Death by Republicans

As a result of the Republican instigated government shutdown, and risking of our nation's credit, all to repeal a health care law that in no way ever could have been repealed...

The new NBC/Wall Street Journal polling data this morning shows that 78% of the public suddenly thinks the nation is on the wrong track - and by far mostly blames Republicans. It is the biggest and quickest swing in over two decades.

The last time we scored a 78 was in October 2008. Which is around the time when Lehman Bothers collapsed; Fannie Mae, Freddie Mac and AIG were nationalized after failing; in a year where Bear Stearns, Merrill Lynch, WaMu, Wachovia, IndyMac all effectively failed; followed by GM and Chrysler failing; after home prices had been cut by one-quarter (from 2006) after not really declining for five decades; after world credit markets melted down; after the Treasury suddenly was begging Congress for $700 billion, and they needed it yesterday; after the Dow Jones Industrial Average crashed thousands of points, wiping away almost $30 trillion in global wealth.

In short, this colossal misstep by the Republican Party which now risks their own destruction, has created a public concern to rival that of the worst financial crisis of a generation's time. Possibly setting into motion materially adverse market consequences (God, I hope not).  Which are at the moment docile, as they focus on the fact that we would not default and that a deal is likely days away.  But the unintended consequences of a suddenly and materially chilled public factor in a new set of economic dampening, until alleviated.

Thank you so much, Republicans.  I know you are divided between Evangelicals, Tea Parties and Moderates.  I know you are panicked right now.  I know the "true leadership" rests more in the Moderate camp, but is unwilling to demonstrate that true leadership, take ownership publicly of this mess, roll up your sleeves and clean it up, getting dirty in the process.  (PS - The one Republican who does, truly has a chance of beating Hillary in 2016.  But right now, this party couldn't beat a Dukakis/Tsongas ticket.  Actually right now, it looks like it will be three parties, come 2016.)

And never forget: The poster child for all this is a Republican Texas Senator, named Ted Cruz: a guy who regards himself so smart, that he would only study with Harvard or Princeton grads while in school. Well, look at the brains on Ted. He's about as smart as Eugene McCarthy - who drank himself to death after finally being censured by Congress.

I think it was MSNBC's Chuck Todd last night that coined this situation (for all politicians, not just Republicans) as "political depression".  So aptly put.  I guess I would refer to the present as a "political crash", where the depression sets in afterward.  And as economic depressions have political consequences, so then political depressions have economic consequences.

Hopefully this all blows over in the next weeks.  Good night, and good luck.

Note: I am not a Democrat.

Contract with Congress

Once again the government is shuttered.  The last time was in 1995, for about a month into 1996.  In the 1994 election, Republicans led by Newt Gingrich R-GA and Dick Armey R-TX made a “Contract with America”.  It was a promise, largely written by the Heritage Foundation, borrowing in part from President Reagan’s 1985 second term State of the Union Address.  Generally, if Republicans were elected to take control of the House, they promised to reduce the size of government, lower taxes, stimulate private business initiatives, reform tort and welfare.

It worked.  In 1995 they took control of both the House and the Senate for the first time since 1953.  And then the Republican controlled Congress sent President Clinton a budget tailored to their Contract’s tenets, that he vetoed.  The government shut for 28 days.  During the shutdown, the President was largely blamed.

Afterward, Speaker Gingrich became vilified for it – portrayed as an infant throwing a tantrum.  Many point to that as a backfire for Republicans.  Speaker Gingrich in their defense cites that it led to balanced budget amendments, and Republicans were subsequently reelected and continued to control Congress for greater than one election cycle, for the first time since 1928.

Whatever the gamesmanship, they didn’t tie their list of demands to risking our nation’s creditworthiness.  Like a handful of House Republicans (and at least one Senate Republican) presently have.  In a couple weeks, the government will run out of money if Congress doesn’t vote to raise the debt ceiling.  About a week after that, our first interest payment on treasury issues will come due.  If we go there, we will not default.  The Treasury will move some money around to keep from a default (not to mention grace periods).

But we should not go there.  Anywhere near there.  The only mitigating factor to the potential panic it could create, is that the world has no place else to store value.  The by-far largest, most liquid, presumed “risk-free” place to invest excess reserves is in US dollar-denominated treasuries, issued by the Federal government, backed by its full faith and credit.  Since the US dollar is the world’s dominant currency reserve, there’s no place else of scale or liquidity to run to if the world sells treasuries, even if some whack-a-dos undermine world faith in our credit.

This is the reality of it all.  Since the world has no place else to go, it dampens the effects of a panicky flight from dollars and treasuries.  Beyond that, the Federal Reserve would run in and buy a shovel-load more treasuries than they already have been.  But all that ends up in the same place, because they can only purchase those treasuries with dollars printed out of thin air by the Treasury.  The Treasury – that has no more ability to borrow in the first place.

All this round and round destroys the value of a fiat currency – whose value only exists through the promise of its issuer to not debase its value by printing too much.  This is all ultimately inflationary – possible hyper – as the flood of a supply of dollars entering a system where everyone is dumping them only accelerates the problem.

And because the world can’t dump dollars and treasuries for the only reason it has nowhere else go, markets haven’t gone where they by now likely would have.  (That is down.  A lot.)  And thus, those politicians are learning a bad lesson – that their brinkmanship is not destabilizing global financial markets.  Because the dollar has not yet collapsed and interest rates have not yet spiked.  Which is a horrible way to govern.  And precisely how it is usually done.  If you will, the stop sign doesn’t go up at the intersection, until after someone has been run over by a car.

So thank you, Congress, for completely abrogating your most basic responsibilities.  Congress has become ungovernable.  Their collective approval rating is ~10% (and even individual approval is plumbing new depths).  They are unfit to serve us.

“What we’ve got here, is a failure to communicate.”  So, Luke, allow me to propose an enhanced method of communication.

What we need is to find a way to impose term limits on Congress members.  Eliminate the possibility of a lifetime career in power with its juicy, comfy perks.  That might go a long way to mitigate the attitude associated with presumed career security that comes from party-favorable gerrymandered districts.

The problem with getting term limits for members of Congress is, you need Congress to vote to impose term limits on themselves.  Like that'll happen any time soon.  Congress voted to impose term limits on the President in 1947 (ratified in 1951).  But is it so hard for a legislative body – that has been at odds with the ever increasing power of the executive since our founding – to limit the President’s power?  The answer is, not nearly as hard as making them impose such on themselves.  Nonetheless, but really to that point…

We need a "Contract with Congress".  We need to level the playing field between the people and its elected representatives.  We need a grass-roots, cross-ideology populist movement.  A contract by the people with any would-be Congress members, that states that the voting public will only vote to elect a person to Congress that subsequently votes in Congress to approve term limits on themselves.

Senators presently serve six-year terms indefinitely (with the Senate being staggered, where one-third is elected every two years).  House Representatives serve two-year terms indefinitely (where all of them are reelected every two years).

We can work on the details, but I propose limiting Senators to no more than two, six-year terms (same staggering).  And allow Representatives no more than two terms, but make them four years in length, so they aren't constantly running for reelection (and staggered, where half the House is reelected every two years).

If you know you’re only in for two election cycles, then that should mitigate your fear of being “primaried” in ever redder and bluer gerrymandered districts.  Compromising with the other side becomes more a viable option.  It will also shorten the leash of control by the monied interests, since they’ll have to train a new dog every handful of years, rather than sit comfortable with one potentially for decades.  And afterward, those elected representatives will still be able to "retire" from public "service" and go on to K Street and make obscene amounts of money "consulting".

All that will require a Constitutional Amendment.  In order to propose one, a super-majority of both houses of Congress must.  Absent that, a national convention of two-thirds of the states (34 of 50) may propose one.  A national convention would require the state legislatures voting to.  Which would require the people sticking it to state level legislators to do so.  Which is even more difficult than this already would be.  Because focusing the public on any of this might make them miss an episode of Duck Dynasty or distract them from Googling Miley Cyrus twerking or something.  But for the rest of us…

In the past several decades, there have been two nearly successful, yet ultimately failed, national conventions.  One addressed the process of redistricting.  The other addressed bringing excessive budget deficits into line.  How germane for today.

Once properly brought (proposed), it must be ratified by three-fourths of the states (38 of 50).  Any deadline for ratification is murky.  The Constitution is silent on that.  In other words, there isn’t one.  But the Supreme Court has since ruled that Congress may place a deadline on it, if it wishes.  An Equal Rights Amendment for women, for example, was written and proposed to Congress in 1923. Congress voted and approved it… in 1972.  It then went to the states for ratification, but it failed to receive the 38 states’ approval before Congress’ self-imposed deadline of 1979 (extended to 1983).  So it failed.

And once passed, it could be repealed in the same process.  By the same people that we have now imposed this on.  So we need a safeguard there.  A term prohibition on repeal, until it sets in as part of our political ethos.  Or perhaps impose some form of poison pill, like barring any member of Congress voting to repeal it, from ever holding subsequent Federal elected office.

So obviously, this is a tall order.  But is this not so clearly a moment in our history that it is desperately needed?  Where politicians now use our nation’s creditworthiness as a poker chip in their power games.  Who are bought and sold by their invisible campaign contributors.  Who for a handful of months each election cycle, pay only lip service to those people who vote them into power.  As our deficits run rampant and our debts balloon.

Where presently every existential threat to the United States is the construct of a small privileged power club, whose near-permanent membership is virtually assured.