Category: Economic Policy

A Few Wealthy A—holes Want To Secede From America

The Daily Escape:

Poppy bloom, Picacho Peak SP, Picacho, AZ – February 2023 photo by Leila Shehab

Wrongologist blog commenter Terry McK had this to say responding to Wrongo’s post about Speaker McCarthy and his lieutenant Marjorie Taylor Green’s antics surrounding gifting Tucker Carlson with the J6 videos:

“We lie to ourselves about the nature of our government…..Nor have we a marketplace of ideas. We could have – but the marketplace is dominated by the intellectual equivalent of soda and snacks….Now most speeches are performance art delivered to an empty chamber. ”

He’s correct. Here are a few recent developments that track with Terry’s thinking. First, Joe Perticone in the Bulwark: (emphasis by Wrongo)

“A strange proposal is working its way through the Idaho state legislature that would have that state envelop more than a dozen of Oregon’s most conservative eastern counties—in effect, shifting the border between the states 200-plus miles to the west. While last Wednesday’s vote in the Idaho House approving this “Greater Idaho” idea is nonbinding, it does legitimize the movement that has long been promoting the plan.”

A Bluer Oregon and a Redder Idaho. This movement is by the far-Right members of Idaho’s government. And among the 15 Oregon counties targeted to become part of Idaho, 11 have so far formally expressed their support for the plan. So unlike Taylor Greene’s rantings about a national divorce, this idea has a lot of elected officials on board.

Second, Ars Technica reports that:

“Two Republican lawmakers in Idaho have introduced a bill that would make it a misdemeanor for anyone in the state to administer mRNA-based vaccines—namely…COVID-19 vaccines made by Pfizer-BioNTech and Moderna.”

This probably won’t go anywhere. And state-level politicians everywhere also have tons of bad ideas.

Finally, a sober look how some of the wealthy in the fancy towns across the western US are angling for succession or civil war comes from Vanity Fair’s James Pogue. Writing about Jackson Hole, Wyoming:

“…there was a constant traffic of small jets and private aircraft, humming into and out of a town that has become a modern refuge for people with remote jobs…many of them driven to the Northern Rockies by a worry…that the rest of America is on its way toward environmental, political, or economic breakdown.”

Pogue speaks with Catharine O’Neill, great-great-granddaughter of John D. Rockefeller. She’s a Conservative who worked in Trump’s State Department and after the 2020 election moved to Wyoming:

“She…views the corporate elite as enemies of America and believes that we’re on the cusp of a populist uprising against the brand of transnational capitalism championed by Republicans for most of the last half-century.”

She lives on a 580-acre “vertically integrated cattle operation” she started. Today she’s anti both Parties but would happily vote for Tucker Carlson if he’d step forward. These are the thoughts of the “dissident right”. A few of the wealthy have created secretive groups to help people “exit’ from society and from what they see as a failing American system.

From Pogue:

“Who even needs a civil war,” one…texted me recently, “when the institutions are doing such a good job of delegitimizing themselves?”

This cohort sees the Northern Rockies as one of a few places in America that will be livable once life in much of America is fighting heat waves, floods, storms, and fires. They’re focused on how to live through “managed decline,” the wind-down period after the age of cheap fossil-fuels and rapid economic and technological progress wane.

They’re certain that will also bring about the erosion of America’s “state capacity”, the government’s ability to do things. Then our “real economy” will hollow out, and our political divisions will worsen, even more than currently.

But this movement isn’t only supported by the wealthy. Average American workers are increasingly priced out of housing and better educational opportunities for their kids. Many of these workers have service jobs that support the wealthy from Los Angeles to Jackson Hole, and from Cape Cod to Miami Beach. A Moody’s Analytics report says that for the first time in 20 years, the average American is “rent-burdened”, meaning they put at least 30% of their income towards housing.

This makes many middle class Americans very susceptible to arguments by the dissident right about how corporate elites and modern capitalism are hurting their chances to realize the American Dream. This was the basic thrust of the “Occupy Wall Street” movement in 2011. Now, the right wing is trying to take up their cause.

Will there be a second civil war? It doesn’t need to be a war. People don’t understand how easy it would be to launch an insurgency in America. We should take a lesson from the way the Taliban defeated the American military using small arms, and there are plenty of small arms in America. Insurgencies are less a war than an extended political conflict, in which the insurgents try to get governments to overreact. And when they inevitably do, the insurgents build support. It doesn’t take all that much to create a plausible scenario for conflict.

This is Wrongo’s second wakeup call this week. We can’t do much about the wealthy who tell themselves that they’re better off without America.

But we can and must do a lot to persuade average Americans not to fall victim to their rhetoric.

Jimmy Carter’s 1976 stump speech included this:

“I’ll never lie to you”…and…”we need a government as good as its people…”

Would living his message today help us hold the country together?

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Monday Wake Up Call – February 20, 2023

The Daily Escape:

Oatman, AZ on Route 66 – February 2023 photo by Laurel Anne Lindsay

Some of you may have heard about a study called “The Hidden Tribes of America” by the group More in Common. It’s trying to understand the forces driving political polarization in America today. They classify the American electorate into seven distinct groups, they call “Tribes”.

But their key conclusion is that most people don’t belong on the far left or far right: (brackets by Wrongo)

“
the largest group that we uncovered in our research has so far been largely overlooked. It is a group of Americans we call the Exhausted Majority…representing a two-thirds majority of Americans, who aren’t part of the Wings….most members of the Exhausted Majority aren’t [simply] political centrists or moderates. On specific issues, their views range across the spectrum.”

More:

“But while they hold a variety of views, the members of the Exhausted Majority are also united in important ways: They are fed up with the polarization plaguing American government and society
.. [they] are so frustrated with the bitter polarization of our politics that many have checked out completely
.. they aren’t ideologues who dismiss as evil or ignorant the people who don’t share their exact political views. They want to talk and to find a path forward.

This chart from the study graphically illustrates the seven tribal groups of the American populace. As you can see, there is a left-wing group that is about 8% of the US population. And there are two right-wing groups that equal about 25% of Americans. That leaves four groups in what the authors call the “Exhausted Majority”. They are 67% of the American populace.

Here are some demographic characteristics of the seven groups:

  • Progressive Activists: younger, highly engaged, secular, cosmopolitan, angry.
  • Traditional Liberals: older, retired, open to compromise, rational, cautious.
  • Passive Liberals: unhappy, insecure, distrustful, disillusioned.
  • Politically Disengaged: young, low income, distrustful, detached, patriotic,
  • Moderates: engaged, civic-minded, middle-of-the-road, pessimistic, Protestant.
  • Traditional Conservatives: religious, middle class, patriotic, moralistic.
  • Devoted Conservatives: white, retired, highly engaged, uncompromising,

Wrongo identifies as one of the Traditional Liberals, their description rings true.

The authors say that in their research, this tribal membership predicted differences in Americans’ views on various political issues better than demographic, ideological, and partisan groupings. You can read or download the whole study here.

An “Exhausted Majority” may be a positive political development. Wrongo spends nearly every day thinking that there are just two opposing camps. And that they each view each other with fear and loathing, refusing to listen to anything that doesn’t fit their existing narrative. As we’re entering the next presidential campaign, it’s good to know that Wrongo’s view of our polarization might be well, wrong.

Is the “Exhausted Majority” merely a new response to our dysfunctional politics? Wrongo isn’t alone in thinking that what’s wrong with our country will take decades to overcome. Faced with that, people start to look for quick fixes, or a way to stop listening to the wrangling. And you don’t have to be unaligned with either Party to share this sense of exasperation.

The people described in the “Exhausted Majority” are similar. It’s also true that for most people, politics isn’t the be-all-end-all of their lives. They’d prefer that the business of government didn’t require their involvement. They’re trying to get their kids educated, and to keep them safe. They prefer to see political compromise happen without needing to be involved.

But if you can walk away from politics when it frustrates you, then you’re in the lucky minority:

  • There are large numbers of parents who have discovered that their child is addicted to opioids.
  • There are many people who had lost their health insurance when they were laid off.
  • Many sent their daughter to college in the South only to learn that she no longer has any reproductive rights.
  • Many are worried that books are being taken from public school libraries.
  • Some fear that they may lose the right to vote.

These people can’t simply throw up their hands and walk away. Only political action will help them. We all know that the political radicals are irredeemable. We also know they make the most noise, but they’re a minority.

The fed-up people on both sides and in the middle have to find a way to take the country back from the radicals, instead of allowing ourselves to be herded into existing opposing camps.

Time to wake up America! We can’t simply drop out. There’s too much at stake. Democrats need to find candidates and a message that can motivate an additional 5%-15% of the “Exhausted Majority” to vote with them. To help you wake up, watch, and listen to the RedMolly band play a very nice cover of Richard Thompson’s “Vincent Black Lightning 1952”. It’s a surprise how beautifully it adapts to a bluegrass idiom, and the dobro work makes it:

“Vincent Black Lightning” is one of the most perfect songs ever written. We saw Thompson perform it live at Tanglewood last summer.

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Biden’s Speech Showed His 2024 Strategy

The Daily Escape:

Sea smoke at Portland Head Light – February 2023 photo by Rick Berk Photography

(The Wrongologist is taking a few days off. The next column will appear on Tuesday, 2/14. Enjoy your nachos and jalapeno dip on Sunday.)

Wrongo and Ms. Right watched the State of the Union (SOTU) extravaganza. You have already read many insightful observations, so Wrongo’s facing the daunting task to come up with something original for you. Let’s start with some data. CNN’s flash poll of SOTU viewers found that 72% had a positive reaction to Biden’s speech, while:

“71% said Biden’s policies will move the country in right direction — up 19 percentage points from before his speech.”

That’s a win. Politico reported that:

“…the White House is ecstatic that the GOP’s ‘boos, taunts, groans, and sarcastic chortles’ helped Biden paint them as ‘unreasonable and chaotic.’”

It was the most confrontational SOTU address ever, but Biden seemed up to handling the catcalls. Like CNN, most pundits gave Biden good marks for the speech. It ran from “best Biden speech ever!” to “Biden Kills It” to Kate Riga of Talking Points Memo tweeting:

Everyone’s talking about how House Republicans underestimated old man Biden. His speech was an early look at his 2024 general election strategy. Biden is a career politician. Maybe he learned somewhere along his way to the Oval Office that you are only as unpopular as your enemies are popular. In that case, he’s a winner.

Based on Sarah Huckabee Sanders’ GOP rebuttal, Trumpists and their ilk plan to treat 2024 as another braying appeal to their grievance-filled base. They’re adding a rich creamy layer of culture war to help spin up their base, along with their evergreen awfulizing about the national deficit.  From JV Last:

“Where Biden spent the majority of his speech talking about steel workers, bridge projects, insulin prices, and junk fees, Sanders insisted that Biden has surrendered to “a woke mob that can’t even tell you what a woman is.” And that “his administration has been completely hijacked by the radical left.”

OTOH, Biden’s 2024 strategy won’t be a re-run. It’s different and new. As Eugene Robinson says in the WaPo:

“The call to action during President Biden’s State of the Union address on Tuesday — “Let’s finish the job” — would never be mistaken for soaring poetry.”

That also resonated with Jon Last, who agrees that “Finish the Job” will be the campaign’s guiding theme. Here are the implied pillars of Biden 2024:

  • The economy has to keep growing and it must help everyone.
  • The deficit must be cut to the extent possible over the next six years.
  • Biden’s great accomplishments were achieved with bipartisan help of centrist Republicans.
  • The government needs to keep funneling money to small towns and rural areas, something that he started with the infrastructure bill.
  • The risky ideas of the MAGA Republicans who plan to torpedo Social Security and Medicare will be front and center in the campaign.

Instead of the Republicans’ embrace of the culture wars, here’s what Biden had to say: (emphasis by Wrongo)

“My economic plan is about investing in places and people that have been forgotten. Amid the economic upheaval of the past four decades too many people have been left behind or treated like they’re invisible.

Maybe that’s you watching at home.

You remember the jobs that went away. And you wonder whether a path even exists anymore for you and your children to get ahead without moving away. I get it.

That’s why we’re building an economy where no one is left behind. Jobs are coming back; pride is coming back because of the choices we made in the last two years.

This is a blue-collar blueprint to rebuild America and make a real difference in your lives.”

A “Blue-Collar Blueprint” is a smart way to brand your 2024 agenda, instead of some focus-group tested acronym or clever name. Sometimes it just makes sense to say what you mean. As Ron Brownstein wrote in The Atlantic: (brackets by Wrongo)

“He [Biden] repeatedly noted how many of the jobs created by his economic agenda are not expected to require a four-year college degree.”

Jon Last contrasts Biden’s strategy with the GOP strategy, which he thinks is doomed to failure:

“Republicans believe they can increase the number of votes from one group of Americans (their base) by….attacking another group (the coastal elites). Further, Republicans believe that the number of votes they will win through this use of negative polarization will be greater than the number of votes they might otherwise gain by trying to empathize with and persuade the out-group.”

That’s a re-run of Trump 2020.

Biden isn’t going to play defense in 2024. The GOP’s core strategy is always to sway working-class voters and use that political base to implement policies that enrich corporations and the wealthy at the expense of their base.

If Biden can find a way to drive a wedge into that Republican coalition, and peel off 3%-5% of their working-class supporters, it would translate into a big victory in 2024.

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There Are No Partisan Facts

The Daily Escape:

Roaring Mountain, Yellowstone NP – January 2023 photo via Yellowstone NP. The steam vents are called fumaroles. With a limited water supply, the water in steam vents turns to steam and makes noise before reaching the surface.

Today let’s delve into the right-wing mind. Sadly we can’t go in too deep, because you know. Wrongo will try to connect the dots on a few ideas that three interesting people wrote about last week, First, the headline in Phillip Bump’s piece in the WaPo:

“There’s actually only one conspiracy theory: Democrats are evil.”

He’s writing about all of the online conspiracy theories surrounding the hammer attack on Paul Pelosi, and then generalizes from the specific:

“Last year, Pew Research Center found that 1 in 8 Republicans (12.5%) liked it a lot when their leaders called Democratic leaders “evil.” Another 16% said they liked it a little.”

So, 28.5% of Republicans think Dems are mostly evil. Bump offers the long laundry list of Democrat conspiracies propounded by Republicans.

  • For example, the 2020 stolen election shows that Democrats are dishonest and will do anything to retain power.
  • The “deep state” is out to get Trump and the Republicans. This leads to demonizing the FBI and CIA as liberals out to get Trump. This year, we can add the National Archives who just wanted their secret documents back.
  • These conspiracies have led the new Republican House majority to create a committee to look at weaponization of the FBI, DOJ and other agencies against Republicans.

Next, let’s look at recent polling on the economy. Matt Yglesias provides two charts that show the US partisan divide on the economy. First is how Democrats view their family’s economic situation over the past 8 years:

On Election Day (ED) 2016, 50% of Democrats said their family’s situation was about the same. On ED 2020, 50% said it was the same. After two years under Biden, it was 52%, so no change. On ED in 2016, about 32% of Dems said their financial situation had gotten better. That fell to about 10% by ED 2020 and is now about 23%.

Contrast that with what Republicans think now and what they thought on Election Day 2016:

From ED in 2016 when Trump won the White House until ED 2020 when he lost it, the percentage of Republicans who thought their financial situation was about the same went from 45% in 2016 to 55% on ED 2020, meaning that they were pretty satisfied with the state of the overall economy. But with Biden, that dropped precipitously to 21% in just two years.

Republicans who thought their personal financial situation had gotten worse stood at 47% in 2016, and just 10% in 2020. But in January of 2023, after two years of Biden, 74% say their financial situation has gotten worse!

But what really happened with the economy? Paul Krugman has thoughts about what we learn from watching only cable news: (brackets by Wrongo)

“Would you know that real gross domestic product has risen 6.7% under President Biden, that America gained 4.5 million jobs in 2022 and that inflation over the past six months, which was indeed very high last winter, was [growing at] less than 2% at an annual rate?”

How does Krugman explain the disconnect between actual economic data and perceptions? More:

“Partisanship is clearly part of the story….. 90% of Republicans said the national economy was poor. A longer view, from the Michigan Survey of Consumers, finds Republicans rating the current economy worse than they did in June 1980, when unemployment was above 7% percent and inflation was 14%.”

Welcome to the United States of Cognitive Dissonance.

There always has been cognitive dissonance in the world. It’s part of being human. But today, people sincerely love to complain and persist in wanting to see the bad side of everything. Egg prices are up? This economy sucks. All that Americans seem to be capable of seeing is the downside.

The country Wrongo grew up in is still here, but its culture has changed. As a member of the Silent Generation, Wrongo and most others wouldn’t have bet against the USA, or its people. But today, we can’t be certain. This dumbing down of American citizens has happened in rapid and spectacular fashion, and the fact-free perception divide is weakening our institutions. This will be extraordinarily difficult to bridge.

Wrongo has no silver bullet for fixing this, but a very basic way to start is to read up on the big problems. Speak up whenever you hear bullshit spewing. That takes courage, but it can’t go uncontested.

Attend your town meetings. Join groups that sponsor educational exchanges on issues. And vote. Vote in every election no matter how trivial.

Wrongo lives in a semi-rural town. When he overhears political talk, it can be staggering to learn what some otherwise smart people believe.

We don’t have to convert all of them, maybe getting 10% to land on the side of the actual data would create a permanent change in our politics.

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Saturday Soother – January 28, 2023

The Daily Escape:

Outside Mayfield, Utah – January 2023 photo by Robert Stevens

Wrongo read a review of two books on US agriculture in the New York Review of Books. The books are “Perilous Bounty: The Looming Collapse of American Farming and How We Can Prevent It” by Tom Philpott, and “The Farmer’s Lawyer: The North Dakota Nine and the Fight to Save the Family Farm” by Sarah Vogel.

The review is written by Ian Frazier. This gives you an idea of his writing:

“We are eating a big hole in the middle of the Midwest and sucking up California’s ancient aquifers until the land collapses like an empty juice box. The awe that new arrivals from other countries feel when they see the bounty in a US supermarket is an illusion—more like what one might experience when stepping from a cold night into a nice, warm house where they’re burning the furniture. In short, we are plundering the natural sources of our food production and can’t go on this way.”

All of this is Big Agriculture’s doing. Corporate farming controls most of our agriculture, but it’s facing the challenge that American consumers can eat only about 1,500 pounds of food per person per year and the US population is only growing at about a half percent/year. But the investors behind Big Ag want more profit than supplying food to a slowly growing US population. So their strategy is to get Americans to eat more, and to find new foreign markets.

Philpott concentrates on just two of the US’s top food-producing regions: California’s Central Valley and the Iowa-centered Corn Belt.

The CA Central Valley constitutes about half of California’s cropland. Smaller farms concentrate on fruits while the large corporate farms mostly concentrate on nuts. Nuts are a highly profitable crop with low labor costs, but they need enormous amounts of water: To grow a single almond requires about a gallon of water.

Frazier says that almond groves cover about a fifth of the San Joaquin Valley and consume four times as much water as the city of Los Angeles:

“…I eat plenty of nuts myself, including almonds. Looking in the pantry, I see I possess the almond-growing equivalent of a few dozen bathtubfuls of California water.”

Philpott points out that TIAA, a leading provider of financial services owns a 40% stake in Treehouse California Almonds. The Farmland Index, which tracks the performance of agricultural investments, has outperformed the Standard & Poor’s index 11.8% to 9.6% in recent decades.

One problem with California’s Ag dominance is that it takes an increasing share of an increasingly scarce water supply. When irrigation water from snow and rain is scarce, as it has been for decades, farmers pump more of California’s groundwater. Nobody can say when the groundwater will run out because nobody knows how much CA has.

Turning to the Midwest, Frazier points out that the Corn Belt is one and a half times the size of California’s farming acreage. The Corn Belt uses so much fertilizer that it delivers a huge amount of polluted agricultural runoff via the Mississippi down to the Gulf of Mexico. Off of Louisiana, there’s a marine dead zone the size of New Jersey.

Huge companies dominate Midwest farming, from fertilizer and seed manufacturers to large and expensive farm machinery equipment. There is concentration in the companies that buy, process and ship the grain: Three companies: Cargill, Archer Daniels Midland (ADM), and Ingredion control 87% of the US corn market. Four companies: ADM, Bunge, Cargill, and Ag Processing handle 85% of the soybeans.

It is cheaper to raise pork in the US than it is in China because our feed is cheaper. Smithfield is the world’s largest pork producer and is Chinese-owned. AND, the 23 million hogs in Iowa along with Iowa’s other livestock produce as much excrement every year as do 168 million humans.

This data are called “fecal equivalent”. Iowa produces the same amount as the world’s eleven largest cities. Shouldn’t that be on Iowa’s license plate?

But the headline is that mid-sized and small farms are dying. Frazier says that midsize farms are too small to compete with the corporate farms in volume and price. OTOH, they are too big to be supported by the farmers’ outside income. In her book, Sara Vogel says the midsize farm is in danger of going extinct:

“In today’s economy [they] wouldn’t have a prayer.”

Frazier closes by wondering who in agriculture will work to save our environment. He concludes that Big Ag won’t try. A disturbing, but important article.

Time to take a break from politics and economics. It’s also time to ignore that inflation is down and an asteroid narrowly missed the earth. Instead, let’s relax with our Saturday Soother. Readers who are into football will spend their Sunday watching the NFL’s division championship games. That will probably include Wrongo. To kick off our weekend, listen to Alexandra Whittingham and Stephanie Jones perform “Helping Hands” by Sergio Assad. Assad is a Brazilian guitarist. We have featured Whittingham here before, but Jones is new to us:

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Keep Your Politics Off Of My Economy

The Daily Escape:

Rachel Carson National Wildlife Refuge, Kennebunk, ME – January 2023 photo by Eric Storm Photo

From the WaPo:

“The economy posted another consecutive quarter of steady expansion between October and December, with economic activity increasing at a 2.9% annual rate. Consumer spending contributed to the strong fourth-quarter showing, especially given the slumps in large parts of the economy, including housing and manufacturing.”

The latest GDP figures show we have a resilient but slowing economy. Some of the slowdown is intentional, brought on by the Federal Reserve’s aggressive increases in interest rates as a way to control our high inflation. The Fed raised interest rates seven times last year, expecting that higher borrowing costs would lead businesses and households to cut back enough to slow the economy and curb price increases.

That’s happened in the real estate market, and to a lesser degree, in manufacturing. WaPo quotes Joseph LaVorgna, chief economist at SMBC Nikko Securities America:

“You may see [growth] and think the economy is out of the woods, but that would be entirely the wrong read….There are a lot of variables that are all pointing in the same direction: There’s a housing recession. Manufacturing looks like it’s approaching recession. We’re seeing weakness in temp hiring. And it’s doubtful we’ve felt the full effects of all of the Fed’s rate hikes.”

So Biden can take credit for an excellent recovery so far, but many major banks are still forecasting an economic downturn this year. As Diane Swonk, chief economist at KPMG says: (emphasis by Wrongo)

“Momentum has already begun to slow in response to rate hikes, but the bulk of the slowdown is yet to come….The Fed’s goal is to let growth stall out in 2023.”

So are we in for a bad downturn that will persist through the 2024 elections? It’s a possibility if we keep playing politics with the economy.

We need to let people know that inflation has been easing month after month while the unemployment rate has held steady at about 3.5%. The year-over-year change in the consumer price index peaked at just over 9% in June, and since then it’s fallen to just under 6.5%. Other inflation indicators like the producer price index (PPI) have trended lower from prior highs as well.

And the world’s biggest inflation scold, economist Larry Summers who has been saying for 2+ years that we need a deep recession to drive out high inflation is sounding less hawkish: (brackets by Wrongo)

“I still think it’s going to be hard…[but]…You have to recognize that the figures are better than somebody like me would have expected three months ago. It’s still a very difficult job for the Fed, but the situation does look a bit better.”

From prior experience, Larry knows how to prepare, cook, and eat crow.

Can the Democrats and Republicans get out of the way of our currently good economic growth? From Heather Cox Richardson:

“On Monday the Wall Street Journal reported that median weekly earnings rose 7.4% last year, slightly faster than inflation. For Black Americans employed full time, the median rise was 11.3% over 2021. A median Hispanic or Latino worker’s income saw a 4.8% raise, to $837 a week. Young workers, between 16 and 24, saw their weekly income rise more than 10%. Also seeing close to a 10% weekly rise were those in the bottom tenth of wage earners, those making about $570 a week.”

Overall, the economy seems to be on solid ground at least for now. But the average American probably doesn’t view it that way.

And who will the voter reward or blame in 2024? We’ve seen that the House Republicans want to hamstring Biden and the national economy by holding the debt limit increase hostage to budget cuts, possibly in Social Security and Medicare.

So the Dems countered by asking new Speaker McCarthy for a plan on what would be axed from the social services budget. Now, Roll Call is reporting that the GOP seems to be changing their strategy on the fly:

“House Republicans are mulling an attempt to buy time for further negotiations on federal spending and deficits by passing one or more short-term suspensions of the statutory debt ceiling this summer, including potentially lining up the deadline with the end of the fiscal year Sept. 30.”

They’re trying to time the engineering of a debt default crisis to coincide with the government’s new fiscal year, thinking this creates a “mega crisis” of default/government shutdown that will bring Biden to agree to the egregious spending cuts the MAGAs want.

But this should help Democrats. First, Democrats will be able to point to the MAGA cuts as being far outside the American mainstream. Second, the GOP reckless attempt at hostage-taking will be on display just as the election season ramps up.

Are the wheels of the Republican clown car already coming off?

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What’s The GOP Plan For Negotiating On The Debt Limit?

The Daily Escape:

Dream Lake, Estes Park CO – January 2023 photo by Rick Berk Photography

(Wrongo and Ms. Right send healing thoughts to friend and blog reader Gloria R.)

We’re all aware that House Republicans are refusing to lift the debt ceiling unless Biden gives them well, something? And Republicans still haven’t decided what they want. The GOP also wants a balanced budget, but they can’t say what should go, or what should stay.

From the WaPo: (Brackets by Wrongo)

“They [GOP] say they want to reduce deficits — but meanwhile have ruled out virtually every path for doing so (cuts to defense, cuts to entitlements, wiping out nondefense discretionary spending, or raising taxes).”

The fact that Republicans are up in the air about what to do highlights the likely Democratic strategy is against their threats about the debt ceiling. Again, from the WaPo:

“Sensing Republicans are on the verge of a blunder in their schemes to use the debt ceiling to hold the economy hostage and try to extract draconian spending cuts, the White House has developed a two-part response strategy.

Part 1: Lay out the simple argument that Republicans are recklessly inviting an economic meltdown even by talking about a possible default.

Part 2: Force House Republicans to put forward a plan on the table and watch as they struggle with the fallout.”

The Democrats along with Senate Minority Leader McConnell (R-KY) are daring Republicans to put forward a plan. Senate Majority Leader Schumer (D-NY) said:

“If House Republicans are serious about taking the debt limit hostage in exchange for spending cuts, the new rules that they adopted require them to bring a proposal to the floor of the House and show the American people precisely what kind of cuts they want to make….”

Everyone who follows politics knows that Republicans never take much interest in fiscal sobriety when their Party is in control. They agreed to raise the debt limit three times while Trump was in power.

It seems that Republicans are doing the Democrats’ job for them. They are asking for an economic catastrophe and seeking draconian cuts that their base doesn’t want.

Consider the Republican desire to reduce our deficits. They have pledged to balance the budget (that is, to have a zero annual budget deficit) within 10 years. But they haven’t laid out any plausible mathematical path for getting there. And of the current debt ceiling, 90% of it was committed before Biden took his job.

Some Republican House members want to cut military spending, an idea that both Speaker Kevin McCarthy (R-CA) and Rep. Jim Jordan (R-OH) are on board with. But others, including House Appropriations Chair Kay Granger (R-TX), have said defense spending cuts aren’t on the table. Rep. Michael Waltz (R-FL) said:

“We’ve got to get spending under control, but we are not going to do it on the backs of our troops and our military,”

Waltz thinks Republicans should focus on “entitlements programs,” such as mandatory spending programs like Social Security, Medicare, and Medicaid. But the bi-partisan popularity of these programs makes them hard to cut.

And last Sunday, Rep. Nancy Mace (R-SC) was asked to name one thing she was willing to suggest as a spending cut. She instead stated things she wouldn’t put on the table:

“Well, obviously no cuts to Medicare or Medicaid or Social Security….That’s a nonstarter for either side.”

Wrongo has repeatedly suggested tax increases which would help lower deficits, but Republicans have ruled that out.

Instead they’ve changed the House rules so tax cuts will be much easier to pass, and tax increases harder to pass. The House’s rules package now says that any increase in taxes would require a three-fifths vote (60%) rather than a simple majority as previously.

They’ve also proposed doing away with income taxes, payroll taxes, estate taxes and even the IRS itself in favor of a supersized sales tax that would provide most revenue to the government. Republicans would substitute a 30% sales tax on all purchases and in exchange, do away with income, Social Security and Medicare taxes.

That means workers would keep the gross amount of their paychecks. But it also means that buying everything from groceries to automobiles would be hugely more expensive. It also provides a big tax cut for the wealthy and businesses.

The result is a smaller tax burden for the highest earners and a bigger one for people in the middle.

Once you reject trimming entitlements or defense spending and bake in the cost of the GOP’s proposed tax cuts, you’re left with an additional $20 trillion hole in the Federal budget over the next decade.

OTOH, the White House is expected to release its detailed budget in early March. It will build on budgets it has released previously. Republicans want Biden to negotiate on what to do about money we’ve already spent.

Try doing that with YOUR creditors.

 

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Monday Wake Up Call, MLK Jr Day – January 16, 2023

The Daily Escape:

It’s MLK day, so let’s talk about a topic that was near to his heart: economic inequality. Since 1980, economic inequality has been increasing between the top 1% and the bottom 90% of Americans. It’s become so great that today, America now faces the same level of economic inequality that existed before the Great Depression.

Here’s a chart from Elise Gould and Jori Sandra of the Economic Policy Institute (EPI) showing the percentage change in annual wages by income group for the last 40 years:

From the EPI article: (emphasis by Wrongo)

“The level of earnings inequality that existed in 1979 could have simply continued…to today. Instead, we have seen a growing concentration of earnings at the…very top of the earnings distribution, while the bottom 90% has experienced meager gains. Wages for the top 1% grew more than seven times fast as wages for the bottom 90% between 1979 and 2021. The top 1% now amasses a record share of total earnings, while the bottom 90% share of earnings has hit a historic low.”

Slow growth in real (inflation-adjusted) hourly wages for the vast majority of workers has been a defining feature of the US labor market for most of the last 40 years. Only for about 10 years after 1979 did workers see consistent positive wage growth: in the tight labor market of the late 1990s and in the five years prior to the pre-pandemic labor market peak in 2019.

While some low-wage workers have experienced high wage gains after America reopened from Covid, the truth is that most haven’t even kept pace with where they were in 1979.

Today is Martin Luther King Day in America. We mostly celebrate Dr. King’s birth rather than acknowledging what he was arguing for when he was killed. His focus at the end was on both economic justice, and voting rights. Perhaps more than any other leader in American history, King could see the different strands of political and social injustice. He was able to tie them together to form a coherent narrative, one that was capable of leveraging dissent for concrete policy change.

Those were the enduring lessons of Dr. King’s life.

There’s less than three months between the observance of King’s birthday and his death. The way each is recognized by politicians reveals the contradictions in his legacy. Most politicians extol the virtues of racial equality, while most ignore King’s criticisms of economic injustice.

From his April 30th speech in Atlanta: (emphasis by the Wrongologist)

“A true revolution of values will…look uneasily on the glaring contrast of poverty and wealth with righteous indignation. It will look across the seas and see individual capitalists of the West investing huge sums of money in Asia, Africa, and South America, only to take the profits out with no concern for the social betterment of the countries, and say, ‘This is not just’
this business of…injecting poisonous drugs of hate into the veins of peoples normally humane….cannot be reconciled with wisdom, justice, and love. A nation that continues year after year to spend more money on military defense
than on programs of social uplift is approaching spiritual death.”

As the EPI report above shows, over the last four decades, policies promoted by the GOP have reduced the opportunities for most workers to achieve wage growth at rate similar to the top 10%.

Time to wake up America! Develop your narrative, one that fights against economic injustice and for voting rights. Add any other issues that are pertinent to you. Take your narrative to your neighbors. Then work to get out the vote.

To help you wake up, watch “People Get Ready”, a Curtis Mayfield tune that foretold the turning tide in the battle for racial equality. It topped the R&B charts after its 1965 release by The Impressions. It’s been covered by scores of artists, including Bob Dylan, Bruce Springsteen and by Rod Stewart and the late Jeff Beck, who died last week. Early in their careers, in 1969, Beck and Stewart performed together in the Jeff Beck Group. Here’s Beck’s official music video for “People Get Ready” featuring Rod Stewart:

Jeff Beck was one of one as a guitarist. There was no one better. He had the mindset of a jazz musician playing blues rock. His guitar sound wasn’t anything like traditional jazz guitar. He didn’t cut his teeth playing the old jazz standards, but he could improvise something fresh every time. OTOH, Wrongo didn’t love Beck the recording artist.

Rod Stewart has a secret hobby; he builds model trains. He would take his trains on tour with him, requesting an extra room so he could work on them while staying in hotels. Stewart recently unveiled his 1,500 square-foot replica of post-war Chicago and New York railway systems that took him 23 years to build.

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Could A Discharge Petition Force The House To Vote On A Debt Ceiling?

The Daily Escape:

Cold morning on the Snake River, Grand Teton NP, WY – January 2023 photo by Laura Phelps Sundria

We haven’t written about discharge petitions in a few years. But with the likely control of much of the House’s agenda by the Freedom Caucus, they may become important. From the WSJ:

“Democrats and some centrist Republicans are in early, informal conversations about dusting off a rarely used parliamentary procedure that could force a vote to raise the nation’s borrowing limit, ahead of a showdown in coming months over government spending. The process, known as a discharge petition, requires 218 signatures, regardless of party—a majority of the House—to dislodge a bill from committee and move it to the floor.”

The tactic is seen as a way to potentially circumvent efforts by House GOP leadership and the Freedom Caucus to block a debt-ceiling increase. Congress must raise the debt ceiling to allow the Treasury Department to issue more debt to pay for existing US government financial obligations. At stake is the government’s creditworthiness, which also undergirds much of both the American and global financial system.

A default or even the expectation of a default on the US debt, could trigger a lowering of the US credit rating, raising our government’s borrowing costs for years. It could also bring financial panic or tip the economy into a recession. More from the WSJ:

“…McCarthy reiterated Tuesday he wants to use the debt ceiling as leverage to cut spending. ‘This is our moment to change the behavior to make sure, that hardworking taxpayer, that we’re not wasting their money,’ he said on Fox News.”

Playing politics with the debt limit is stupid. Hold that thought and read this from Ryan Grim at the Intercept: (brackets and emphasis by Wrongo)

“When the House Republicans enacted new rules for the 118th Congress on Monday [they included a rule] that preserves the traditional right of rank-and-file members of Congress to bypass House leadership and put legislation on the floor directly if they obtain the signatures of a majority of the chamber. This opens a handful of legislative opportunities for Democrats, despite Republican ideological cohesion.”

He means a discharge petition. Normally, the House Majority Leader sets the floor schedule, in collaboration with the House Rules Committee, but a discharge petition can automatically pull a bill from committee and move it to the floor. Since Democrats currently hold 212 seats in the 118th Congress (one is vacant), if they can find six Republican votes, they could bring a bill to the floor. For most of the Democrats’ agenda, six opposition votes might be a high hill to climb.

But a discharge petition to raise the debt ceiling is one tool that could work. It would give any like-minded Republicans a route around their own leadership and could be the way the House votes to avert a financial crisis (assuming Democrats could find six Republicans who are unwilling to risk a US government debt default).

That may be possible since there are 18 House Republicans who were elected last fall in districts Biden won in 2020.

If a discharge petition is to be used as a workaround for the looming debt crisis, Democrats would have to move fairly quickly. The rules to bring a bill to the floor of the House require that first, the bill would have to be introduced and referred to committee, according to House rules and precedents. Then 30 legislative days have to pass. A legislative day is one in which the House is in session and then adjourns.

If 218 signatures are collected, an additional seven legislative days need to pass, at which point a motion to discharge the bill would come to the floor on either the second or fourth Monday of the month.

Any motion to discharge filed in February or March ought to be ready for a floor vote by summer. Although the Treasury Department hasn’t given an exact date when default will occur, the expectation is that it will occur in the summer.

Discharge petitions have been successful in the past. It has played a role in shaking loose some historic pieces of legislation, including the Civil Rights Act of 1964 and Equal Rights Amendment in 1970. More recently, a successful petition in 2015 reauthorized the Export-Import Bank, which the Republican House majority adamantly opposed.

We’ll see if McCarthy will stand up to his cobbled together majority and bring a clean debt limit bill to the floor. If not, we’ll see if there are at least six Republicans in the House who have backbones and love their country.

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Monday Wake Up Call – December 12, 2022

The Daily Escape:

Oak Creek in snow, Sedona, AZ – November 2022 photo by Ray Redstone Photography

What is it with our national politicians? There are only a few days left for the House and Senate to increase the country’s debt limit, but both Parties have been screwing around, and now it looks like they may punt the problem to the incoming Congress.

From the NYT:

“Congressional leaders have all but abandoned the idea of acting to raise the debt ceiling this month before Democrats lose control of the House, punting the issue to a new Congress when Republicans have vowed to fight the move, and setting up a clash next year that could bring the American economy to the brink of crisis.”

The plan had been for Democrats to act during the lame-duck post-election session to increase the legal borrowing limit. That would take advantage of the Dems’ final month of control of both Houses of Congress. It would head off a pissing contest with Republicans when they take over the House in January. Republicans have threatened to block the increase once they are in charge of the House. They plan to hold it hostage until the Democrats agree to substantial cuts to domestic spending and Social Security, Medicare, and Medicaid.

There are several problems here. The debt ceiling which the US will reach sometime next year; the expiration of the last stopgap funding bill that expires on Dec. 16; and passing an overall budget for the current fiscal year.

The Dems had planned to attach a series of other priorities to the big funding package, including the reform of the Electoral Count Act (ECA), a critical reform that helps prevent election denier shenanigans in 2024. On December 3, Wrongo warned that this was a high risk gambit: (emphasis by Wrongo)

“…the Democrats need Mitch McConnell and other GOP Senate leaders to agree to attach ECA reform to a spending bill and enlist the 10 GOP Senators to support it. That means the GOP controls whether this bill is enacted.”

Now we’re hearing that the leadership of both Parties can’t get to an agreement on the big package. More from the NYT:

“Republicans and Democrats remain at odds over how to split funding between military and social programs. Talks are set to continue through the weekend ahead of the Dec. 16 deadline, though aides said lawmakers could pass a one-week stopgap bill to give negotiations additional time.”

So America’s Christmas present from Congress will be no Electoral Count Act reform and no new budget, and no debt ceiling increase. Instead, we’ll get another Continuing Resolution that will fund the government until early in 2023 when the Republicans will try once again to toss the US credit rating off a high cliff with their far Right ideological theories on US government debt.

Under the last debt limit increase passed late in 2021, the federal government can borrow $31.381 trillion. Total national debt has been slightly above that level, but since a small portion of the debt is exempt from the debt ceiling, we’ve stayed in compliance. As of last week, total debt subject to the debt limit got as close as $31.345 trillion.

The consequences of failing to extend the debt limit are immediate and bring great risk. For example, it could force the government to choose between paying Social Security checks or paying the interest due on the country’s debt. That happened in 2011, when Congressional Republicans pressured President Obama to accept similar spending cuts in exchange for raising the debt limit.

That standoff led to downgrading the credit rating of the US. It rattled American investors and the US economy. This time, it could have global economic implications, given that the world is facing a global recession.

Before you say: Well, these birds learned this lesson back then, so they surely will make a deal this time. Consider that Goldman Sachs reports that less than a quarter of Republicans and less than a third of Democrats who will serve in the House in 2023 served there in 2011.

Time to wake up, Congress! Sure, some of you are very old, and want to go home for the holidays. But we pay you to fix things, not to make them worse. Schumer and Pelosi should make them all stay in DC until they vote on what the country needs.

To help them wake up, watch, and listen to a live version of the Allman Brothers’ “Midnight Rider” with Vince Gill, Gregg Allman and Zac Brown from a 2014 performance at the Fox Theater in Atlanta. One of the wonders of live music is what happens when artists collaborate in a live setting:

We’re also seeing Chuck Leavell on keyboards and Kenny Aronoff on drums.

Sample Lyric:

And I don’t own the clothes I’m wearing
And the road goes on forever
And I’ve got one more silver dollar
But I’m not gonna let ’em catch me, no
Not gonna let ’em catch the midnight rider

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