“Good Cop, Bad Cop”: Conservative Think Tanks’ Responses To Default Is Another Reason To Kill The Debt Ceiling
House Republicans are looking to weaponize the debt ceiling again, while the Obama administration is trying to make removing the threat of default part of any agreement.
Here’s one reason why the debt ceiling needs to go: the conservative intellectual infrastructure cheered on a potential default. I had imagined that there would be a good cop/bad cop dynamic to the right. Very conservative political leaders would be the bad cop, saying that they weren’t afraid to default on the debt, while conservative think tanks would play a version of the good cop, warning of the dire consequences of a default for the economy if their bad cop friend didn’t get his way.
For instance, here’s bad cop Sen. Pat Toomey (R-PA) saying that the markets “would actually accept even a delay in interest payments on the Treasuries,” especially “if it meant that Congress would right this ship, address this fiscal imbalance, and put us on a sustainable path, and that the bond market would rally if it saw we were making real progress towards this.” Missing interest payments is fine; in fact, it is great for the country if it is used to pass the Ryan Plan.
Financial analysts, to put it mildly, disagreed. JP Morgan analysts wrote that “any delay in making a coupon or principal payment by Treasury would almost certainly have large systemic effects with long-term adverse consequences for Treasury finances and the US economy.”
Here’s where the think tanks are fascinating. You could imagine them saying “our partner Toomey is nuts, we can’t control him, and you’d better do what he says or there’s going to be real damage.” But that’s not what they did. It’s best to split the work they did on the debt ceiling in two directions:
1. Technical Default Ain’t No Thang. The first is arguing, like Toomey, that a “technical default” wouldn’t matter, and in fact it could be a great thing if the Ryan Plan passed as a result. How did James Pethokoukis, then of Fortune and now of AEI, deal with a Moody’s report arguing a “short-lived default” would hurt the economy? Pethokoukis: ”I guess I would care more about what Moody’s had to say if a) they hadn’t missed the whole financial crisis, b) didn’t want to see higher taxes as part of any fiscal fix and c) if they made any economic sense.” Default doesn’t matter because Pethokoukis doesn’t want taxes to go up, and there’s no economic sense because of an interview he read in the Wall Street Journal.
Others went even further, arguing that the real defaulters are those who, um, don’t want to default on the debt. Here’s the conservative think tank e21 with a staff editorial arguing that ”policymakers need to stay focused on the real default issue: whether the terms of the debt limit increase this summer will be sufficiently tough to ensure that the nation’s debt-to-GDP ratio is stabilized and eventually sharply reduced.” All these people who want a clean debt ceiling increase are causing the real default issue. As someone who used to do a lot of credit risk modeling, this is my favorite: “Indeed, those demanding the toughest concessions today actually have a strong pro-creditor bias.” S&P disagreed with whoever wrote that editorial and increased the credit risk (downgraded) based on the threat of this technical default.
The Heritage Foundation wrote a white paper saying that you could just “hold the debt limit in place, thereby forcing an immediate reduction in non-interest spending averaging about $125 billion each month,” and that “refusing to raise the debt limit would not, in and of itself, cause the United States to default on its public debt.” Dana Milbank noted that these kinds of shuffling plans would still leave the government short and likely cause a recession. Milbank: ”Without borrowing, we’d have to cut Obama’s budget for 2012 by $1.5 trillion. That means even if we shut down the military and stopped writing Social Security checks, the government would still come up about $200 billion short.” The Cato Institute also jumped in with the technical default crowd here.
But that was the reaction from the number-crunching analysts. What about the bosses?
2. Civilization Hangs in the Balance of the Debt Ceiling Fight. Here’s the president of AEI, Arthur C. Brooks, in July 2011: “The battle over the debt ceiling…is not a political fight between Republicans and Democrats; it is a fight against 50-year trends toward statism…No one deserves our political support today unless he or she is willing to work for as long as it takes to win the moral fight to steer our nation back toward enterprise and self-governance.”
Even better, the president of The Heritage Foundation, also in July 2011, compares Democrats to Japan during World War II and then argues: ”We must win this fight. The debate over raising the debt limit seems complicated, but it is really very simple. Look beyond the myriad details of the awkward compromises, and you see an epic struggle between two opposing camps….Congress should not raise the debt limit without getting spending under control.”
So the the conservative intellectual infrastructure, which consumes hundreds of millions of dollars a year, looked at the possibility of a debt default and determined it was both inconsequential and also the only way to stop statism in our lifetimes. No wonder the time period around the debt ceiling in 2011 was such a disaster for our economy, killing around 250,000 jobs that should have been created. There’s no reason to assume all the same players won’t play an even worse cop this time around.
There’s no good reason for the debt ceiling, and now there are really bad consequences for its existence. Time to end it.
By: Mike Konczal, The National Memo, December 6, 2012
“The Emperors Waterloo Defeat”: Jim DeMint Returns To Obamacare Roots With Move To Heritage Foundation
South Carolina senator Jim DeMint announced Thursday morning that he will be leaving the Senate in January to run conservative think tank The Heritage Foundation.
Although he said in a statement that “I’m leaving the Senate now, but I’m not leaving the fight,” adding that “the conservative movement needs strong leadership in the battle of ideas,” his departure from the Senate could be a significant blow to the right wing. DeMint, who holds extreme far-right positions on virtually all social and fiscal issues, has been the unofficial Senate leader of the Tea Party. As founder of the Senate Conservatives Fund, he has helped nominate far-right candidates in several Senate races, and has not been afraid to break with party leadership in primary battles. While some DeMint-backed candidates (like Marco Rubio and Rand Paul) won their elections and helped swing the Republican caucus to the right, others (like Sharron Angle and Christine O’Donnell) blew winnable elections for the GOP — helping Democrats maintain their majority.
Between his extreme rhetoric and his flat rejection of ideological dissent within his caucus, DeMint is in many ways the perfect embodiment of the modern Republican Party. Despite his laughable claim that he left the Senate “a better place” than he found it — as Buzzfeed’s Andrew Kaczynski points out, the American public disagrees — in truth, his legacy is better summed up by New York senator Chuck Schumer: “Certainly his effect on the political system may have been more beneficial to Democrats than Republicans.”
For DeMint, the move to The Heritage Foundation represents the closing of a full circle with regards to the issue that made him and the Tea Party a household name: Obamacare. Although he famously declared in 2009 that “this health care issue Is D-Day for freedom in America,” and that defeating the law would be Obama’s “Waterloo,” the senator was actually for individual mandates before he was against them. Back in 2007, DeMint praised the mandate in Mitt Romney’s Massachusetts health care law for “making freedom work for everyone.”
His new job will be a return to those roots; after all, the individual mandate was originally developed in 1989 by Heritage Foundation health care expert Stuart Butler.
Of course, just like DeMint, the Foundation now believes that the law “must be repealed.” In fact, if Heritage Action for America’s post-campaign video dramatically declaring war against President Obama is any indication of the Foundation’s priorities, then DeMint’s hyper-partisan brand of politics is a perfect fit for the think tank.
Heritage may be a perfect fit for DeMint, as well. Despite winning huge headlines as a senator, his actual legislative record is close to nonexistent. Additionally, as Kaczynski notes in Buzzfeed, DeMint is currently one of the poorest members of the Senate; his new job represents a significant pay raise, and if he plays his cards right — perhaps following Dick Armey’s example at FreedomWorks — then DeMint’s work in the right-wing private sector could set him up for life.
By: Henry Decker, The National Memo, December 6, 2012
“The Conservative Learning Curve”: Thinking Mildly Heretical Thoughts Is One Thing, Actions On The Other Hand…
Over the long run, the most important impact of an election is not on the winning party but on the loser. Winners feel confirmed in staying the course they’re on. Losing parties — or, at least, the ones intent on winning again someday — are moved to figure out what they did wrong and how they must change.
After losing throughout the 1930s and ’40s, Republicans finally came to terms with the New Deal and elected Dwight Eisenhower in 1952. Democrats lost three elections in the 1980s and did a lot of rethinking inspired by Bill Clinton, who won the White House in 1992. In Britain, the Labor Party learned a great deal during its exile from power in the Margaret Thatcher years. The same thing happened to the Conservatives during Tony Blair’s long run.
The American conservative movement and the Republican Party it controls were stunned by President Obama’s victory last month. The depth of their astonishment was itself a sign of how much they misunderstood the country they proposed to lead. Yet the shock has pushed many conservatives to think at least mildly heretical thoughts.
In particular, some are realizing that the tea party surge of 2010 was akin to an amphetamine rush — it produced instant gratification but left the conservative brand tarnished by extremism on both social and economic issues. Within two years, the tea party high gave way to a crash.
It’s true that the early signs of conservative evolution are superficial and largely rhetorical. The right wing’s supporters are already threatening primaries against House and Senate Republicans who offer even a hint of apostasy when it comes to raising taxes in any budget deal. Many Republicans still fear challenges from their right far more than defeat in an election by a Democrat.
Nonetheless, rhetorical shifts often presage substantive changes because they are the first and easiest steps along the revisionist path. And on Tuesday, three prominent Republicans took the plunge.
At a dinner in honor of the late Jack Kemp — a big tax-cutter who also had a big heart — Rep. Paul Ryan and Sen. Marco Rubio both worked hard to back the party away from the damage done by Mitt Romney’s comments on the supposedly dependent 47 percent and the broader hostility shown toward government by a conservatism transfigured by tea-party thinking.
Ryan spoke gracious words about Romney, the man who made him his running mate on the GOP ticket. But the implicit criticism of Romney’s theory was unmistakable. Kemp, Ryan said, “hated the idea that any part of America could be written off.” Republicans, Ryan said, must “carry on and keep fighting for the American Idea — the belief that everyone should have the opportunity to rise, to escape from poverty.” He also said: “Government must act for the common good, while leaving private groups free to do the work that only they can do.”
Rubio dubbed his speech a discourse on “middle-class opportunity” and distanced himself from the GOP’s obsession with giving succor to the very wealthy.
“Every country in the world has rich people,” Rubio said. “But only a few places have achieved a vibrant and stable middle class. And in the history of the world, none has been more vibrant and more stable than the great American middle class.”
Rubio also walked a new and more careful line on government. “Government has a role to play,” he said, “and we must make sure that it does its part.” Then, making sure he stayed inside the conservative tent, Rubio added: “But it’s a supporting role, to help create the conditions that enable prosperity in our private economy.”
For good measure, former president George W. Bush tried to push his party back toward moderation on immigration, using a speech in Texas to urge that the issue be approached with “a benevolent spirit” mindful of “the contribution of immigrants.”
There’s ample reason to remain skeptical about how far conservatives will go in challenging themselves. Substantively, neither Ryan nor Rubio threw much conservative orthodoxy overboard.
And actions matter more than words. It’s not encouraging that a large group of Republican senators blocked ratification of the international treaty on the rights of the disabled. Then there’s the budget. If Republicans can’t accept even a modest increase in tax rates on the best-off Americans, it’s hard to take their proclamations of a new day seriously.
Still, elections are 2-by-4s, and many conservatives seem to realize the need to understand what just hit them.
By: E. J. Dionne, Jr., Opinion Writer, The Washington Post, December 5, 2012
“It Isn’t Easy Being Fox”: There Isn’t Enough Liberal Hating To Fill The Day
Fox News has been in the news a bunch over the last two days, with stories like Roger Ailes’ wooing of David Petraeus, and now the discovery by Gabriel Sherman of New York that the network has benched Karl Rove and Dick Morris, though for slightly different reasons. Morris is just an embarrassment because he’s always so hilariously wrong about everything, while Rove apparently angered top management by challenging the network’s call of Ohio for Obama on election night. “Ailes’s deputy, Fox News programming chief Bill Shine, has sent out orders mandating that producers must get permission before booking Rove or Morris.” This highlights something we liberals may not appreciate: it isn’t easy being Fox.
For starters, MSNBC and CNN don’t get nearly as much attention for their internal conflicts as Fox does. That’s not only because there’s a healthy appetite among liberals for these kinds of stories, but also because there seem to be many people within Fox who are happy to leak to reporters about what goes on there, presumably because they don’t like their employer’s politics. Without them, we’d never know about these things. But more importantly, Fox has a lot of people and factions to keep happy. To see what I mean, let’s start with Ed Kilgore’s explanation for the sidelining of Morris and particularly Rove:
Thanks to their high visibility in the 2012 cycle, some MSM and progressive observers seem to be making the mistake of associating Rove and Morris with right-wing influence in the GOP, and assuming that taking them down a notch in FoxLand means some sort of new conservative pragmatism. Are we forgetting who these men are? Rove was the author of every single violation of “conservative principle” by George W. Bush that has enabled wingnuts to absolve themselves of any responsibility for the bitter fruits—substantively and politically—of the Bush/Cheney administration: No Child Left Behind, the Medicare Rx drug initiative, comprehensive immigration reform, and in general Big Spending and Big Government Conservatism. And given his role as the “quarterback” of the entire Super-PAC/501(c)(4) money blitz in 2012, Rove is also nicely positioned to take the fall for a “Republican Establishment” that failed to make ideology and “vetting” the centerpiece of the anti-Obama drive. As for Dick Morris—well, he’s the same unprincipled self-promoter he’s always been.
Putting Rove and Morris “on the bench” is precisely what you would expect from conservatives looking for a way to shift blame after another electoral defeat. The idea that it means Fox is coming to grips with the error of its ideological ways is leap of logic and faith unjustified by anything we’ve seen so far.
Let’s not forget that for a long time, Rove was for conservatives something like what Nate Silver was for liberals in 2012. Not only did he tell them they were going to win, he did so in a way that made them feel smart, by throwing a bunch of numbers at them and seeming to have a unique, evidence-based explanation for the coming Republican victory (the difference was that unlike Silver, Rove cherry-picks his data and always predicts a Republican victory, whatever the actual facts are). And he was and will always be the architect of George W. Bush’s two presidential victories, a considerable achievement. But now he has the stench of defeat about him. So when you put him on the air, it doesn’t make conservatives feel reassured, it makes them feel angry. But not the kind of angry Fox likes (i.e. angry at liberals). The bad kind of angry, the kind that might make you turn your TV off.
And keeping conservatives watching is Fox’s business. But that isn’t always easy, particularly when there are different kinds of conservatives whose immediate goals and beliefs may be in conflict. The one thing that unites them all—hatred of liberals—is what Fox specializes in. But at times like this, with Republicans in Congress going wobbly on taxes and a reexamination of the Republican future in progress, there isn’t enough liberal-hating to fill the day. Which can make it tough for Fox to navigate, since as the house organ of the conservative movement, it needs to keep everyone happy. It needs to simultaneously cater to the establishment, to the Tea Party, to the elite, to the base, and to everyone in between. That can be a difficult juggling act. Fox plays a much more central role in the conservative movement than MSNBC does in the liberal movement, which is good for business, but it also brings complications.
But don’t worry about Karl Rove. He’ll be back on the air before you know it, telling conservatives why their victory is inevitable.
By: Paul Waldman, Contributing Editor, The American Prospect, December 5, 2012
“Comedy Central”: Grover Norquist Is Wrong About The Tea Party’s Second Coming
This past Sunday, on NBC’s Meet The Press, Grover Norquist had a warning for the president, Democrats, the nation, and perhaps the world: If America ends up going over the “fiscal cliff” there will be a Tea Party revival that will outweigh that of the 2010 midterm elections. “Tea Party two is going to dwarf Tea Party one if Obama pushes us off the cliff.”
I have a question. Has Mr. Norquist resigned as president of Americans for Tax Reform and turned to comedy? If not, maybe he should quit his day job because I laughed so hard at the idea of “Tea Party two” as a warning to our president, my political party, and our nation. Oooh…”Tea Party two.” Scared President Obama? Democrats? You should be, or so Mr. Norquist thinks. Is the “Tea Party two” like Jaws II, or worse yet, Godfather III?
Look, all joking aside, the Tea Party, which isn’t a party at all, had a handful of political victories in 2010. But as I predicted, those “Tea Party candidates,” who are technically Republicans, acted like the red R on their cape dictated when it came time to voting. There was no “T” next to their name when they ran or were elected and when they got to Washington. The GOP schooled them not only on how to behave, but on how to vote. So the faithful lost their religion so to speak. And America wasn’t fooled by a party which was a movement. America also wasn’t fooled by a group that claimed to be nonpartisan, not conservatives, not angry, or not anti-Obama when it turned out to be just that: extremely partisan, very conservative, angry and definitely against the president. In other words, the original plan for the Tea Party either got off track or they lied. Oh, excuse me, let me use political terms: They misspoke.
Another reason I had to laugh at Mr. Norquists’s warning of the second coming of the Tea Party? Polls show since last spring a continuing decline in support for the Tea Party. And there was an analysis done by the Pew Research Center showing that support for the Republican Party has fallen even further in those places that once supported Tea Party candidates than it has in the country as a whole. In the 60 districts represented in Congress by a member of the House Tea Party Caucus, Republicans were viewed about as negatively as Democrats. And the analysis suggests that the Tea Party may be dragging down the Republican Party. That analysis was proven true by the results of the last election. Other polls have shown a decline in support for the Tea Party and its positions, particularly because of its hard line during the debate over the debt ceiling and deficit reduction.
So when Mr. Norquist warns the president about pushing the country over the fiscal cliff, I think he is really speaking to Republicans who are lining up now to walk away from their original pledge to him and his organization not to increase taxes. I think Mr. Norquist is saying, work with the Democrats and we’ll put so much power and money behind a Tea Party candidate to challenge your seat in Congress that you’ll lose your job. So a warning to the president? Or a threat, an unspoken form of bullying to any of the 95 percent of Republicans who signed his pledge?
Some say Democrats should heed Mr. Norquist’s warning. Some say the Tea Party is no longer relevant, they had their 15 minutes of fame and they were a one hit wonder. (This blogger among those of that opinion).
So when Mr Norquist took center stage on NBC’s Meet The Press and David Gregory asked the question “Are you over?” I think it was Sen. Claire McCaskill, a Democrat of Missouri who was in the same segment on Sunday, who said it best: “I just met him for the first time this morning,” McCaskill said. “Nice to meet him. But, you know, who is he?” Or perhaps my two toddlers, who when they hear me mentioning “Grover,” think I’m talking about a furry guy on Sesame Street.
By: Leslie Marshall, U. S. News and World Report, December 5, 2012
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