Collective Conscious

NYT (via):

Well, there you have it. Frankly, it’s kind of under­whelm­ing. The gov­ern­ment owes a good chunk of that money just to itself, and Bush is respon­si­ble for most of the rest. Hon­estly, Repub­li­cans should be pay­ing Democ­rats to clean up his mess instead of play­ing chicken with it. Even Obama has been dragged into it, although if he adopts, say, the CPC plan, this could be an oppor­tu­nity for major lib­eral reform rather than another round of nego­ti­a­tion with and con­ces­sion to the Tea Party. Who knows though.

Eco­nom­i­cally, the debt doesn’t pose the slight­est threat to the health of the United States. Investors still want to buy US bonds at near-​​zero rates, and the United States is not allowed to default on its exist­ing debt — in fact, it can’t, since it prints its own cur­rency and can just use that to pay the bills. The only rea­son the debt is an “exis­ten­tial cri­sis” or what­ever is because there’s a law lim­it­ing how much we can have. Of course this makes no sense, because Con­gress can raise the limit when­ever it wants; if we were like most coun­tries, that would sim­ply be implied as a result of pass­ing a bill that called for new spend­ing, rather than hav­ing to pass a sep­a­rate bill to do that. It’s quite an absurd appen­dix of a law, and it seems we might come down with appen­dici­tis rather soon.

If eco­nom­ics is ruled out as a rea­son to work on the debt, all we have left is social pol­i­tics. And that’s exactly what we’re see­ing the fight about. Nobody really wants to reduce the debt. Paul Ryan’s plan increases it for the first decade, and then when it does start reduc­ing spend­ing by destroy­ing social ser­vices for the poor, it uses much of the sav­ings to finance a tax cut for the wealthy instead. Okay, so that’s basi­cally rob­bing the poor to feed the rich. Not a great idea, but the Republican’s finest.

Which is why Democ­rats need to take the oppor­tu­nity to respond in kind. Obama’s Wednes­day speech will mark the ter­ri­tory, and tell us exactly how hard the Admin­is­tra­tion plans to push back on this. It frames the terms of the debt limit increase, and tells us whether he will allow the lunatic fringe to insist on rad­i­cal social pol­icy rid­ers to the debt limit, such as defund­ing this women’s health pro­gram or that one, or what­ever they like to do at the moment to increase suf­fer­ing for the any­one out­side the rich-white-old-men’s club called the Repub­li­can Party.

Of course we can’t let that hap­pen, and we have to begin from the premise that social pol­icy is sim­ply out of the ques­tion when it comes to the bud­get game. Only poli­cies with real fis­cal impact should be con­sid­ered. Nat­u­rally, both sides are ready to claim that their pre­ferred social poli­cies reduce the debt. Repub­li­cans can say this because cut­ting any­thing and every­thing does reduce the debt. Democ­rats can say this because well-​​targeted taxes on cor­po­ra­tions and the rich also reduce the debt.

So it’s pretty clear this should be a total impasse if approached cor­rectly. Obama needs to take the revenue-​​based approach of the CPC to make it clear that any cuts other than defense will be a con­ces­sion that must be matched by rev­enue pro­pos­als. The right has already pre­sented their cuts-​​based bud­get. If Obama comes out and says, okay, we’ll cut too, but we only dis­agree on how much, we’ve already lost.

Keep in mind that Democ­rats are not try­ing to make the gov­ern­ment “big­ger” or any­thing. All we’re try­ing to do is fund the pop­u­lar pro­grams already in place. It’s Repub­li­cans who have the ide­o­log­i­cal goal of reduc­ing the size of gov­ern­ment by elim­i­nat­ing the pop­u­lar pro­grams for the poor. But those are the terms of the debate, and the war has already begun. Keep an eye on Wednes­day to get the lay of the land.