“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
“Unforgivable Stupidity”: Rep Louie Gohmert Shows How Not To Respond To A Tragedy
In the wake of tragic gun violence, most politicians realize the decent, responsible thing to do is send sympathies to those affected while leaving politics out of it. Others aren’t as sensible.
After the Columbine massacre, for example, then-Rep. Tom DeLay (R-Texas) blamed science textbooks for the murders: “Our school systems teach the children that they are nothing but glorified apes who are evolutionized [sic] out of some primordial soup.”
In 2007, after the Virginia Tech massacre, Newt Gingrich blamed liberals for supporting “situation ethics,” adding, “Yes, I think the fact is, if you look at the amount of violence we have in games that young people play at 7, 8, 10, 12, 15 years of age, if you look at the dehumanization, if you look at the fact that we refuse to say that we are, in fact, endowed by our creator, that our rights come from God, that if you kill somebody, you’re committing an act of evil.” Gingrich, explaining the VT tragedy, went on to condemn Halloween costumes and the McCain-Feingold campaign-finance law.
And this morning, after the slayings in Aurora, Louie Gohmert weighed in with some stupidity of his own.
Rep. Louie Gohmert (R-Texas) said Friday that the shootings that took place in an Aurora, Colo. movie theater hours earlier were a result of “ongoing attacks on Judeo-Christian beliefs” and questioned why nobody else in the theater had a gun to take down the shooter.
During a radio interview on The Heritage Foundation’s “Istook Live!” show, Gohmert was asked why he believes such senseless acts of violence take place. Gohmert responded by talking about the weakening of Christian values in the country.
“Some of us happen to believe that when our founders talked about guarding our virtue and freedom, that that was important,” he said. “Whether it’s John Adams saying our Constitution was made only for moral and religious people … Ben Franklin, only a virtuous people are capable of freedom, as nations become corrupt and vicious they have more need of masters. We have been at war with the very pillars, the very foundation of this country.”
“You know what really gets me, as a Christian, is to see the ongoing attacks on Judeo-Christian beliefs, and then some senseless crazy act of a derelict takes place.”
I see. So, in the mind of this strange Republican congressman, a madman killed 12 people because of … the separation of church and State? The First Amendment is to blame for a shooting spree in a movie theater?
If decency had any place in American politics, this would be an immediate career-ender for the ridiculous congressman from Texas. Some political missteps are simply unforgivable.
Update: Gohmert also wondered aloud why no one else in the theater was armed, complaining that the victims should have shot back.
By: Steve Beneb, The Maddow Blog, July 20, 2012
“Ignore The Republican Hysteria”: Understanding The Health Care Law Is A Public Responsibility
In a sane climate, Mitt Romney would be running for president on his one big success as a politician: achieving something close to universal private health insurance coverage as governor of Massachusetts. Romneycare cut costs, improved health care outcomes and is quite popular there.
Alas, President Obama’s election has driven many Republicans so crazy that the putative nominee makes an unconvincing show of despising his own brainchild.
Has there ever been a more unconvincing faker in American politics? Romney acts as if he thinks voters are morons. But then, right-wing hysteria over the Supreme Court’s upholding “Obamacare” shows he could be correct.
Mandating health insurance wasn’t Romney’s own idea. The conservative Heritage Foundation saw it as a way to realize the practical and moral benefits of a socialized, government-run health care system like Canada’s through private, for-profit insurance companies — the best of both worlds.
Romney even wrote a 2009 USA Today column advising President Obama about the mandate’s advantages: “Using tax penalties, as we did [in Massachusetts], or tax credits, as others have proposed,” he wrote, “encourages ‘free riders’ to take responsibility for themselves rather than pass their medical costs on to others.”
The president put it this way in reacting to the Supreme Court’s validating Obamacare: “People who can afford to buy health insurance should take the responsibility to do so.”
So is it a tax, or is it a penalty?
The correct answer is “who cares?” Provide your family with the security of a decent health insurance policy and you don’t need to pay it.
Tyranny? Oh, grow up. The government can already make you sign up for Social Security, educate your children, vaccinate your dog, send you to fight a war in Afghanistan, limit how many fish you can catch, and put you in prison and seize your property for growing pot.
Furthermore, Justice Roberts is right. The U.S. government encourages all kinds of virtuous behavior through the tax code. You can get married, or pay higher taxes. Buy a house, have children, invest in a retirement account, even raise cattle (my personal favorite) or pay higher taxes.
And buying health insurance is an intolerable offense against liberty?
Ask Rush Limbaugh who pays for his Viagra. Answer: his employer-provided health insurance company. Only impoverished people, deadbeats and fools go without it.
And guess what? You’re already paying for their medical expenses when time and chance happens to them. As it happens to everybody, even right-wing Supreme Court justices who think it’s clever to compare an inessential food like broccoli to a universal human need like health care.
You can eat your vegetables or not; it’s entirely up to you.
But you can’t not get sick or hurt. And moral considerations aside, the rest of us can’t risk letting you lie down and die on the road. After all, it might be communicable. So there’s no non-participation in the health care system. Even if they drag you in feet-first, there you are.
And somebody’s got to pay for it.
It follows that the minority’s distinction between “activity” and “inactivity” with regard to health insurance is not merely specious legalistic jargon. Frankly, it’s downright adolescent.
Justice Scalia may increasingly resemble a small, volcanic Caribbean nation — eat your vegetables, Tony — but even he is not an island. We’re all in this together.
Previous to Obamacare, the United States has had the most inefficient health care finance in the advanced world, spending by far the highest percentage of its GDP on health care while getting worse results. Most western countries spend a fraction of what we do on health care and their citizens are demonstrably healthier.
Ending the perennial war between hospital bureaucrats and number crunchers at insurance companies and government agencies over who’s going to pay for indigent care should begin to change that.
Meanwhile, now that Obamacare has passed constitutional muster, it’s time for the wise and judicious American public to get off their lazy keisters, ignore the hysteria and learn what’s in the law and what’s not.
I recently took a brief online quiz sponsored by the Kaiser Foundation. I hope you won’t think I’m bragging by saying I got a perfect score. It’s my job to know the basics. Apparently, most Americans don’t. The percentage of citizens ignorant of even the new law’s most basic provisions was shocking.
Granted, the White House has done a terrible marketing job. But no, there’s no new government-run insurance company. If you’ve already got a policy you like, keep it. No, small businesses with fewer than 50 employees need not provide insurance; but, yes, they get tax credits if they do. No, undocumented immigrants aren’t eligible for help.
Many of you have mistakenly trusted carnival barkers like Limbaugh and Sarah Palin. Now that Obamacare’s the law, ignorance is no longer an excuse.
By: Gene Lyons, The National Memo, July 4, 2012
“Assaulted, Victimized And Wounded”: It’s Hard Out There For A Billionaire
Is there a group of people you can think of who have thinner skin than America’s multi-millionaires and billionaires? Wall Street titans have been whining for a couple of years now about the horror of people in politics criticizing ineffective banking regulations and the favorable tax treatment so many wealthy people receive (you may remember the time when hedge fund billionaire Steven Schwarzman said that President Obama suggesting that we eliminate the “carried interest loophole,” which allows hedge fund managers to pay taxes at only the 15 percent capital gains rate instead of standard income tax rates, was “like when Hitler invaded Poland in 1939”). America’s barons feel assaulted, victimized, wounded in ways that not even a bracing ride to your Hamptons estate in your new Porsche 911 can salve. And now that the presidential campaign is in full swing, their tender feelings are being hurt left and right.
David Weigel points us to this remarkable video, in which someone at the Heritage Foundation interviews an aggrieved Frank VanderSloot, an ordinary businessman whose “life changed forever” when “President Obama’s campaign included his name, and seven others, on an enemies list” because he donated to a pro-Romney superPAC. And what was VanderSloot subjected to, once he was placed on this “enemies list”? Harassment from government officials? IRS audits? Baseless prosecutions? National Park Police pulling him over, smashing one of his taillights, then giving him a ticket for having a broken taillight? Well, no. But it is true that he was mentioned on an Obama campaign web site as a major donor to a Romney superPAC. That’s the “enemies list.” As far as we can tell, no actual government action was taken against him, though he did lose some customers when people found out about his political activities. The entire part of the post concerning VanderSloot reads as follows:
Frank Vandersloot: Frank Vandersloot is the national finance co-chairman of the Romney campaign and, through his company Melaleuca, has donated $1 million to Restore Our Future. He is also a “litigious, combative, and a bitter foe of the gay rights movement” who “spent big” on ads in an “ultimately unsuccessful effort to force Idaho Public Television to cancel a program that showed gays and lesbians in a favorable light to school children.”
Shield your eyes from the brutal government oppression!
The quotes come from this Mother Jones article about VanderSloot, his political activities, and his company, a “multi-level marketing” firm that sells supplements and cleaning products. You can argue that the “multi-level marketing” industry is basically made up of con artists who make money by roping gullible people into pyramid schemes and convincing them they’ll make riches without actually working. I don’t know enough about VanderSloot’s company to say if this is an accurate picture of what it does. But what’s critical is that the Obama campaign never criticized VanderSloot’s business practices, or attacked him for being rich. The paragraph they put on their web site about VanderSloot concerned his involvement in politics.
Frank VanderSloot has a lot of money, and has decided to use some of that money to engage in politics, both in his home state and nationally, by doing things like taking out ads about issues that concern him in newspapers and on billboards, and investing heavily in the candidacy of Mitt Romney, whom he’d like to see become president. Which is fine. I’d prefer a system in which it wouldn’t be legal for multi-millionaires to buy presidential candidates, but in America today it is legal. But the whining we get from them is just unbelievable. These guys all seem to think that they are the personal embodiment of the wonder of free enterprise, and if anybody ever criticizes them for their political activities, it can only mean that economic freedom itself is under vicious assault. “We don’t hear about the American Dream anymore, do we? It’s almost a bad thing. It’s almost evil if you become successful in America today,” VanderSloot says in the video. “The whole principle of people getting out there and producing jobs for folks, we ought to go back to knowing that’s a good thing as opposed to believing it’s not.”
I’ve got a deal for Mr. Vandersloot. I’m only an underpaid political writer, but I hereby declare that I will give him one billion dollars if he can show me a time when that committed socialist Barack Obama ever said that “people getting out there and producing jobs for folks” is a bad thing.
I find VanderSloot’s whining particularly grating because as a political writer, I get attacked all the time. People say that I’m wrong, people say that I’m an idiot and a jerk, I get plenty of hate mail, and I’ve even gotten some threats. The latter are a bit unsettling, but as for everything else, it comes with the territory. Like giving a million dollars to a super PAC, writing about politics is a choice, and if you can’t tolerate anybody disagreeing with you, or even calling you names from time to time, you shouldn’t do either one. What VanderSloot obviously wants is a situation in which he can put millions of dollars into influencing the course of elections and policy debates, but nobody ever criticizes him for it. Well, that’s just not how things work in a democracy.
Speaking of one billion dollars, that’s the amount that wealthy people and corporations are planning to spend this fall to make sure that Mitt Romney is the next president. It’s a good investment on their part–just think of all the goodies a Romney administration could shower on America’s beleaguered and oppressed wealthy.
By: Paul Waldman, The American Prospect, May 30, 2012
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