The United States of Austerity

The "sugar-coated Satan sandwich" passed and will be signed this afternoon, whether we like what we see under the bun or not. I pretty much yelled myself out yesterday; here's a handful of other people's reactions that I think are noteworthy:

• The MoJo article from which I shamelessly stole the title of this post, in which Andy Kroll lays out what's under the bun of the sandwich: "Education, environmental protection, and jobs programs are just the start. An array of social safety net programs—the Women, Infants, and Children nutrition program, food stamps, housing assistance for low-income individuals, foster care money, and basic income security programs—could lose funding under the debt ceiling plan. So, too, could critical infrastructure investments in better bridges, roads, and rail transportation." (You know, the usual steal from the rich/give to the poor stuff.) All things we have to look forward to until and unless what Paul Krugman calls the "confidence fairy" swoops in to save us.
• Here's a brilliant article by the Mother Jones editors (both women) on John Boehner's real handicap. Unlike some other powerful men from all over the political spectrum, his problem (so far as we know) isn't with too much contact with women, but too little. The speaker is a member of one of 24 remaining male-only golf clubs in the country, and the editors see that as a resounding statement of the exclusivity and disconnect that mark him and his party. And it has an impact on all of us: he might be spurning girls to go play golf with the boys, "But don't feel left out, guys: The speaker's contempt is not confined to those of the female persuasion. From the glass ceiling to the debt ceiling, Boehner and the rest of the GOP brass are not only ignoring the needs of the majority of Americans, they are actively flipping all of us the bird. And that is something new."
• David Corn on "Obama's Hope-a-Dope Strategy:" maybe, despite the fury its engendered on both sides, there's some method to the lead-from-behind, fight-avoiding madness after all? I'm not totally buying this one, as you'll see from the comment I left on the story ("hoya progressive," posted at 8:17am).
• Kevin Drum explains that when it comes to getting your agenda across (and legislated), "It's the public opinion, stupid." He notes how well the Right has done at capturing the public's opinion (and its language, and its vote...) since Reagan, then correctly lays the blame on everyone on the Left who's failed to think up a captivating/intelligent/motivational-enough narrative to win the public opinion (and control of the elusive "national narrative") back. Here, Drum wonders at the teeny-tiny percentage of voters who actually favor a no-compromise Tea Party agenda and their ability to hold the whole country hostage ("According to a recent poll, only 22% of Americans consider themselves tea party members or supporters, half the number of last November. And of that 22%, two-thirds supported a debt ceiling compromise and more than half thought it should include tax increases as well as spending cuts...So who was driving the absolutist view in Congress over the past few months? If it was the no-compromise wing of the tea party, that's less than 10% of the country. So riddle me this: how did we manage to let 10% of the country bring us to the brink of disaster? It is a remarkable thing.")
• Speaking of hostage crises, Joe Nocera tells us why we did wrong to negotiate with the Tea Party terrorists, just like with the other kind.
• For a great example of what's wrong we how we think about, describe and (in the case of the mainstream media) cover the debate right now, skim or read today's NYT "Room for Debate" panel of thinkers thinking about whether the Tea Party won the debate on debt. From a legislative standpoint, they didn't just win, they crushed it: in spite of the latest Pew poll showing that 83% of Republican and Tea Party conservatives disapproved of the debt debate (incidentally, they maintained a "decidedly positive impression of [somewhat conciliatory, almost-deal-making] House Speaker John Boehner's role in the process"), the Tea Party's legislative jihad left us with the Satan sandwich du jour. Sure, they wanted twice the cuts they got, but they got a "deal" waaaaay to the right of the American public they're so eager to defend. And what do our NYT writers (nominally of varying political persuasions) have to say? Invariably, that the Tea Party won big, and in most instances they take wildly inaccurate swipes like this one at macroeconomics: "How quickly they [Obama and co.] forget the fiscal bombs they dropped on the American people with the nearly $800 billion stimulus package, “Cash for Clunkers,” so-called high-speed rail and other Keynesian boondoggles that have accelerated our bumping up against the debt ceiling while simultaneously exacerbating our nation’s economic woes" (John M. O'Hara, "Voters Will Understand" [!!]). Color me un-understanding, but where do we even begin to make sense of that brain fart? Go back and read the GDP=C+I+G+X bit from yesterday: the Tea Party won a massive legislative victory, but that isn't the point. The point is that America lost by an even greater margin. This qualifies as "upholding and protecting" the Constitution?

And a few of my own comments:

• What is Mitch McConnell on about? As quoted in the Times after the Senate passed the Satan sandwich: "“It may have been messy,” he said. “It may have appeared to some that their government wasn’t working, but in fact the opposite was true.” Legislating, he added, “was never meant to be pretty.”" In case anyone was still wondering whether he had any grounding in reality, he went on to say that "It's never, ever personal" in legislation. Um, Mitch? When you flip off 90% of the country, it borders on personal. And when you f--- over a whole generation or three of Americans, hell yeah it's personal.
• Chances of the "confidence fairy" arriving aren't looking too good. NYT headline just below the one that announces the deal: "Stocks fall again, despite debt vote." No shit. The "confidence fairy" idea, for those who haven't been reading Krugman, is that if everyone slashes spending and goes into deep voluntary austerity, the world will somehow be convinced that we're serious about our economy and will start investing. No: cutting like that convinces everyone that we're serious about austerity, which is precisely the opposite kind of economic environment to the growth-fueled kind that investors actually have confidence (and thus investments) in. This is like an obese person deciding to not only stop eating, but to start purging. That doesn't give me confidence that the person will get healthy by going into extreme caloric debt until he's made up for all his previous excesses. He'll be unhappy and/or dead long before he's skinny and healthy. Everyone knows you fight obesity with diet and exercise, not starvation. In this hypothetical, government is obese (true, but not as badly as the Tea Party would have it), self-imposed austerity is the starvation/purging plan, and "grand bargains" (for lack of a better term for smart, long-range policy) are akin to a personalized diet and exercise plan. If you were an insurer (investor) and had to bet on one treatment to save your patient (country), which would you invest in? Exactly.
• Finally, I can't hit this point hard enough: we have shamed ourselves in the world's eyes in this debt debacle. Our leaders might not read the newspaper and even our newspapers might not cover little things like the Euro-crisis and Fukushima much if at all, but the rest of the world is watching our political suicide attempt with horror (Germany's Die Welt had the U.S. debt crisis at the top of Page One and the op-eds, and they're not impressed with us). The reason shouldn't be hard to understand: the post-WWII economy is entirely predicated on the "full faith and credit" of the United States government. T-Bills are gold and we don't even pay the credit-rating agencies for our automatic AAA rating (every other country is charged a rating fee). The implication shouldn't be hard to see: if the Zimbabwean dollar collapses (it has), no-one cares because the world is still USD-denominated. If the Euro collapses (it might), Europe is in deep doo-doo, but the world economy probably pulls through, contracting to be sure, but seeking and finding shelter in the Greenback. If the U.S. economy goes over the cliff, however, the other 193 countries shackled to the dollar can't just step off the merry-go-round. To go back to Die Welt's coverage of our crisis, for example, today's articles emphasized the self-inflicted nature of our plight and how it terrifies the rest of the world, rightly made us sound completely irrational in quoting a variety of citizens from all over the country who invariably describe the Washington "theater" as making everyone involved look bad, and mentioned that foreign tourists in America were relieved that we'd averted default. A British tourist was quoted as saying (I'm translating back into English here) that "We've been waiting for a resolution. Whatever happens in the USA invariably also has consequences on Europe." We as a country fundamentally don't understand that insight, and in these days of the "hot, flat and crowded" world, that's a political, economic and moral crime. If we want to shoot ourselves in the face by, say, completely de-funding education (oh, wait, we just did that!), we're only hurting ourselves. But when we play chicken with default, it's not just our own future we're toying with. It's also the world's, and the world is pretty unhappy to see the U.S. both politically immobilized and acting with such callous disregard to the consequences of its actions. Christine Lagarde, new head of the IMF, blasted us the other day. The U.S. getting scolded by the IMF chief might be a new phenomenon, but we deserve it.
• If you don't intuitively understand the consequences of that, read that article: "Among foreign leaders and in global markets, the political histrionics have eroded America’s already diminishing aura as the world’s economic haven and the sole country with the power to lead the rest of the world out of financial crisis and recession." Understand this: the world still needs the dollar today, this week, this month because until now, no one has thought about jumping ship from it. Now that we've proven ourselves incompetent stewards of the world's reserve currency, the world can and will find ways to de-couple itself from the dollar if it feels the need. And, as Krugman wrote yesterday, "the idea that a temporary disruption would permanently damage faith in US institutions now seems moot; if you haven’t already lost faith in US institutions, you’re not paying attention." That's called playing with fire, people, and we're so myopic we don't even understand what we're doing. The dollar hasn't always been the world's currency, but we act like it has -- and always will be. Don't think for a second that the world won't figure out a different solution if we prove that the inmates are running the asylum; if that happens, we're in for a nasty re-education in what it's like to be on a dependent currency, not the world's dominant currency.
• OMG! I think I've finally developed "the conscience of a liberal!" Krugman's post this morning:

Macroeconomic Folly

All of a sudden, people seem to have noticed that policy is moving in exactly the wrong direction. We’re getting headlines like this: Debt Deal Puts U.S. on Austerity Path as Economy Falters.

I’ll need to write up my thoughts here at greater length, but let’s just say for now that what we’ve witnessed pretty much throughout the western world is a kind of inverse miracle of intellectual failure. Given a crisis that should have been relatively easy to solve — and, more than that, a crisis that anyone who knew macroeconomics 101 should have been well-prepared to deal with — what we actually got was an obsession with problems we didn’t have. We’ve obsessed over the deficit in the face of near-record low interest rates, obsessed over inflation in the face of stagnant wages, and counted on the confidence fairy to make job-destroying policies somehow job-creating.

It’s a disaster – and maybe not only an economic disaster.

Fears of far-right rise in crisis-hit Greece

ATHENS, Greece — They descended by the hundreds — black-shirted, bat-wielding youths chasing down dark-skinned immigrants through the streets of Athens and beating them senseless in an unprecedented show of force by Greece’s far-right extremists.

In Greece, alarm is rising that the twin crises of financial meltdown and soaring illegal immigration are creating the conditions for a right-wing rise — and the Norway massacre on Monday drove authorities to beef up security.

The move comes amid spiraling social unrest that has unleashed waves of rioting and vigilante thuggery on the streets of Athens. The U.N.’s refugee agency warns that some Athens neighborhoods have become zones where “fascist groups have established an odd lawless regime.”

Got that 30s feeling, all the way.