Why is it so important?

Easy… because without being able to spend more money than we can realize in revenue through taxation, we’re all going to die.  Just look around, this theoretically historically unprecedented permanently damaging possibility is sure to end the Republic as we know it:

President who tells us our senior citizens and military members will not get paid….

Bernake warns of catostrophy…

For others, our national security is at stake…. in fact, Al Qaeda itself might attack just because of this!

& on and on….

 With all of that looming, it’s not wonder someone has to be at fault….

There are alternative answers to defaulting itself, for instance let’s get rid of the ceiling altogether.  Or maybe, since a five dollar treasury bond and a five dollar bill are virtually the equivalent, why not give out more IOUs in a different form thereby removing the need for the ceiling in the first place?

But those ideas are centrist, so largely ignored and with a problem this large… someone has to be to blame.

So who is at fault?

Maybe the Tea Party’s fault?  Or maybe, like much of everything else, it’s Bush’s fault?  How about Governor Norquist?!?!

Or maybe there is no maybe.  Ask the brilliant policy minds over at The Rolling Stones, and they’ll tell you, that without question it’s the GOP’s fault.

For the logic minded, one might contend that the President, who refused to pass this perfect budget a year ago when his party controlled both legislative houses shares some blame.

But what do I know…. according to some Barack supporters, his only problem is being too much like the Big Gipper, the famous “let’s raise taxes” President…

The issue is, when you push predictions of doom and gloom for some scenario, blame has to be affixed quickly and preferably without relation to actual facts as that just muddies the waters.  Nope, the goal for almost every writer, seems to be scare tactics followed by blame.

There are a couple who have offered advice.  HBR for one had an interesting post about needing a moderator, perhaps Adam Smith.  It’s not an unpleasant thought and certainly a brilliant economic mind serving as moderator cannot help, but what most struck me about their advice is the same thing that struck me about most of those pieces blaming this or that: it misses who is truly responsible.

For when HBR states the Debt Ceiling Debate needs a moderator, I have to stop and say, they already do: the American public.  Certainly one could make the argument that the current moderators are abdicating their responsibilities and I might agree, but as much as one can delegate tasks, authority and responsibility cannot be delegated.

So sure, the public collectively can give moderator powers to Adam Smith or someone similar but alive, however the responsibility for the consequences of that process will still be the American people.

So…. is there a debate crisis?

Maybe not… as while many of us individually and seemingly ever single writer might view this whole process as out of control; seeing the whole thing as a demonstration in nothing more than the problems with this country, these are just mere opinions.

In all honesty, I’m sympathetic to that view.  However, the market place of ideas is free.  & If you analyze politics like one does the market, with the idea being the result cannot be wrong as the market is not wrong…

Then I think based upon the current political result I would submit a large enough percentage of voters have already cast their vote to continue the political infighting, applaud Pyrrhic victories, and any number of other actions which are designed to benefit their collective and not the average individual.

As proof of this reality, see incumbency rates, or polls which say cut things, but say no to all questions about what to cut, the current press articles being created because people are buying them, and more.  But even without those facts, the logic is simple: the current debate has to be ok with society at large because a free people is watching it happen and doing nothing, in a concerted effort, to substantially change anything.

So by virtue of its mere existence, it is the correct debate needed at this time.

& if it’s not?

Well, as Lincoln stated <paraphrased here>  ”As a nation of free men, we will live forever, or die by suicide.”

QE3?  Really?

What has the Fed in QE1 & 2 already spent?

A couple trillion, right?  IIRC – 800 billion here, a trillion there I think.

They spent it buying toxic assets, clunkers (link below… but… only in America is destroying 2 billions dollars in real property combined with giving people money to buy cars when we’re going broke is argued openly to be considered a success), GM, Fannie, AIG…. etc, etc, etc, but they have yet to tell anyone exactly where any of it went.

They have actively resisted calls for auditing.  & they have done this even while they argue how much all this was needed.  While they go to the American public and claim with all sincerity that if it weren’t for this spending, we’d all be so much worse off.

& they do all of this so without as even a mention of what the hell they actually did…. other than spend a sh!t ton of money we had to borrow and will force future tax payers to deal with.

Senator Menendez thinks things are sooooo bad, he calls the dealing with the GOP similar to dealing with terrorists (here):

Sen. Robert Menendez (D-N.J.) on Friday compared the tax-cut fight with Republicans to negotiating with terrorists…

& not to be outdone, Senator McCaskill thinks pitchforks and violence are needed (continued):

…while Sen. Claire McCaskill of Missouri suggested Americans might need to “take up pitchforks” if Congress renews tax breaks for the wealthy….

& let’s not forget, Senator Brown… who thinks paying people to stay home is the beginning of job growth (here):

….extending unemployment benefits that creates economic activity that creates jobs, not giving a millionaire an extra ten or twenty or $30,000 in tax cuts that they likely won’t spend,” Brown said….

No worries that Sen. Sherrod et al are wrong on the facts (here):

After the dividend tax rate came down, average dividends among the top 1% surged to $52,814 in 2004 and $83,072 by 2007. Reported dividends of the top 1% in 2007 were twice as large as the previous peak in 2000….

&

Average capital gains among the top 1% rose from $145,433 in 2002 (in 2008 dollars) to a record $427,930 in 2007….

But it does make one wonder where you go from there with their party leader has made a deal with terrorists & those deserving of pitchforks? (here):

An

This house believes that America’s political system is broken.

The current debaters are Matthew Yglesias, defending the motion and Peter Wehner arguing against.   In their second round of the debate, the house is winning with a full 75% agreeing to a broken US political system.

I say it doesn’t seem to have any useful answer as the most likely result from such a poll will be based mainly upon emotions.  Since most lay people don’t typically sit around and try to analyze political systems, the answers from the majority of respondents will have to fall back on other knowledge and human behavior demoonstrates this is likely to be emotions.  IE – if I like what’s going on, no fixing.  If I don’t like what’s going on, it needs fixing.

Reminds me a little of an argument I’ve seen a number of times in the health care debate.  Invariably, someone will put up a poll telling me how many people think their health care costs are too high.  & my retort stays the same, with some variation of Socratic questioning like… ”So?  Did you expect to see a poll that said most Americans want to pay more for anything?”

But I digress, the question has been asked and for Mr. Yglesias, things aren’t going well.  His baisc argument starts something like this:

American political institutions are in a period of crisis. The source of the crisis is relatively simple. Our institutions work only when leaders can reasonably expect broad bipartisan co-operation, but the emergence of more ideologically rigorous parties makes such co-operation extremely unlikely…

Which might make for a good thesis, assuming you can prove that broad bipartisan co-operation is indeed a requirement (hell, prove it’s useful…) as well as proving that more ideologically rigorous parties have come into existence.

His proof?  In the short, yet varied history of the US, he points to the last few election cycles – excluding all information about 9/11 and two wars and the nominal fact that the higher the consequence of any legislation the more ferocious the public debate – he starts his historical research by going all the way back to President Bush the younger; who entered the presidency with:

…an unprecedentedly weak electoral mandate. More voters marked their ballots for Al Gore than marked their ballots for Mr Bush. The median voter in the election supported Mr Gore. But thanks to a combination of litigation, stubbornness and the perversity of the electoral college, Mr Bush succeeded in prevailing and becoming president….

Just a quick note here – is it a little odd to start an arguement to theoretically prove that idealogically rigirous institutions are harming us, by being idealogically rigid… but whatever.

He contends that the result of the weak mandate  and an inability to overcome a Senate fillubuster worked well:

…This led to a fair amount of legislative co-operation in the first Bush term. A series of important changes to the Elementary and Secondary Education Act were approved; an extremely costly new prescription drug benefit was added to Medicare; income taxes were steeply cut—all on an at least somewhat bipartisan basis….

Somewhat bipartisan?  Like idealogically rigirous, “somewhat bipartisan” is undefinable in any concrete terms, but a quick look on just the tax cuts seems to indicate consistent partisan fighting.

What we know?

The cuts themselves were passed in two bills.

1. Economic Growth and Tax Relief Reconciliation Act of 2001 &
   1. Senate vote here, House vote here
2. Jobs and Growth Tax Relief Reconciliation Act of 2003.
   1. Vote totals here

In 2001: only 1 Republican voted against it in the Senate out of 33 nay votes (the other nays were Democrats), and in the House, all but one of the 154 nay votes were cast by Democrats.  & of course out of the yea votes, while less one sided, still doesn’t appear to be bipartisan.  In the Senate, 12 of the 58 yea votes were cast by Democrats and in the House 28 votes our of 240 yea votes were cast by Republicans.

& 2003?  I guess Mr. Yglesias would also be surprised to learn that in the 2003, the tax debate was even more lopsided, including such a tight vote in the Senate that the VP had to vote to pass the legislation and break a tie:

Final Senate vote:

& least you think the tax cuts were picked specifically due to its ability to polarize politicians, the Medicare Prescription Drug, Improvement, and Modernization Act didn’t fair any better on a theoretical chart of degree of partisanship (Senate totals here, House totals here).

Possibly another surprise to Mr. Yglesias, but this vote was just as contentious.  It passed the Senate well enough, but almost failed to pass in the House and the lines were demarcated as expeted:  most Republicans voted yea and they made up the vast majority of yea votes cast and most Democrats voted nay and made up the vast majority of nay votes in both chambers.

But, like all pundits, Mr. Yglesias must be saying to himself  ”let not facts interfere with a core belief” because reality won’t stop him from taking indefinable terms which have more factual evidence against them than for them and acting as if it’s still the basis for some reasonable conclusion.

So he continues with his thoughts about this period of enlightenment, this…. awesome togetherness known as bipatrisan support, and moves to when it all began to come down:

The larger problem, however, was political. Co-operating with Mr Bush brought congressional Democrats no help at the polls in 2002 and 2004….

Which according to his logic, pushed Democratic leadership, Nancy Pelosi & Harry Ried specifically to change tacts:

…Thus, even in the Democrats’ apparent moment of deepest political weakness, the key was to refuse to co-operate. The out-of-power party would have no obligation to make concrete proposals or difficult choices, and could simply unite in rejection of the Bush agenda. So in the second term, Mr Bush, despite his stronger mandate, suddenly found himself unable to make progress on reforming immigration, privatising Social Security, overhauling the tax code, or indeed much else….

Which, again, according to Mr. Yglesias, proved effective as:

Democrats rode this strategy to victory in 2006 and 2008….

Even to the point Republicans blindly followed the same effective strategy of billigerent obstructionism just a short time later:

…learned from history and spent 2009 and 2010 urging a united caucus to say “no” to everything….

He veers off here, once again, to throw in a quick political punch, because after all when arguing against idealogically rigirous parties, one apparently needs to be intensely idealogical….

Suddenly Republicans who had eagerly embraced Keynesian arguments in the past professed to find them outlandish. GOP support for climate change and immigration reform legislation vanished. Democrats whined. And in the 2010 midterms, the GOP won big….

I say her veered off as he failed to mention the overwhelming majority of Democrats against a percription drug benefit for which they normally would be championing.  He also doesn’t mention the very recent history where Democrats are moving away from the White House and towards former President Bush in the current tax cut debate.

Of course neither the GOPs’ nor the Democrats’ fondness for changing political tracks when public opinion moves has anything to do with whether the system itself is broken, but that doesn’t stop the idealogically rigid people amongts us.  Mr. Ygelsias concludes:

…the rules of the Senate give even a defeated minority extensive power to block policy change. In an era of weak, poorly sorted parties this was not a big deal. Indeed, it was not even much of a problem insofar as actors in the political system did not properly understand how it worked. But now that congressional minorities have discovered that their best path back to power is blanket obstruction we are faced with a profound problem. It is unrealistic to expect bipartisan agreement on major issues if the benefits of agreement will all flow to the president and his party….

…America’s political institutions worked well during a period when we had a highly idiosyncratic party system; but that now that the party system has changed so profoundly our institutions need to change with it….

& there you have it.  With lots of facts which disagree with his premise, no supporting facts given, & a complete lack of any historical context, the US system is broken.

Bringing us back to where we started.  Even with an expert, or at least a very informed layperson in poltical affairs, an author paid to think and write about politics, even a senior fellow at a think tank, and all we got was his opinion that he doesn’t like what’s going on now.

But that’s just my two synapses… maybe I’m just jealous, he does get paid to do this after all….

Though under great stress, we humans tend towards the flight or flight response. True leaders however, can use these difficulties against themselves to provide both motivation and a sense of urgency to gain the ingenuity required for such challenges.

This is understood well in society. Like business leaders who understand innovation can be helped significantly by design constraints (here):

Great designers understand this. Charles Eames says design is all about innovating around constraints. And it’s the constraints – the scarcity – that fires the designer’s creativity. Smart business people “get it” too. Amazon founder Jeff Bezos embraces self-imposed scarcity saying, “One of the only ways to get out of a tight box is to invent your way out.”

They understand that principle of economic scarcity. As do military leaders. Sun Tzu notes in the Art of War:

For to win one hundred victories in one hundred battles is not the acme of skill. To subdue the enemy without fighting is the acme of skill.

For President Obama, the Tea Party & the Republicans taking back control of the House of Representatives could give him the opportunity to display true deft.

Assuming it does happen as predicted (here via the Philly Inquirer) however, the President is accorded a tough task ahead.

He would now have the body responsible for appropriations bills (all spending bills much start in the House & they are very important. For instance, they can kill health care by simply not funding it….) mainly in place due to running against him. Secondarily, while they don’t wish to be seen as obstructers, their willingness to work with Obama will be small even without their election strategy. Because any bill passed, regardless of how/why, if it turns out to be a good or well liked idea, Obama will naturally take credit to further his chances for re-election in 2012.

& the Democrats know that neither the President nor health care is a selling point for this election, even if they are communicating differently. The facts are that se hasn’t really made many direct candidate speeches, just backyard BBQs in key districts in key states. They are essentially, and correctly, playing against their weakness – his popularity.

Not a bad strategy in the short term, but I think people have heard him speak enough and any celebrity (yes, while the President is certainly more important and more powerful than any normal celebrity, s/he is still a celebrity) runs the risk of over saturation.

Irregardless, with Obama, the question is can he live inside those constraints?

What we know is given a new landscape, the answer for tomorrow’s question will not be the same answer as today’s. I think if he can push himself with a sense of urgency, surveys the landscape to see what he has and what he can accomplish with what he has. Then uses both the sense of urgency and strategic thinking by changing his game plan when the field of battle changes…. well, then we’ll see a real leader who may live up to his Nobel Peace Prize (here).

Or said more succinctly, it’s a crappy state of affairs you might find yourself in Mr. President, but challenges is how leaders prove themselves.

Honestly, I don’t think he’ll be able to do it. I think he’s too insecure (here) about himself and his handlers seem to know little more than an approval ratings drop equals time for Obama to give more speeches. & I don’t honestly think that’s likely to change…. but predictions are better left to Ms. Cleo.

What is likely however is the people around him understand exactly this point.  They do know it. The question is whether their emotions towards their beliefs (see: Confirmation Bias here & here) combined with the difficulty of telling a President who gives great speeches to shut up. Not to mention game theory predicts leaders to surround themselves with “yes men”.

All of that makes significant and required change seem unlikely, but I’d never count out someone who made it to the Presidency, nor, the team that helped him get there.

So Mr. President, here’s your chance.