Doom Loop, or Political Elites Missing the Point

Paul Krugman describes what he calls the Doom Loop – the process wherein political elites are radically (and potentially deliberately) misinterpreting signals from financial markets to enact destructive policies.

1. US debt is downgraded, sparking demands for more ill-advised fiscal austerity

2. Fears that this austerity will depress the economy send stocks down

3. Politicians and pundits declare that worries about US solvency are the culprit, even though interest rates have actually plunged

4. This leads to calls for even more ill-advised austerity, which sends us back to #2

Krugman points out that this loop and the people who are giving it energy are “impervious to evidence.”

Ben White of Politico noted in his daily tip sheet today essentially the same phenomenon:

Moving between NYC and DC as I do it can be jarring at times to hear politicians in Washington talking endlessly about markets demanding that the U.S. focus on spending and deficit and debt reduction. Then I come back to New York and such talk is simply laughed at given rock-bottom Treasury yields and the commonly held (and correct) view that the U.S. does not have much of a debt problem, certainly not in the near term. But it has a MASSIVE and potentially disastrous growth problem.

That’s why traders often mute the TV (or start cursing) when President Obama begins talking about super committees and shared sacrifice and tax hikes. To be fair, they mute GOP leadership as well. It’s hard to recall a time when the debate and rhetoric in Washington seemed more completely disconnected from what is actually going on in markets and the economy.

There’s a disconnect, to be sure. But it’s driven by ideology. People who believe that austerity should happen and that austerity is the only tool in their tool chest will seek out and find reasons for austerity to be deployed, regardless of whether they are right or not.

Ari Melber on Super Congress

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Above is a rant by Ari Melber on the Super Congress that’s a big piece of the deficit deal that passed earlier this week. Here’s a snippet of the transcript:

I think that brings us to the last ingredient in this farce: the idea that these arbitrary cuts are magically going to result in equal pressure on both sides. …Well many Republicans opposed default too, but in practice you know and I know this GOP congress has proven itself willing to risk great harm in pursuit of its agenda.

There are other larger issues with the Super Congress, but the notion that it will work out of a fear of mutually assured destruction is bogus. For starters, it’s a central tenet of the modern Republican Party’s governing philosophy that the social support network should be removed and Americans should all be on their own. As we saw with the deficit hysteria, conservatives are anxious to use this narrative as a means of destroying the Big Three social programs and many smaller ones as well. While some Democrats have sought to reduce waste and Cold War era weapons systems from the Pentagon budget, reducing the size of the defense budget isn’t exactly a driving force of the Democratic Party. And since all of our many wars aren’t funded out of the Pentagon budget, this Super Congress isn’t affording liberals a mechanism to speed the end of the wars in Iraq, Afghanistan and Libya. Reducing defense spending is no Democratic holy grail. Dennis Kucinich and Mark Warner aren’t in the same place on it. Decreasing the raw Pentagon budget just isn’t a guiding star for the Democratic Party, particularly given the amount of Democrats who supported and funded the war in Iraq, the President’s escalation of the war in Afghanistan, and his initiation with little Democratic objection of a war congressionally irrelevant kinetic action in Libya.

And that’s just the Democratic Party’s tensions on defense spending. There’s a real tension in the Republican Party between war hawks and tax cutters. This is has the potential to undercut the Republican fear of the Super Congress not reaching a deal and snap cuts to defense. Since that fear, we are told, is critical to good-faith negotiation within the Super Congress, this is actually a pretty large structural problem with the mechanism for finding future spending cuts.

As Melber points out, the nut result is that there will be tremendous pressure on Democrats to block social spending cuts and some amount less pressure on Republicans to stop defense cuts, paired with rabid pursuit by conservatives of social spending cuts with some degree of understanding that defense should be cut some too coming from Democrats. This structural asymmetry seems destined to produce deeper social spending cuts that inflict more damage and more pain on working American families than will be felt by cuts to contracts with Halliburton, Raytheon, BAE Systems, and KBR.

Home Rule for DC

I’ve lived in Washington, DC for almost two and a half years, but only this past weekend, as Congress approved a budget which included a ban for the District to use its own funding to pay for abortion services for poor women, did the absurdity and cruelty of DC’s status become clear. The budget bill included a provision that makes a special application of the federal ban of money being used to fund abortion. DC’s budget, even with money raised from its own taxes and not from federal funds, must currently be approved by Congress. And this Congress has said that not only can no federal dollars go to pay for abortion in DC, but none of DC’s money can be used to pay for abortion services for poor District citizens.

License plates in DC carry the slogan, “Taxation without representation,” and clearly this is the system we live under. But the cruelty of the structure is not merely about the quid pro quo the rest of America makes with our government (taxes in exchange for how those taxes are spent). DC is, at the end of the day, a colony of the United States, and we live at the whims of a Congress in our own back yard.

There’s been talk in recent years of giving DC a representative with full voting rights in the House of Representatives, often pairing this addition with a new congressional district in reliably Republican Utah. But even this would be to treat DC like a colony, with sub-standard rights when it comes to representation. Either DC needs to be given full statehood – and the accompanying representation in the Senate – or DC should be merged into Maryland, our contiguous geographic neighbor.  While full statehood for DC is probably the most appealing and straightforward solution, at the end of the day, the necessity for a particular cure of the current colonial system is more important than the particular solution which is used to treat it. If Maryland will take us, fine. If statehood is achievable as the state of Columbia, great. But what we currently have must end and fast.

For what it’s worth, a while back Matt Yglesias mocked up a simple map of how you could give DC statehood, while still carving out the constitutionally required federal district around the White House, Capitol, the Mall and most federal buildings. It would include essentially no residential areas and certainly end the current situation where DC has a larger population than the state of Wyoming. Ygelias’ rough map:

dc statehood

My hope is that the absurdity and the cruelty of the recent budget bill – an outright attack on the rights of poor women in DC – is enough to engender wide support in Democratic circles for DC statehood.  The current situation is a blight on our national conscience and an affront to our Founding Fathers’ memory as patriots who fought against unfair taxation and non-representative colonialism.

Senate Rules Reform

Not terribly surprising, but there won’t be major Senate rules reform, let alone filibuster reform, this session. David Dayen has a post up about the deal, which can only be viewed as an early sign of the sort of fecklessness we’ll see from Democrats in the 112th Congress.

Sen. Reid thanked his colleagues in the GOP for coming to this agreement. He also said the Senate “runs on a fuel made of comity and trust” in his speech on the floor, and that the chamber has “the ability to debate and to deliberate without the restraints of time limits.” He said that’s encoded into the Senate DNA. I watch far too much C-SPAN, and I can tell you pretty clearly that I’ve seen almost no debate or deliberation in the United States Senate. The “encoding” in the DNA is a nonsensical statement of exceptionalism that merely invites obstruction. Make no mistake – the Senate, and all its members, are getting precisely what they deserve. Any future whining about how difficult it is to break a filibuster will go in one ear and out the other. They had their chance to fix this, and they punted. I don’t believe Republicans will be as generous.

Reid closed with this:

Senator McConnell and I both believe our reverance for this institution must always be more important than our respective political parties. As part of this compromise, we’ve agreed that I won’t force a majority vote to fundamentally change the Senate. That is the so-called Constitutional option. And he won’t in the future.

Good luck with that one. [Emphasis added]

I really wish Dayen’s assessment was wrong, but I’m right there with him. The Senate doesn’t debate and Republicans will not feel bound to this gentleman’s agreement. Expect the 60 vote filibuster to be repealed at the start of the next Senate, under the constitutional option.

Honest Men in Washington

Matt Taibbi’s post yesterday praising the honest and conviction of Senator Bernie Sanders is a great reminder that these are characteristics politicians are capable of possessing in genuine ways. Taibbi writes:

I can live with the president fighting for something and failing; what I can’t stand is a politician who changes his mind for the sake of expediency and then pretends that was what he believed all along. You just can’t imagine someone like Sanders doing something like that; his MO instead would be to take his best shot for what he actually believes and let the chips fall where they may, budging a little maybe to get a worthwhile deal done but never turning his entire face inside out just to get through the day. This idea that you can’t be an honest man and a Washington politician is a myth, a crock made up by sellouts and careerist hacks who don’t stand for anything and are impatient with people who do. It’s possible to do this job with honor and dignity. It’s just that most of our politicians – our president included, apparently – would rather not bother. [Emphasis added]

Bingo. I would say that as a political operative and someone who has spent most of my life drawn to politics and towards the idea of the nobility of public service, the highlighted passage has been a benchmark assumption. Over time, I’ve come to understand that the number of actually honest politicians is a perilously low number. The depressing side of political work comes not from failing to see any people do this work with dignity – there are those that do and are inspiring as a result – but how many people you thought were in that category are actually disinclined from working honestly, with dignity, for the public good. Some walk away from it because it is hard. Others walk away because they never believed in honest service to begin with. In both cases, the challenge is that the system is run by people who don’t bother to do their work “with honor and dignity.” This speaks to the value of Bernie Sanders 8+ hour long speech against the proposed tax cuts. He stood up as a hero for those who opposed the cuts and did so without apology. We need more actions like Sanders’ in both chambers of Congress, as these inspire people who watch them and remind us that it is possible for people of principle to work with dignity in the halls of power.

Playing Two Different Games

Politico’s Mike Allen:

Gibbs, to Meredith Vieira, on ‘Today’: ‘The president believes that somewhere in all of this, we can find common ground. … The American people … didn’t vote in November for gridlock.’

The entire GOP Senate caucus:

Senate Republicans intend to block action on virtually all Democratic-backed legislation unrelated to tax cuts and government spending in the current postelection session of Congress, officials said Tuesday, adding that the leadership has quietly collected signatures on a letter pledging to carry out the strategy.

CBS News senior White House correspondent Bill Plante said officials had confirmed the letter was being circulated among Senate Republicans.

If carried out, it would doom Democratic-backed attempts to end the Pentagon’s practice of discharging openly gay members of the military service and give legal status to young illegal immigrants who join the military or attend college.

It’s clear that the White House and the Senate Republicans have two diametrically opposed opinions of what the election meant in November. Oftentimes you hear talk of the brilliance of American voters, who will vote one party into the White House and the other party into one or both chambers of Congress. This recipe makes gridlock fundamentally likely and easy. Unfortunately it seems to be what the GOP wants to take away from the voters is that they should get to do whatever they want, regardless of its human cost. Blocking anything from happening is their mission now and will continue to be for the next two years. Pretending otherwise is going to be a very dangerous from a tactical standpoint.

Pelosi Sticks Around

This is just great news. Speaker Pelosi has announced that she will run for Minority Leader and, per Greg Sargent, “her candidacy is partly about protecting the legacy of Dem accomplishments, and partly about ensuring that Dems show the fortitude and spine that will be required to resist the GOP urge to repeal them.” Sargent has Pelosi’s letter to the caucus announcing her intentions. It includes:

Our work is far from finished. As a result of Tuesday’s election, the role of Democrats in the 112th Congress will change, but our commitment to serving the American people will not. We have no intention of allowing our great achievements to be rolled back. It is my hope that we can work in a bipartisan way to create jobs and strengthen the middle class.

Many of our colleagues have called with their recommendations on how to continue our fight for the middle class, and have encouraged me to run for House Democratic Leader. Based on those discussions, and driven by the urgency of protecting health care reform, Wall Street reform, and Social Security and Medicare, I have decided to run.

Pelosi has been the best advocate progressives have in the leadership of the Democratic Party. I have to imagine that if she’s announcing for Leader, she has the votes in place to win. In a situation where Democrats are in the minority in Congress, I’d hope that Pelosi could be a real agitator and leader in the charge of opposition to the GOP majority in the House. She can take them on more directly than Reid or President Obama.

More to the point, though, Speaker Pelosi has been one of the brightest points in the Democratic Party for years. She is an able public servant and an effective legislator. She deserves to continue to lead the caucus and I hope her colleagues feel the same way.