress are about to plunge the world into Depression.  He gave the ball to Congress and so far they've tripped over it, and are sitting dazed in the mud.  Beyond that everything's a guess.  The country may be going down big time early next week. And even the least destructive scenarios will be terrible for the economy and the country.   But in the meantime, have a great weekend, and enjoy what's left of the high tide.

More Up to the Minute News on the Default Crisis

I'm tempted to again leave the Grim Spending Cutter as the total comment on the day's non-events, but I do have an observation.  The only commentary I watched Wednesday was Lawrence O'Donnell, who hasn't changed his basic take for weeks: Obama is not really sincere about big budget cuts, all of the plans are political, none will pass or else be signed, and at the eleventh hour Congress will pass a one-page clean debt ceiling bill.  I do depend on Lawrence for the sardonic truth, but I disagree on several points. 

First of all I believe that President Obama is sincere in wanting a big package, especially in view of this story (even though it originated in Politico, not exactly my most trusted name in news), which I find persuasive: he really wants to avoid a drop in the U.S. credit rating, and at least one of the agencies is explicitly calling for a big package. (I wouldn't say he fears it more than default, though, as the headline says.)

Second I'm not at all sure the Congress is capable of passing anything that President Obama can sign, even at the 11th hour.  There's talk of the White House crafting yet another bill, and the likelihood of a very short extension on Tuesday.  I take heart in O'Donnell's suggestion that ultimately an up or down vote in the House won't require a single TPer vote to pass, if Dems are on board.  But I'm starting to go through the Climate Crisis process now.  Just like the effects of the Climate Crisis, I knew that serious economic hardship is likely to eventually hit this country, as the need for growth outruns resources and a depleted environment.  But like the CC effects, I hoped it was some time in the future, and present actions might address it and forestall it.  But like the CC effects, I'm mournfully becoming used to the idea that there is no confident daylight between now and that future.  The big difference is that our society unknowingly caused the Climate Crisis (even if it is now willfully making it worse), and the consequences come from nature--from the physics and chemistry of what's been done.  But this time we are knowingly and unnecessarily electing to cripple our economy, for no real reason.  And once it starts (or arguably, continues, but on steroids) I'm not sure that economy will ever recover.

Another Tragic Gap

Visit msnbc.com for breaking news, world news, and news about the economy

Melissa Harris-Perry made her debut as a substitute host for Rachel with a stunning segment, exactly what is missing from the dominant news media.  As a woman of color, Professor Harris-Perry had the chops to analyze the Pew study released Tuesday that calculated the dimensions of the "wealth gap," with median white wealth at about 20 times that of median black and Latino families.  The above video is that segment, and the transcript is here.  Two points stand out: the wealth gap was seeded a few generations ago when federal programs (especially in housing) that paid for the basis of the white middle class, discriminated against black and Latino families and mostly did not include them.  And that, with America set to be a non-white majority country by mid-century, if the weath gap were closed, there would be plenty of new tax and other revenue sources from people of color, as well as greater economic activity, to erase deficits in the federal budget.

Apart from what this portends for public policy and the public debate (which is mostly depressing), this debut more than suggests that there is a place for Melissa Harris-Perry (or "Melissa" as she will be called) on MSNBC--and that there is a crying need for such a presence in the media.  It may be that Melissa's academic responsibilities preclude a nightly gig, but at least a weekend program.   

Up to the Minute News on the National Default Crisis

The Entire World is Watching

He spoke softly, looked into the camera.  He started with explanations, and then delivered his message, about compromise being at the heart of the American system of government, about coming together as one nation. He was eloquent at times.   It's perhaps only when you read the transcript that you realize how hard President Obama's message was:

" So defaulting on our obligations is a reckless and irresponsible outcome to this debate...
This is no way to run the greatest country on Earth. It’s a dangerous game that we’ve never played before, and we can’t afford to play it now. Not when the jobs and livelihoods of so many families are at stake. We can’t allow the American people to become collateral damage to Washington’s political warfare.

But do you know what people are fed up with most of all? They’re fed up with a town where compromise has become a dirty word.

The entire world is watching. So let’s seize this moment to show why the United States of America is still the greatest nation on Earth –- not just because we can still keep our word and meet our obligations, but because we can still come together as one nation."
 
Compare this "pitch-perfect" speech with the hostile, sarcastic and devious screech by John Banal, beginning with his odd and absurd claim that he is the Speaker of the whole House, not just the GOPer House--no, the whole House.
 
In one sense, President Obama's speech was puzzling for containing nothing new--except perhaps for one element.  Until now there have been three voices in this contention--the President's (and Democrats), the GOPers and the markets.  President Obama asked to hear from the fourth voice: the American people. With a prime time address, he reached more people directly on this issue--a new issue, as he said, because raising the debt ceiling has always been a bit of congressional housekeeping before.  He explained what it's about: 
 
"Understand –- raising the debt ceiling does not allow Congress to spend more money. It simply gives our country the ability to pay the bills that Congress has already racked up. In the past, raising the debt ceiling was routine. Since the 1950s, Congress has always passed it, and every President has signed it. President Reagan did it 18 times. George W. Bush did it seven times. And we have to do it by next Tuesday, August 2nd, or else we won’t be able to pay all of our bills.

Unfortunately, for the past several weeks, Republican House members have essentially said that the only way they’ll vote to prevent America’s first-ever default is if the rest of us agree to their deep, spending cuts-only approach.

If that happens, and we default, we would not have enough money to pay all of our bills -– bills that include monthly Social Security checks, veterans’ benefits, and the government contracts we’ve signed with thousands of businesses.

For the first time in history, our country’s AAA credit rating would be downgraded, leaving investors around the world to wonder whether the United States is still a good bet. Interest rates would skyrocket on credit cards, on mortgages and on car loans, which amounts to a huge tax hike on the American people. We would risk sparking a deep economic crisis -– this one caused almost entirely by Washington."

 President Obama could call for voters' voices, confidently knowing that according to polls upwards of 2/3 of the electorate supports his position of a budget solution that mixes cuts and revenue, that calls for sacrifice from the very wealthy as well as those with the least resources.  The initial report was that, while Banal was talking, congressional webpages were crashing from the volume.
 
As I observed yesterday, the voice of the markets speak urgently but ambiguously in terms of solution. Since the two sides seem far apart with the clock ticking, I can't see the markets being reassured by either speech. But the voices of voters speak their minds.   
 
What happens now?  The Harry Reid Senate plan calls the GOPers bluff: it provides exactly what GOPers said they wanted as late as a week ago: cuts totaling more than the amount of the debt ceiling rise, which raises the ceiling to get the country into 2013.  But among other things, the new Banal plan fulfills none of those demands that Banal himself was making just a few days ago.  From his own words, it's clear that the intent of his plan is to make this another political circus in six months, on the theory that it would hurt President Obama.  (A theory that is questionable.)
 
As President Obama pointed out, a six month rise may not be enough to satisfy the ratings agencies, who will downgrade the U.S. credit rating, which will send interest rates soaring and the economy downward.  And  signals from one of the agencies itself support the contention that a six month deal on Banal's terms could  trigger a drop in the U.S. credit rating.
 
During the day on Monday, the reporting from Washington indicated a lack of enthusiasm for the Reid plan, but positive hostility towards Banals--not only from Democrats, but from TP GOPers.  It's not clear now that Banal has the votes to pass it in the House--you know, the whole House he is Speaker of.  It could be that President Obama's intent with his speech was to get quickly beyond these two competing but probably equally doomed plans to a compromise this week.  Because if both plans go to votes, it will take until the weekend for that to play out, and next Sunday we'll be in the same deadlocked situation with the first U.S. default in modern history becoming official on Tuesday.   After the market crash on Monday (if not sooner.)

Beyond Banal

Introducing his detailed breakdown of the latest GOPer proposal on the deficit and the debt ceiling, the President of the Center on Budget and Policy Priorities wrote:

"House Speaker John Boehner’s new budget proposal would require deep cuts in the years immediately ahead in Social Security and Medicare benefits for current retirees, the repeal of health reform’s coverage expansions, or wholesale evisceration of basic assistance programs for vulnerable Americans.

The plan is, thus, tantamount to a form of “class warfare.” If enacted, it could well produce the greatest increase in poverty and hardship produced by any law in modern U.S. history.

This may sound hyperbolic, but it is not. The mathematics are inexorable."

The Dreaming Up Daily Quote

“The guilty one is not he who commits the sin, but the one who causes the darkness.”

Victor Hugo

F Day II.5

 After congressional members of both parties spent Sunday talking to themselves, the ultimate chicken game is emerging.  House GOPers will presumably pass a bill authorizing the debt ceiling to be raised by a trillion accompanied by a trillion in cuts.  That debt ceiling level means that they go through this whole thing again in the middle of the 2012 campaign season.  Senate majority leader Dem Harry Reid has said the Senate won't pass it, and President Obama said he won't sign it. With that in mind, it's not certain that the GOPers can even pass this in the House. But if they do, Banal is apparently betting that the Democrats and the President will blink before he does, to avoid default.  It is an overtly partisan political move.

Meanwhile, the story is going around that Harry Reid will introduce a separate bill in the Senate, raising the debt ceiling by the $2.4 trillion necessary to get the country through 2012, accompanied by the same amount in cuts (the Nancy Pelosi plan) without tax increases.  This is essentially what the GOPers claim they have been asking for.  Depending on the cuts, it's not certain that this will pass the Senate.  But if it does, the Dems are betting that the GOPers will blink, and why shouldn't they?  This is what they said they wanted.

If it plays out like this, an objective view would have to be that the Dems have bent over backwards to accomodate the GOPers unreasonable demands.  But there's no objective view of any consequence here.  It's all about how this plays out on Capitol Hill, with the world economy held hostage.

The wild card some observers are pointing to is the behavior of the markets.  The Asian markets and the first hours of the European markets were broadly down, and investors were shedding dollars for other currencies. (U.S. stock market is hours from opening.)   If and when--and it's probably when--markets show greater alarm, it puts pressure on the process, but I don't see how it helps one side or the other.  It's a game of chicken while the drivers also play Russian Roulette.    

F Day II

Meetings in Washington on Saturday failed to make apparent progress on avoiding U.S. default.  Delusional John Banal apparently believes that if he can announce a plan (not a deal) on Sunday, the first Asian markets to open won't register dismay on Sunday afternoon, followed by other overseas markets Sunday night, and the U.S. markets on Monday.  Meanwhile, Democratic congressional leaders are firmly behind President Obama's bottom line demand that the debt ceiling must be raised sufficiently to take the country through the 2012 elections.  Otherwise credit agencies are apt to downgrade the U.S. credit rating, which in itself will be sufficient to cause ripples of financial chaos, from virtually every American's own finances to unknown implications around the world.  Among the many ripple effects of all of this--increases in the national debt and deficit.

Sunday night television may be unusually compelling.