Saturday, July 30, 2011

Boehner Gives Up - A Bizarre 48 Hours in DC, and Little Hope for the Next 1.5 Years

The past 48 hours have been quite a spectacle for those of us who live in DC and/or follow US politics.


Even by DC's standards, the past 2 days have been crazy:


1. The Republicans (especially Speaker Boehner) wasted 48 hours passing a debt ceiling bill by a 1-vote margin that has no chance of becoming law - the Senate killed it just a couple hours after the House passed it. I don't understand how Republicans ever thought that this would become law - both the Senate Democrats and the White House said this bill was dead on arrival - did they think that passing a bill by a 1-vote margin would somehow make the Senate and White House buckle at the knees? The Republicans have already made several symbolic debt ceiling votes - why the need for another one? Do they really not realize that, for the Democrats, a default (or, more likely, a more creative solution that runs around Congress) is a better gamble than any of these terrible "offers" from the Republicans?


2. For some reason I don't understand, Speaker Boehner decided to take a purely symbolic debt ceiling vote and turn it into a referendum on his leadership. He pushed and pleaded and cajoled and arm-twisted and begged the Tea Party faction of the Republicans in the House to go along with his plan - and he failed. In the end, he failed. He had to give up and attach (another) balanced budget amendment provision to his debt ceiling bill in order to appease the Tea Party faction to get a purely symbolic bill to pass the House. Even Bill Kristol called this a "pointless and embarrassing gimmick to try to secure a last-gasp victory on the House floor." I really have no idea what made Boehner think, a few days ago, that this was a good idea.



3. As Dana Milbank put it:
The thwarting of the [original] Boehner Plan also displayed how ungovernable the House Republican majority is. With the nation just days from a default, the chamber is at the mercy of a handful of people who believe they are on a mission from God.
 And from Nate Silver:
The most complicated question may be what this will do to the relationship between the Republican establishment and insurgent groups like the Tea Party. Last night was a point of evidence that the Tea Party has enough direct influence on the Republican Congress to have a de facto veto over its agenda. That is to say, even in the House, the Republican majority is not large enough to pass bills without either the Tea Party’s support, or the Democratic Party’s support.
The Washington Post even declared that Boehner had the worst week in Washington. I'd tend to agree.


I'm still trying to work out what all this means - I suspect we won't know for quite a while, but I'll make a few educated guesses. (Yes, against my own better judgment, I'm going to try to predict the future - we'll see how that works out for me.)


1. I think this episode shows that Speaker Boehner cares more about holding on to his Speakership than achieving his own policy agenda or doing what is right for America. If Boehner really cared most about reducing government spending and/or reducing the deficit, he should have taken the Grand Bargain offered by the White House (and avoided both a US default and US debt downgrade in the process). He said "no" to appease the Tea Party faction in the House, but they did not repay him for the favor. However, if he wants to remain Speaker, he has little choice but to do his best to appease the Tea Partiers.


2. Strangely enough, this episode has made a U.S. default LESS likely, though the final outcome depends greatly on parliamentary mechanations in both the House and Senate this weekend (which I admit I don't fully understand, so I could be completely wrong). This episode has shown that if Boehner is going to pass ANY legislation that can possibly pass the Senate and White House, he has to work with the House Democrats - any legislation that has the approval of the Tea Partiers in Congress is so odious to Democrats that it has no chance of becoming law. Since a default would be so calamitous (and I'm pretty sure Boehner is smart enough to know this, partisan rhetoric aside), I suspect that the Senate will pass Reid's plan (or something close to it), and that bill will pass the House with broad Democratic and some moderate Republican support - and if it doesn't, then the U.S. will default, because there won't be time to send another House bill back to the Senate. Personally, if I were the Democrats, I would take advantage of this situation and rescind ALL offers and demand a clean hike in the debt ceiling, but I doubt the Democrats will take that approach - because I think that a lot of the cuts in the Reid plan are cuts that moderate Democrats and the White House are glad to make. Many of those cuts will undermine the economic recovery, however, making Obama even more vulnerable in 2012. Some are even calling Obama an underdog already. From an electoral strategy position, I'm starting to think that Obama invoking the 14th amendment, minting $1 trillion coins, or destroying U.S. Treasuries held by the Fed would all be better strategies for Obama than a deal that includes trillions of dollars in cuts. Maybe Obama could announce the alternative strategy of his choice by showing everyone this video in which all of the people currently insisting on huge cuts in exchange for raising the debt ceiling defend past "clean" increases in the debt ceiling as a matter of good public policy:






3. At the same time, this episode has made it more likely that the federal government will shut down on October 1, 2011, perhaps for several weeks. (This will suck for me, as a federal employee.) Since Boehner is so keen to keep his job, he will have to keep introducing legislation that is ultra-conservative enough to please the Tea Partiers in Congress - legislation that will have no chance of becoming law. I would think that this episode has finally demonstrated to the Senate Democrats and White House that it is pointless trying to negotiate with the Republicans as a whole - instead, Senate Democrats and the White House should, in the future, write legislation that can win broad Democratic support in the House and pick up enough moderate Republican votes to become law. We'll see whether Boehner allows bills like this to come to the floor for a vote - my guess is no, at least not initially - so we'll see a government shutdown, perhaps a prolonged one, before we get a budget for FY2012.


4. The current Congress will go down in history as the least effective Congress ever. They will do even less than the "Do Nothing" Congress. Since he has already demonstrated that keeping the  Speakership is more important than doing anything or helping the country, Boehner will hold on to the Speakership by ensuring that the Senate Democrats and White House accomplish as little as possible. To be fair, I'm not sure he has much choice - if he started compromising with the Democrats regularly in order to actually accomplish things (and even advance the Republican policy agenda), he'd probably lose the Speakership to someone equally if not more uncompromising, such as Eric Cantor. So, America, don't expect for the US government to do much of anything for the next 1.5 years.


And now, a couple of REALLY speculative thoughts:


1. Will Boehner manage to keep the Speakership? I have no idea, and as I said above, I don't really think it matters - I think anyone who came after him in this Congress would find themselves in a similar boat, so I don't think the outcome would change much with a different Speaker.


2. Is this the beginning of the end of the Republican party? As I said, I think this episode has, somewhat paradoxically, perhaps made it more likely that a deal will be reached over a debt ceiling, but there's a good chance that the Tea Partiers in the Republican Party will view this as an epic betrayal by the Republican leadership (they can't help it - it's in their nature to refuse to compromise, just as it's in Democrats' nature to be open to compromise). This episode has shown the extent of the rift between the various factions under the Republican umbrella, and I wonder if we'll see the Republican party split into two or more factions: the populists, the fiscal conservatives, the social conservatives, and/or the pro-business faction. I doubt it, but anything's possible - as you see above, Bill Kristol has come out swinging against the Tea Partiers, and so has Bill O'Reilly - along with John McCain, the Wall Street Journal, and Ann Coulter - people who can hardly be called RINOs. I think the Republican leaders will probably be able to keep their coalition together by focusing on a common (if somewhat mythological) enemy - the socialist/fascist/communist Obama and whoever comes after him - but it's not guaranteed.


3. The U.S. will continue it's slow decline, thanks in no small part to foreigners' shift away from the U.S. dollar as the world's preferred reserve currency. Thanks to all of this debt ceiling idiocy, the rest of the world already thinks we're crazy and are calling our politicians a "laughing stock" - if I were other countries, I'd start diversifying away from the U.S. dollar and other U.S. assets. I'm not even sure many of U.S. politicians are fit to govern, and as I've watched the past 2 days play out, I'm starting to think that we might deserve a debt downgrade.


Maybe I'll be proved wrong. Perhaps Boehner has a brilliant endgame in mind, will manage to pull through this like a knight in shining armor, and will put together a deal that can pass the Republicans in the House, the Democrats in the Senate, and the White House - but I doubt it, so he'll have to take Reid's compromise or be largely responsible for a U.S. default. At this point, the House Tea Partiers will view any compromise with the Democrats to raise the debt ceiling (which both I and Wall Street still see as highly probable, at this point) as a blood betrayal by Speaker Boehner, which will only make them more intransigent in the future. At that point, if Boehner ever wants to pass any legislation that will actually make it past the Senate and White House, he'll have to do it together with the House Democrats rather than with the full Republican caucus - which may cost him the Speakership.


We'll just have to wait and see how this plays out - we'll know whether I'm correct in some of my above predictions in a few days; others might take years to come to light. The only thing I'm sure of at this point is that, no matter what happens, the poor are going to get screwed.

Friday, July 29, 2011

The Coolest Way to Solve the Debt Ceiling Crisis - Mint $1 Trillion Platnium Coins

With the Republican leadership slowly imploding (I may have more to say on this topic this afternoon, depending on now the events of the day play out), it may be more important than ever to come up with a solution to the debt ceiling crisis that doesn't involve Congress. One option is "the constitutional option," though that would probably end up with Obama being impeached, and Obama has probably waited too long to sue Congress, as I advocated.

But, never underestimate the power of obscure American laws! I somehow missed this yesterday - by way of TNR, we have from CNN the coolest way to solve the debt ceiling crisis:
Sovereign governments such as the United States can print new money. However, there's a statutory limit to the amount of paper currency that can be in circulation at any one time.
Ironically, there's no similar limit on the amount of coinage. A little-known statute gives the secretary of the Treasury the authority to issue platinum coins in any denomination. So some commentators have suggested that the Treasury create two $1 trillion coins, deposit them in its account in the Federal Reserve and write checks on the proceeds.

Matt Yglesias gives us the law on the matter:

It’s right here in 31 USC § 5112 “Denominations, specifications, and design of coins.” It’s super-prescriptive about all kinds of things until you get to section (k):
(k) The Secretary may mint and issue platinum bullion coins and proof platinum coins in accordance with such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary’s discretion, may prescribe from time to time

Yes, it's just that crazy, cool, and simple. But why stop at 2? Why not mint 100 of the suckers and effectively give the Treasury enough borrowing authority to make the debt ceiling irrelevant for decades, if not forever?

I suspect at least some people would seriously freak out ("ZOMG INFLATION!!111!!1!"), and at least a few people would dream of swiping the coins, even though you wouldn't be able to do anything with them. Nevertheless, this is a simple, elegant, apparently completely legal solution that would take about an hour, needs no approval from Congress, and wouldn't end up with Obama getting impeached.

I like Jonathan Chait's moniker and hereby dub this the Montgomery Burns Solution:



Note: Based on a little quick feedback, I just want to clarify - I do NOT think this is the best solution to the crisis. However, if Congress refuses to act, I think a more ... "creative" solution, such as this one or "the constitutional option" would probably cause less harm than a U.S. default. The best solution to this "crisis" would be for Congress simply to raise the debt ceiling, cleanly - it would take them about 5 minutes.

Thursday, July 28, 2011

I'm in the USAToday Today? Huh?

The wave of the future! ... Maybe ...

(WARNING: I will be tooting my own horn in this post, over something that doesn't actually merit much tooting. But hey, I grew up in the South, where getting your name in the paper was a big deal.)


Apparently my/our little paper I told you about yesterday has landed me/us in the USAToday today for the first time.

The summary they give isn't quite how I'd summarize the paper (they focus on the "OMG GAS HAS TO COST A LOT BEFORE ELECTRIC CARS WILL CATCH ON!!!!" side of things), but then again, it's the USAToday - I wasn't exactly expecting much depth of reporting or understanding.

The best are the comments, however - some praise/agreement, some skepticism, some "OMG GAS JUST CAAAAN'T GET SO EXPENSIVE," and some Harvard haters - though the best is the guy who said that he and his buddies could have figured this out at a bar over a beer. Personally, I don't think I could run a Monte Carlo simulation by hand at a bar in order to demonstrate the approximate probability distribution of likely future costs of electric cars, but perhaps he's more talented than I.

I hope that it's picked up by the NYTimes (or at least one of their blogs), so there'd be a bit more erudite commentary on the paper (or at least on a poor summary of the paper).

Anyway, if you haven't checked out the paper yet, apparently you should; after all, it's in the USAToday! (You know it ... that's newspaper that's super bland so as to offend as few people as possible and to maximize hotel purchases of the paper.)

Wednesday, July 27, 2011

Newly Published Harvard Paper of Mine: "Will Electric Cars Transform the U.S. Vehicle Market?"

A paper that I've been working on with one of my former HKS professors for about a year has finally been published:

Click on the picture to go to the summary page. Here's a direct link to the full paper (PDF).
The bottom line on the costs of electric cars:

This paper finds that, at 2010 purchase and operating costs, a PHEV-40 [plug-in hybrid electric vehicle, like the Chevy Volt] is $5,377 more expensive than an internal combustion engine or ICE, while a BEV [battery electric vehicle, like the Nissan Leaf] is $4,819 more expensive. In other words, the gasoline costs savings of electric cars over the cars’ lifetimes will not offset their higher purchase prices.
In the future, this cost balance may change. If one assumes that over the next 10 to 20 years battery costs will decrease while gasoline prices increase, BEVs will be significantly less expensive than conventional cars ($1,155 to $7,181 cheaper). Even when the authors use very high consumer discount rates, BEVs will be less expensive, than conventional vehicles although the cost difference decreases. PHEVs, however, will be more expensive than BEVs in almost all comparison scenarios, and only less expensive than conventional cars in a world with very low battery costs and high gasoline prices. BEVs are simpler to build and do not use liquid fuel, while PHEVs have more complicated drive trains and still have gasoline-powered engines.
As the paper discusses, electric vehicle adoption depends on a lot more that just costs, but I'll let you look at the full paper if you're interested (PDF).

I quite enjoyed working on this paper and got to do interesting things like build a costing model for electric cars from scratch, design and run a Monte Carlo simulation, and the like. Check it out and let me know what you think

Cheaper-Than-Free Money: Why the U.S. Government Should Be Borrowing and Spending Even More, Not Less

First off, I've not forgotten that we're in the middle of a huge, more than a little crazy fight over the debt ceiling at the moment. I also recognize that projected US deficits and debts are a real long-term problem for the United States. As you'll see below, however, the financial markets and I both agree 1) that U.S. debts and deficits are not a problem in the short- and medium-term and 2) that the U.S. should be borrowing and spending more in the short- and medium-term than it is right now.

As a data-driven decision-maker, I let the numbers tell me the best course of action, and the numbers are currently saying that instead of trying ways to spend less and cut the debt, the U.S. government should instead be borrowing and spending even more money than it is now. It barely even matters on what - just so long as it is a relatively productive use of the money - such as building high-speed rail projects to connect all major U.S. cities; refurbishing the U.S.'s crumbling airports; resurfacing every U.S. highway; implementing electronic medical records - think big people!

Why would I say that in the middle of a fight that has the Republicans and Democrats tripping over each other to see who can cut more government spending? Simple - the real interest rate on (some kinds of) government debt are currently negative:



 

This is a big deal, and difficult to wrap one's head around. Karl Smith explains:

Suppose the government had two choices. It could either pay for infrastructure improvements as it went along out of tax revenue or it could borrow money build the infrastructure now and then repay the money with tax revenues.
Ordinarily the question would be, does the advantage of building quickly outweigh the cost of the interest.
However, right now the interest cost is negative. The government saves money by borrowing now rather than waiting and paying cash.
 Matt Yglesias notes:
In a sane political environment, Washington would be obsessed with the question of how much can get done within this window. How many projects is it logistically possible to complete quickly enough to take advantage of the cheapness of debt. Instead, we’re attempting to resolve thorny and ideologically freighted questions about the long-term trajectory of the welfare state even though resolving these issues won’t change anything about the present environment. It’s weird. It’s sad.
Yup. Instead of taking advantage of an amazing opportunity in which investors are not only willing to give the government money for free, but are willing to pay the government in order to get the government to borrow money, Congress is instead doing their best to cut spending and borrowing - which is the exact opposite of what the market is telling the U.S. government to do, at least as evidenced by interest rates.

And the benefits of borrowing and spending cheaper-than-free money are not even counting the benefits that would come about from increased employment, since persistent unemployment is a far greater danger to the U.S. economy than debt is in the short- and medium-term.

I suspect this ridiculous, completely political and manufactured debt ceiling "crisis" will close this window of opportunity quickly, but this is just one more measure of Congress's utter dysfunction - that they refuse to take advantage of money that is cheaper than free.

Monday, July 25, 2011

Why Balanced Budgets Are Stupid, for Both Governments and Families

A few days ago, the House passed a bill that would bar any increase in the debt ceiling until Congress passes a balanced budget amendment to send to the states. Since it was obvious that this would never pass the Senate, I thought the Republicans might have given up on the matter, but apparently they haven't, since a balanced budget vote is part of the debt ceiling deal Boehner proposed today.

Because the Republicans seem keen on trying to keep this idea on life support, I thought I'd take a minute to explain why a balanced budget amendment is a terrible idea, both for the government and for a household (since Republicans [and, distressingly, Obama too, as of late] are such big fans of comparing government finances to household finances, even though the two have almost nothing in common).

Basically, a balanced budget amendment says that a government cannot spend more money than it takes in during a given period of time (usually a year). Politicians often say that people / households / families can't spend more than they make, so the government shouldn't be able to, either.

This is a ridiculous idea for several reasons, the most obvious being that people / households / families spend more than they make all the time. How do they do this? They borrow money. If they didn't borrow money to spend more than they make, almost no one would own houses or cars or go to college, since almost no one has the cash on hand to pay for those kinds of expenses out-of-pocket. I rather doubt that the Republicans would argue that people should only buy houses, cars, or college educations if they can do so without needing to borrow money. So, if people borrow money all the time, why can't the government?

Furthermore, another pernicious result of a balanced budget amendment would be to make recessions last deeper and longer, hurting more people worse than is otherwise necessary. It is a good thing if the government borrows and spends money during an economic downturn, to keep demand up and act as a counter-cyclical influence. (Note: this requires an understanding of Keynesian economics. If you don't understand or believe Keynesian economics, there's not much I can do to help you.) If the government can't do this, then the government ends up spending less during recessions (because it's taking in less money), making the recession even worse (see "procyclical"). By borrowing and spending (especially when the economy is bad), the government can smooth out overall societal consumption and lessen the pain of economic downturns.

Oh America - some things never change. Source.

The problem with the U.S. government is that it never seems to be able to save money during good times in order to have extra money (or borrowing capacity) on hand during bad times. The most recent (and perhaps most egregious) example of this was when George W. Bush was handed a surplus by Bill Clinton. Instead of saving for a rainy day as a responsible family would do (i.e. using the surplus to pay down some of the U.S.'s debt so that the U.S. would have plenty of borrowing capacity when the next downturn came), Bush instead decided to spend the surplus on decreasing taxes (especially for the wealthy) and then started two wars without paying for them - turning record surpluses into record deficits that got unimaginably huge when a recession hit at the end of his Presidency and the beginning of Obama's.

So, that's why balanced budget amendments are bad ideas for both governments and families. The problem isn't with borrowing and spending; the problem is with borrowing and spending during the good times as well as the bad times. We're currently in bad times, so the government should be borrowing and spending, especially since the government can borrow money for cheaper-than-free at the moment - but no one's talking about the sensible thing to do.

What would be preferable to a balanced budget amendment? Why, an unbalanced budget amendment, of course:

The unbalanced budget amendment is a requirement that in good times the government must run a budget surplus. The virtues of such a rule are that it allows for counter-cylical fiscal policy during a recession. Indeed, it reduces the cost of counter-cyclical fiscal policy because it guarantees a reserve fund for just such emergencies. The unBBA is thus a type of automatic stabilizer of the kind I have argued for before (e.g. here).
A simple version of the unBBA requires surpluses but more generally the rule would be a surplus or a similarly sized reduction from the previous year’s deficit. The size of the required surplus/deficit reduction would be tied to a function of current and recent GDP growth rates.
Notice that while making counter-cyclical fiscal policy easier the unBBA would tend to create budget balance as surpluses in good times were spent in bad times. Thus over a period of time the unBBA has similar results to a BBA. By requiring surpluses (and thus taxes) to be high(er) in good times,however, rather in bad times the unBBA has a lower cost and a better chance of being passed than the BBA.
 I'm sure Congress will get right to passing that.

Sunday, July 24, 2011

A Quick Reminder that Republicans Created the Debt Problem in the First Place

As we all wait with baited breath to see if Congress can figure out a way to raise the debt ceiling in time to avoid a catastrophic meltdown in the financial markets (all the while wondering whether Obama will exercise "the constitutional option" or whether he will gut the New Deal or the Great Society in a desperate attempt to negotiate with crazy), the New York Times reminds us that the Republicans created most of the debt that they are now saying endangers the country and, according to them, can only be dealt with by cutting services and benefits to the poor, elderly, and sick (as opposed to, say, increasing taxes on billionaries or cutting corporate tax loopholes):


This chart details how Bush policies created three times as much debt as Obama policies - and Bush's two biggest budget boondoggles (the Bush tax cuts and two unfunded wars) EACH added AS MUCH debt at ALL of Obama's policies COMBINED.

So, the Republicans rack up huge amounts of debt, and then when a Democrat is in the White House, they suddenly turn around and claim that the only way to deal with the debt is to cut services and benefits to the poor, elderly, and sick (oh, and to stick it to federal workers - since I am one, I won't forget that), which just happen to be the New Deal and Great Society programs that the Republicans have wanted to get rid of for a while now. Convenient, eh? Oh, and they want to repeal Obama's health care reform because that too helps sick people, and because they refuse to face the reality that the heath care reform law saves money over the long-term.

At this point, I don't know what's the best outcome - yes, a default would be utterly catastrophic, but some of the proposals Obama seems to be entertaining in order to placate the Republicans' absolutely unreasonable demands are also catastrophic.

The Republicans agreed to raise the debt ceiling with NO STRINGS ATTACHED 7 times while George W. Bush was President and a whopping 17 times while Reagan was President - but a Democrat is President and suddenly debt is a more pressing issue than a bad economy and 9.2% unemployment? The agenda here is so blatant, Boehner might as well be wearing neon leggings.

If the Republicans are only willing to raise the debt ceiling if Obama agrees to such a terrible deal, part of me is curious to see what happens if Obama grows enough backbone to just say "no" to the hostage-takers. I mean, if he agrees to the Republicans' demands, he'll end up being a one-term President anyway (since the Republicans' demands will further weaken the economy, and they'll use any Medicare/Social Security cuts against Obama in the 2012 election [just as they did the reductions in Medicare spending in the health care reform act in the 2010 elections] - both of which will be powerful negatives against Obama) - so part of me says he might as well roll the dice with a default and try to take the Republicans down with (or instead of) him.

But all of this is so ridiculous that it simply boggles the mind - after all, the "debt ceiling crisis" could be resolved by Congress in five minutes:

Surveying the scene, perhaps everyone should take a deep breath and recall the traditional way the country has avoided default when the debt ceiling needs raising: Congress raises the debt ceiling.
It’s that simple. The same kind of “clean” debt ceiling increase that’s passed repeatedly over the past 100 years will allow the country to avoid default without tax increases, without defense cuts, and without slashing entitlement spending. Education will be spared. So will transportation, health care, farm subsidies, and everything else. The interest rates investors are charging the American government to buy our debt are extremely low right now. The world economy is suffering from an excessive demand for American debt, not by reluctance to lend. All we need to do to keep our finances flowing is to raise the statutory debt ceiling. At some point, things will change, and we may face a crisis that requires bipartisan dealmaking and “tough choices.” Right now, though, the only crisis we face is an entirely self-created one. House Republicans wanted to create a hostage situation to force President Obama to propose steep spending cuts. But when Obama came to the table with a proposal for steep cuts, it turned out that Republicans don’t actually want to sign a bipartisan deal. Which is fine. Don’t sign a deal! The absence of a deal in no way forces a crisis. Just raise the debt ceiling, fight the 2012 elections, and pick up the long-term budget issue then.
But the Republicans refuse to do that - the temptation to take hostages to advance their anti-New Deal and anti-Great Society agenda is just too great. After all, the public loves Social Security and Medicare, and cutting them is wildly unpopular - so it seems the Republicans are willing to push us to the brink of economic catastrophe in order to gut those programs against the will of the American people.

Sadly, the cynic in me doubts whether the American people will even notice - and when the Democrats get trounced again in 2012, the lesson they'll take from their loss won't be, "We should differentiate ourselves from the Republicans;" instead, they'll (wrongly) think, "we should obviously move even further to the right and be more like the Republicans." And then God help you if you're poor, sick, or old in the USA - it will suck to be you.

Saturday, July 23, 2011

Debt Ceiling Insanity - Part Two of a ?-Part Series

Source.

Thanks to my blog relaunch, I'm joining the whole debt ceiling discussion a little late. Well, not terribly late, I suppose - after all, I already posted in January some of the reasons why refusing to raise the debt ceiling is an astoundingly bad idea, before the mainstream media and political pundits decided they should start talking about this issue seriously, and back when Obama was so naive as to dismiss the notion that the Republicans would use the debt ceiling to take the US economy hostage in order to continue dismantling FDR's New Deal.

My, how things have changed since January.

Well, some things don't change, actually - a plurality of Americans continue to oppose raising the debt ceiling, though I attribute this apocalyptic desire to ignorance rather than to a genuine desire to plunge the US and the world into the Second Great Depression.

However, our elected representatives are supposed to be better, wiser men and women than the proletariat who elected them, right?

Well, not exactly. Michelle Bachmann has gone on record as saying that she will not vote to raise the debt ceiling, no matter what, while John Boehner has flip-flopped from saying that failing to raise the debt ceiling could mean "the end of our economy" to saying that the debt ceiling is 100% Obama's problem:
“When’s he going to lay his cards on the table? This debt-limit increase is his problem, and I think it’s time for him to lead by putting his plan on the table, something that the Congress can pass.”
Mitch McConnell has even gone on record as saying that his #1 legislative goal is not to make America stronger, improve Americans' quality of life, send astronauts to Mars, reduce taxes or the size of government, or anything else that a legislator might be expected to want to do - nope, his #1 goal is to make sure that Obama is a one-term president. I can understand that as the #1 of the Republican National Committee, but that seems like an inappropriate goal for the leader of the Senate Republicans.

I sincerely hope that saner heads prevail - I hope that the Republicans back away from their absurdly dangerous hi-jinks and that the US is not plunged into default (and a Second Great Recession, if not a Second Great Depression) by Republicans trying to score political points with the Tea Party. Even Business Insider, hardly a left-wing mouthpiece, ran this piece the other day:
IT'S OFFICIAL: The Whole World Thinks Republicans Are Dangerous Maniacs Threatening Everyone
Wow ... just ... wow.

No, that's not hyperbole; that's the actual article title - click on the link if you don't believe me. If you're a Republican and you've lost the business press, you must be seriously in outer space.

More on the debt ceiling debacle in coming posts:
  1. A discussion of why a balanced budget amendment makes no sense (either for governments or for households);
  2. Why the debt ceiling shouldn't exist in the first place (and is probably unconstitutional, to boot);
  3. An irrefutable economic argument for why the US should be borrowing and spending HUGE SH*T TONS of money right now rather than decreasing government borrowing and spending;
  4. My thoughts on whether Obama is a brilliant or terrible negotiator; and
  5. Whatever else I feel like writing on the topic of the debt ceiling.

Friday, July 22, 2011

A Novel Idea - Obama Should Sue Congress Over the Debt Ceiling!

                                       V.

While writing another post about the debt ceiling that I'll post later today or tomorrow, I had an idea that I have not seen raised anywhere else yet - Obama should sue Congress over the debt ceiling, and fast.

Here's the basic problem the Obama administration has vis-à-vis the debt ceiling:
  1. Congress passed a budget ordering the Obama administration to spend X amount of money.
  2. Congress passed a debt ceiling telling the Obama administration that it can't borrow more than Y dollars.
  3. Y is too small to allow the Obama administration to spend X.
  4. Therefore, by passing contradictory laws, Congress is forcing the Obama administration to violate the law - either the law governing the budget or the law governing the debt ceiling.
Some commentators have advocated for Obama to exercise "the constitutional option," i.e. invoking Section 4 of the 14th Amendment, which says that “the validity of the public debt of the United States … shall not be questioned” and simply ignoring the debt ceiling altogether. Bill Clinton has said that this is what he would do, if he were in Obama's situation, though the Obama administration thus far seems to have ruled this option out.

If Obama exercised "the constitutional option," it's not clear what would happen - Congress would be the only party who would have standing to sue the Obama administration, though it's unlikely that a joint resolution to sue the President would pass Congress. Even if Congress took the Obama administration to the Supreme Court, I rather doubt that this conservative Court, with its affinity for concentrating power in the hands of the Executive Branch, would rule against the Obama administration. But, there is that possibility - after all, if Obama can overrule Congress's authority to borrow (based on laws it passed through its authority to spend), what's to stop the President from overruling Congress's authority to tax, print money, or sell federal property, if needed? And without question, regardless of the final outcome, exercising "the constitutional option" would inject a lot of uncertainty into the economy and politics until the Supreme Court decided the final outcome.

I think, however, that it is very clear that the Obama administration has standing to sue Congress NOW over putting it into a situation in which it MUST break the law and must choose the law it's going to break. I suspect that the Supreme Court would indeed find that Congress may not put the President into that kind of bind and therefore find the debt ceiling unconstitutional.

This approach (Obama suing Congress) has other advantages - it could happen far faster than Congress suing Obama in order to find out who is in the wrong, and it puts the Obama administration on the offensive rather than the defensive.

So, dear readers / lawyers / Constitutional scholars out there - what do you think of this plan?

    Thursday, July 21, 2011

    Welcome to The Angry Bureaucrat!

    "Everything not prohibited is mandatory!"
    screams the Angry Bureaucrat.

    Welcome, everyone, to my new blogging home!

    After taking a several week break from blogging, I'm happy to be back at a new location with an updated design and new blog features! Particularly exciting is a system I've set up to post a collection of stories gathered from around the web that I think are worth reading - I'm still working the bugs out, so if you have suggestions as to how to improve the (daily? weekly? semiweekly? fortnightly?) "links" posts, let me know. I'm also enabling anonymous comments on this blog, in the hope that it will increase commenting - though if spam or abuse becomes a problem, that will change quickly.

    On this blog, I'll be posting articles similar to those that I wrote for / posted on my last blog - miscellanea I find important, provocative, interesting, or just quirky. Based on what I wrote about in my last blog, a plurality of what I think about seems to be political, which is part of the reason I moved here. I also think it's a much catchier name for a blog.

    The new blog also offers greater space and opportunity for others to guest post, or even to get other regular authors, if I find talented, insightful writers I want to partner with. So, if you're interested in guest blogging, drop me a line at angrybureaucrat (at) gmail (dot) com.

    So, make yourself at home, and keep in touch.

    ~The Angry Bureaucrat

    Friday, July 15, 2011

    Work Continues on the New Blog

    If you managed to find this blog, congrats on finding my new blogging home before I officially launch the site!

    As you can see, it's still a work in progress, but I have managed to transfer most of my old blog posts and comments, and I've got the basic layout set, I think. Feel free to let me know if you have any suggestions.

    I've got some more work to do on this site before it's ready to open to the public officially, so I apologize in advance for the occasionally weird things that may happen in the next 1-2 weeks.

    Check back soon!

    Friday, July 1, 2011

    Blog Update - Just in Time!

    My homage to the old "under construction" banners from mid- to late-90's
    websites, and to websites that are either old enough, retro enough, or just don't
    care enough and still use them. You guys rock.
    Contrary to what my lack of updates this month might have led you to believe, I was not raptured on May 21, and you weren't either.

    Nothing serious happened to keep me away - my 3-week blogging vacation just turned into a 6-week blogging vacation, largely because of unanticipated demands from my real life. Rest assured, dear readers, that I've not forgotten about you or this blog, however. Since I said I'd be back in June, I wanted to post an update before June passes us by completely, to let you all know what's going on.

    I'm taking the opportunity created by the downtime to move my blog to a new and different web address, as well as add a couple of new features to the blog. I'm still working out the bugs, so it will probably be a couple more weeks before I start posting daily again. But, I wanted to let you know that the blog will be coming back soon, new and improved, and at a new address.

    I'll post again with the new address when the new blog launches - until then, check out the archives, and take care of yourselves!

    P.S. - I just noticed the post dated itself as on July 1 - that's because my blog runs on GMT time, not Eastern time, which is the time zone I operate on. So, just wanted to be clear that where I am, I kept my promise!