30 September 2013

Fight Crazy with Crazy

I’m sorry.  I don’t like getting political, but there’s political stuff here tied to some real important economic and financial stuff… And this one’s pretty cut and dry…

Presently, I count 47 House members that represent the Tea Party Caucus.[1]  Based on the November 2012 election results, I estimate that ~2.6% of the US population have empowered them to hold office.[2]  Almost one-quarter of those 47 are from Texas, who have been empowered by ~0.5% of the population.

There are presently 432 members of the House.[3]  The Republican Party en masse holds a majority, with 232 seats.  To the extent its Tea Party Caucus is not aligned with broader Republican Party interests, Republicans don’t enjoy majority power with only 185 seats.  To the extent Democrats try to do anything in the House with their 200 seats, they become obstructed by the Republican/Tea Party coalition of 232 seats.  Stalemate.

So 11% of House members – that ~97.4% of us did not vote for – now stand in the way of funding our government’s basic operations, which will shut down hours from now.  But that’s not the scary part.  The scary part is, come 17 October or thereabout, the US Treasury won’t have any more money to pay Federal debts if the debt ceiling is not raised.

The Tea Party Caucus has tied that and government funding to a list of demands, which predominantly include defunding or now materially limiting so-called Obamacare.  A bill that – like it or hate it – has been signed into law over three years ago.  Since upheld by the Supreme Court.  Its primary advocate for repealing lost the last Presidential election.

Now although I absolutely agree that our debts are getting out of hand and need to be pared back, this is a very dangerous game to play.  Either through ignorance, obstinacy or both, it is the ultimate in foolishness.  The US is the largest, most successful, most integrated economy of the world.  What happens to it moves the entire global economy and financial markets.  Because of our unique foundational role in the world, if a legitimate sense of fear of the US defaulting on its obligations were to begin spreading through the markets, it has the potential to set in motion a series of events that could utterly collapse the global financial system and usher in a depression to rival the 1930s.

In brief, the dollar would collapse.  The price of everything would skyrocket overnight.  Interest rates would spike.  What little lending activity that has come back since the 2008-09 global financial crisis would completely shut down.  So would our economy.  Mass firing would ensue.  The unemployment rate would climb dramatically.  The stock market would crash hard, destroying everyone’s nest egg.

Depending on the severity and protraction of the above, social stresses would start to develop.  We could see hoarding of supplies.  There could be gas shortages, and food and water could disappear from store shelves.  With a scarcity of basic survival supplies, crime would likely spike.  Gangs would roam from neighborhood to neighborhood looting those households that could not defend themselves.

To counter that, martial law would become imposed for an undetermined period of time.  Civil rights would be suspended until things calm down.  Rationing and price controls would be instituted by the government, until the economy comes back.  Which could be years.  And the world will spend the next quarter-century trying to rebuild a global economy, destroyed by a completely avoidable man-made event.  That is, if those increased global hardships don’t devolve world cooperation into global conflict.

This draconian scenario happens to nations all the time (just ask our many friends who have left their homes to live with with us here), when markets lose faith in their financial or political systems.  It just hasn’t happened to us yet.  Mostly because, so far, we have been governed by politicians who – albeit might have been self-serving or corrupt or not very bright – have at least not been complete, raving loony idiot children.
But at least the Tea Party Caucus members got to stick to their convictions, so that they could maintain the favor of the 1/38th of America in their very, very gerrymandered districts who elected them.

The potential economic devastation from such political gamesmanship, could well end up far worse than what any terrorist could hope to inflict on us.  I urge all to think soberly about that last statement, and consider the extent to which these politicians’ personal aspirations might rival those who we regard true enemies of the state.

I understand that was a more extreme statement.  But I measure my words in proportion to the subject matter.  The potential dangers here are that extreme in my view.  And I know I might have miffed some conservative readers here (who haven't stopped reading after my first few paragraphs), because I just sound like I’m towing the Democrat Party line.  If I have you pissed off, good. You should be.

For the record, I am not a Democrat.  Nor am I a Republican.  I have absolutely no vested ideological interest or party affiliation.  It just so happens in this instance, the President is correct, and those that claim to represent the Tea Parties in Congress are wrong.  They have put the President in a situation, where to compromise, sets a bad precedent where any antagonist minority fringe can risk too much (for us all) for too little (for them).

Risking our creditworthiness in some political maneuver to castrate Obamacare… that’s not “crazy like a fox”.  That’s just crazy.  As crazy as it is, it isn’t totally as unbelievable as it might feel.  This is what happens when societies come under prolonged periods of economic hardship.  Desperate people start actually giving ear to the more radical voices, frustrated that their incumbent governments have not delivered.

The rise of communism in Russia and China, or fascism in Italy and Germany in the early 20th Century for example.  Indeed in 1930, the Nazis became the second largest party in the Reichstag.  They won over business interests, successfully campaigning that their version of national socialism was not like Marxism, as the Nazis were not anti-private ownership of property.  (Maybe you can find some Princeton or Harvard grad to explain that to you.  Since some seem to like making Nazi references.  Just sayin'.)

And our depressions of the late 1800s through the 1930s gave rise to a host of third parties with more radical points of view as well.  And every single one of them disappeared into oblivion as soon as the economy got back to where it should be.  So pay attention Tea Party… the moment we’ve gotten this economy working again properly… you and your uncompromising ways are gone.

For all non-Tea Party Republicans, to the extent you can’t wait long enough for that to happen… to date, House Republican leadership has not demonstrated a willingness to split from the Tea Party and pass agreeable legislation with Democrats, combining their 185 and 200 respective seats (although that’s the rumbling as of a few minutes ago).  I have heard that off the record Republican leadership regards that act as being the end of their party for the next quarter-century.

I don’t disagree necessarily.  But consider two things.  One, until you get back to the art of the compromise and stop allowing the Tea Party to continually take us all to the brink, you risk destroying the entire nation for a quarter-century.  Which will destroy the Republican Party for at least that long.  Two, given its already internally fractured state, lack of leadership and a confusing platform that seems to embrace everything that this nation’s attitude and demographics are moving away from, the Republican party may have already come to an end.

I know you are in an existentially very tough spot, but sometimes the only way to fight crazy, is with crazy.  So get on it, guys and gals.  I don’t want that other party having too much power for the rest of my life.

[1] Source: http://conservatives4palin.com/2013/04/reviving-the-congressional-tea-party-caucus.html.  There were 48, but last week Congressman Rodney Alexander of Louisiana’s 5th District resigned.  AZ 1, CA 3, CO 2, FL4, GA 4, IA 1, KS 2, LA 3, MI 1, MN 1, MO 2, MS 1, NC 1, NE 1, NM 1, SC 3, TN 3, TX 11, UT 1, WV 1.

[2] Excludes Alexander, who last week resigned.  Of the 47, five ran unopposed in the general election.  For those five, I count all votes in their respective district as “for”.  If you count none in the unopposed races (with the view that all voters in that district had no other viable party alternative), that results in ~2.3% of population as having voted “for” the House Tea Party Caucus.  Voting results source: Politico, November 2012, with 100% reporting.

[3] Three vacancies.

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