Another year, another battle over the budget. This time the threat is a trifecta, a showdown over shutting down government, defunding Obamacare, and a default on the Federal Debt by not raising the debt ceiling. The stakes could not possibly be higher – and yet just about no one outside of Washingtoon wants to be in this game in the first place. How did it get to this?
First of all, this is about the Republican Party and absolutely nothing else. Boehner and the leadership had to prove their mettle to more vocal Tea Party members if they wanted to have a chance to keep their positions. But there is little doubt that even if they win the greater party outside stands to lose the most in this game. For the rest of us, all we can do is hope that nothing stupid winds up happening.
It worked so well before, right?
First of all, it’s not really a game unless we run down the odds. No one gives Obamacare defunding a chance of succeeding at all, making it pretty obvious that this game is about something else. The odds of a shutdown are generally considered to be higher than a default, given how stupid the latter is, but both are pretty dumb. The odds of a shutdown range from 1:9 to 3:1 depending on who you ask, but the default is generally considered only slightly more likely than defunding Obamacare.
Also, there isn’t an actual “budget” that is being debating, only another “continuing resolution” that will keep spending more or less as we have been since 2009. Congress still hasn’t done their share of the work, regardless of how much they gripe.
So if this is really all about the possibility of a shutdown, what can be gained from such an event? The short answer is that there is no reason to believe that 2013 is much different from 1995-96, when the public punished the Republican House severely. Many people will (temporarily) lose their jobs, payments will not be made, and general chaos will ensue.
The Republican House is willing to make that gamble in large part because of a few polls that show that defunding Obamacare might be a big win for them after all. Voters seem to believe that Obamacare will increase health insurance costs, despite considerable evidence that it will lower it. How we arrived at this situation is unclear, but the Republicans do have an opening that they hope to exploit.
I’m still in charge here, so … I’ll do as you say.
However, a prolonged shutdown is not going to play well with anyone if it comes to that. There could be some serious trimming of the budget that comes out of this showdown, which the Democrats would be wise to consider, but it’s unlikely to produce anything too dramatic.
That gets to the real goal, which has already been met. The Republicans are united, at least for now, even if they have no idea how the game will play out. Jim Jordan, a prominent Republican in the House admitted they have no plan after this vote, saying “Even the best coaches in the N.F.L. only script out the first two series of plays. They don’t script the whole game. We’ve got to play the game. We’ve got to see how it all shakes out.” In short, they may have already made all of the statement they intend to.
But how will the Tea Party react if there is no follow-through on the euphoric tie of the continuing resolution to Obamacare defunding? It’s very hard to say, but it seems as though there is nothing but bad news ahead for the party. Either they stay united and keep fighting, causing a shutdown that will hurt the economy and make people angry, or they cave and possibly become more disheartened than ever. If there is some way they can declare victory and get out of this fight they almost certainly will.
We have a bit over a week until the 1 October deadline to avoid a shutdown. There will have to be a lot of movement in the meantime to avert it, but there is always the possibility that it will happen. Every single mainstream Republican backer, from the US Chamber of Commerce to serious economists, says that a shutdown will be a disaster. Ben Bernanke went out of his way to scold Congress on this point, too.
Has the time come for a really bad idea? Given that the game is about keeping the Republican Party intact, the answer is that it’s very hard to read. The potential for harm is obvious and serious, but we’ve come this far.
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I may be way off base here but I say there will not be a shutdown. This is just for show and they can only take it so far. What would the big business base say if they really go through with it? They may think they need the tea party but they need the money more.
I think you are right – and I think this tidbit tells the story: http://www.rawstory.com/rs/2013/09/22/palin-demands-fox-news-host-turn-over-the-gop-cannibals-who-are-trying-to-trash-cruz/ Republicans are far from united on this, for some very good reasons. There isn’t anything for them to win if you look at it objectively.
So I do hope you are right and they don’t do anything stupid. If they do, it’s clearly not in their best interests anyway.
I have been reading articles about this Washington GOP power play mostly from left leaners
(salon, Krugman etc.) So I am not too worried although if prolonged it could probably effect my job. But for the many like my family who will benefit immensely from the AHCA These
new men Kruze, Rubio and Paul are simply terrorists. We know now in Minnesota that we will get better coverage at about 1/2 the former cost.
Opposition to Obamacare is simply bizarre in the extreme. A shutdown will be very painful and will hurt Repubs terribly – as will their opposition to Obamacare once people get into it and realize how it works. This is all so very crazy – and suicidal.
It makes me so mad that they would play games with the economy and so many people’s lives. You are right it’s nothing but a game and its all for their own party faithful to demonstrate they are tough or something. Its sick and totally wrong. They have every reason to disagree and I do wish we had a more balanced budget but this isn’t even close to an argument about that, they never came up with a budget on their own. Real reform is needed and this is not it at all.
It is worth saying this again and again – it’s not like the House did THEIR part of the job and propose an actual budget. We haven’t had one since the Republicans took over and that is just sick.
Even if it is a game and there is a government shutdown, it’s not like the Republicans are deploying chemical weapons on people.
We should put things in perspective.
In any case, the goal of a smaller budget deficit and a smaller national debt are worthy goals.
Time and again Erik lectures the Barataria community about debt and forgetting what our grandparents taught us about the great depression.
Also I’ve notice you take both sides on debt. When credit issuers get paid back a fraction of what they have lent, Erik expresses shock. Then you turn around and say their should be a jubilee. And then you oppose a massive stimulus. And then you support strong leadership. Then you support infrastructure spending but not the way “they” do it.
I’ll take your perspective on this – you are right, it’s not like we have open violence!
As for debt, I am very cautious about taking on more, yes. I think we have to be very prudent and careful – and I do support what infrastructure spending has gotten through Congress so far.
But – bad debt is bad debt, and there is no point in letting it linger around. We know there are trillions in loans that will never be repaid, so why not clear them now? That’s the Jubilee. And while we’re at it, let’s be very careful about any new debt taken on .
If I gave you the impression I was shocked by debt holders getting back a fraction, I didn’t express my position adequately. I am appalled by how write-downs of up to 80% on Greek bonds are called a “haircut” – it’s a default, not a restructuring. It’s the Orwellian nature of the term meaning “a little off the top” that bothers me – 80% is not a “haircut”.
I also oppose a massive, willy-nilly stimulus because in a global economy the benefits will not stay here in the US. The Great Convergence, as I am starting to call it, between developed and developing world economies was financed largely by the carry trade – borrowing in US Dollars at 0% and loaning it to BRIC nations. We can’t use the old-fashioned concept of Keynsianism because we don’t have a closed economy anymore.
I think I need to write about this more explicitly. It is an important concept.
Glückwunsch an Bundeskanzlerin Angela Merkel für den Gewinn Wiederwahl
Congratulations to Chancellor Angela Merkel for winning re=election
It was a big win, but the Free Democrats are possibly out of the Bundestag. A grand coalition with Social Democrats appears to be in the works, which will be interesting – the last time they had one was pre Euro crises.
Great analysis, as always.
Thank you!
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