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The Wrongologist

Geopolitics, Power and Political Economy

Saturday Soother – August 26, 2017

The Daily Escape:

Depression Bread Line by George Segal, 1999, at the NJ Grounds for Sculpture – 2017 photo by Wrongo

There are two political imperatives facing America by the end of September: The House, Senate and the president must extend the Federal borrowing limit, and pass a budget. When Obama was president, extension of the borrowing limit was a dicey thing, as was passing a budget. From 2008-2016, we largely avoided government shutdowns, we passed spending bills, but not an entire budget.

And we never even considered tax reform, but it’s the third item on the GOP’s 2017 to-do list.

In some sense, everything except increasing the debt ceiling is optional. As of now, there are only twelve days in September when the House and Senate are jointly in session. The Senate has a few more legislative days on their schedule than the House, but it’s unclear how they’ll use them.

Republicans and Wall Street used to have concerns about the consequences for America if we didn’t get our finances under control. They said that the growing federal debt could eventually drag down the economy, burden future generations, and even threaten national security. CEOs of corporations and the biggest banks joined a campaign called Fix the Debt, arguing that the size of our debt was our most pressing issue.

But now these same people are all in on Trump’s plan to cut taxes for corporations and high earners, saying it is the way to fuel economic growth. That, despite estimates that Trump’s plan could reduce federal revenue by $3.9 trillion over 10 years, thereby increasing the debt that CEOs used to hate. From Bloomberg:

Goldman Sachs Group Inc. CEO Lloyd Blankfein, a Fix the Debt supporter…in 2012 told CNBC he’d be for higher taxes if they helped mend the fiscal gap. After the 2016 election, Blankfein told colleagues…that Trump’s proposals, including tax reform, ‘will be good for growth and, therefore, will be good for our clients and for our firm.’

Hmmm. Aren’t Treasury Secretary Steve Mnuchin and Trump’s Economic Adviser Gary Cohn both from Goldman?

Dean Baker, co-director of the Center for Economic and Policy Research sees the policy shift clearly: (brackets by the Wrongologist)

They [CEOs] were yelling, Deficits, deficits, deficits… [and] as soon as George W. Bush gets in the White House? Oh, we’ll have a big tax cut.

The same thing is happening now. Bloomberg reports that according to Seth Waugh, chairman of wealth adviser Alex. Brown, many in finance have moved on from the debt: (brackets and emphasis by the Wrongologist)

It’s not a fun, sexy thing to talk about…Waugh, another Fix the Debt member, recalls playing golf with a private equity executive…Waugh told his friend it would be nice if Congress addressed deficits… [but]…The private equity executive said nobody was talking about that. It was a dead issue, and they should take the good news: Paying less in taxes, the friend reminded him, means getting richer.

It’s probably a distant dream. The GOPs plan for tax reform involves using the budget reconciliation process, which allows them to pass it with just 51 votes, that is, without Democrats. Otherwise, they face a filibuster. Reconciliation starts with passing a budget resolution for the coming fiscal year. In that budget resolution, they need to include special budget directives or instructions:

To start the reconciliation process, the House and Senate must agree on a budget resolution that includes “reconciliation directives” for specified committees. Under the Congressional Budget Act, the House and Senate are supposed to adopt a budget resolution each year to establish an overall budget plan and set guidelines for action on spending and revenue.

So they need to pass a budget, but before that, Republicans need to vote to raise the borrowing authority of the government. That may be impossible without support from Democrats.

We’ll know very soon if Dems are willing to get on board with Paul Ryan and Mitch McConnell on any of this.

It’s Saturday again, and despite the brief three-minute respite from politics brought by the solar eclipse, Trump had another successful week. (If success is his continued destruction of what remains of America’s psyche).

We are now in desperate need of something soothing to kick off next week’s war for truth. So grab a couple of Trader Joe’s Cold Brew Latte Dessert Bars (40 calories and 7 grams of sugar each), put on your best Bluetooth headphones, and listen to the late guitarist John Abercrombie, who died this week. Here is Abercrombie with Dave Holland on bass, and Jack DeJohnette on drums doing “Homecoming” live in 1995. Let’s hope it’s not the best few minutes of your week:

Pay attention to Abercrombie’s remarkable and airy technique.

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Pant Suit vs. Pant Load, Part III

(Note: this week there will be no Sunday Cartoon Blogging, since Wrongo will be visiting MA and PA through Sunday, returning on Monday.)

Wrongo and long-time blog reader Terry engaged in a short email dialog on how to “fix” the US political system. We were concerned that there is no individual Congressperson accountability. A backbencher can follow an agenda that can imperil our nation (and a few have done just that) without consequence.

But in America, accountability is managed by election district. Your only alternative is to round up enough votes to replace poor representation. So, if you wanted to reform the impact that money has in our politics, or the way the filibuster works in the Senate, you have to reform Congress.

Yet, under our Constitution, only Congress can reform Congress. And today, there are three parties vying for control of it, and since they rarely are willing to work with each other, not much gets done. So you can completely forget about Reform.

And the parties have not been willing to deal with the not-so hidden desperation in America that shows up in statistics like increasing opioid addiction and suicide rates. The political class ignores how lethal the US economy is for the less fortunate: The New York Times reported this week that US death rates have risen for the first time in a decade.

The increase in death rates among less educated whites since 2001 is roughly the size of the AIDS epidemic. One reason is the use of opioids. And, despite Mr. Obama’s speech in Elkhart, IN where he said our economy is doing well, there has been a spike in suicides to levels higher than during the 2008 financial crisis.

The little people know that the economic policies followed by both parties have brought income inequality to Gilded Age levels. They know that all of the post-crisis income gains have accrued to the top 1%. Unlike in China which continues to grow, our economic expansion has brought with it high unemployment and underemployment, particularly among the young.

As a result, people feel powerless. In fact, a RAND survey in January found that 86.5% of GOP voters who strongly identified with the statement “people like me don’t have any say about what the government does” were Trump supporters.

And, since so much of politics is about corralling money into the bank accounts of our politicians, your Congresspersons have no intention of listening to you unless you have given at least $10,000 to their campaign fund, or are the CEO of a major employer in their district or state. In US politics, money=speech. But, there is little meaning to free speech without free access to influence the political process.

Many of us feel nihilistic about our politics and our government. So the Pant Load’s support seems a lot like a form of public political vandalism where The Donald is the can of spray paint.

Most people can see that a large portion of Americans are poorer with each new election cycle. After all, the reason Trump (and Sanders) are doing well is because many, many workers are seeing their job security, income security, and retirement security all go up in smoke. That’s no mystery, just the natural outcome when the government fails to represent the people in favor of the rich who fund their campaigns. It’s no wonder the Pant Load is easily corralling the frustrated.

But can the Pant Suit reverse the Democratic Party’s abandonment of the working class in America?

We know that she needs to focus on drawing more potential working class and young supporters, but so far, Democrats are content to run only in their municipal strongholds, following a strategy of stitching together interest groups, largely in states with big urban populations.

Energizing people around the fact of our corrupt political system is both a way to get higher turnout, and a way to elect members of Congress and state legislatures to fix the corrupt system. That is Bernie’s message, what he calls a “political revolution.” But Sanders is not the person to bring this about. Consider Sanders just the messenger.

Strategically, the Pant Suit needs to figure out how to get folks energized enough to vote for her and against Trump for reasons that don’t so paralyze them with fear that they stay home. If she is successful, it could be the start of re-establishing the New Deal coalition, and a re-installation of the principles of the civil rights movement.

That’s a huge job that will not be completed in one election cycle.

This threat is the GOP’s worst nightmare. They have worked for 40 years to eliminate these ideas, so expect the GOP to unanimously support the Pant Load:

COW Never Hillary

The Bernie Dems will rally behind Hillary for similar reasons.

Trump/Arpaio 2016: Because immigrants are the greatest threat to the nation.

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The Battle to Replace Scalia

With the death of Justice Scalia, the Supreme Court has become even more of a BFD than it usually is in our politics. Republicans are setting the terms of the current battle by saying that Mr. Obama should not even bring forward a candidate for the Senate’s Advise and Consent process.

The Republicans fought for 40 years to get a Conservative majority, and will not give that up without a fight. This is the first time since Clarence Thomas replaced Thurgood Marshall in 1991 that the ideological balance on the Court could actually change. In the last six cases, from Ginsberg through Kagan, either a Republican president filled the seat of a conservative justice, or a Democratic president filled the seat of a liberal justice.

So the stakes are very high, both substantively and politically.

On the other hand, the voters might rediscover that presidential elections should be about serious issues. At the top of the list: Who will pick the justice that creates a new Supreme Court majority?

A brief history from Paul Waldman at the WaPo:

The Senate…used to approach nominations to the Supreme Court with a simple standard: If the nominee was qualified and wasn’t a criminal or a drunk, he or she would probably get confirmed with the support of both the president’s party and the opposition…But we may have entered an era with an entirely different starting presumption: not that a well-qualified nominee deserves confirmation, but that senators ought to oppose any nomination from a president of the other party.

Waldman provides this list of recent nominees and how the Senate voted:

Antonin Scalia (1986): 98-0
Anthony Kennedy (1987): 97-0
Clarence Thomas (1991): 52-48
Ruth Bader Ginsburg (1993): 96-3
Stephen Breyer (1994): 87-9
John Roberts (2005): 78-22, 20 of 42 Democrats in favor
Samuel Alito (2005): 58-42, 4 of 45 Democrats in favor
Sonia Sotomayor (2009): 68-31, 9 of 40 Republicans in favor
Elena Kagan (2010): 63-37, 5 of 40 Republicans in favor

Since Chief Justice Roberts in 2005, we see that our political divide is not simply about Congress and  the President, the Supreme Court is now also entrenched in the polarization. Justice Kagan’s approval is instructive. She was well-qualified, (a former dean of Harvard Law School and Solicitor General), and had no absurd legal views. Nevertheless, only five Republicans voted to confirm her. Three of those senators — Richard Lugar, Olympia Snowe, and Judd Gregg — were moderates who are no longer in the Senate.

In the case of a Scalia replacement, every Republican senator trying to decide what to do will know that if they vote to confirm any Democratic nominee for this seat, a primary challenge from the right will probably happen whenever they run for re-election.

But the GOP-controlled Senate ignores its responsibilities at its peril. 24 GOP-held Senate seats are up for election this cycle to just 10 held by Democrats. A few (enough) of those GOP Senators are in states that were won in 2012 by Barack Obama including: Kirk in Illinois, Toomey in Pennsylvania, Portman in Ohio, Ayotte in New Hampshire, Johnson in Wisconsin, and Rubio’s open seat of Florida. Since Republicans hold 54 seats, losing 4 of them could flip Senate control.

But, this is a situation where the Democrats really need to get control of their message machine, or they’ll risk getting overrun again in the perception battle.

The best guess is that is unlikely that control of the Senate changes hands in 2016, so divided government will likely remain with us, assuming a presidential win for the Democrats. As Scott Lemieux says in the New Republic:

As the stakes of Supreme Court nominations get ever higher, getting Court vacancies filled during periods of divided government is going to become increasingly difficult. Depending on the results of the 2016 elections, this dysfunctional future could very soon become our present.

Could a non-functioning Supreme Court finally be the last straw? We might soon find out.

We know that Chief Justice Roberts is concerned with the public perception of SCOTUS as an institution. Perhaps if the White House and the Chief Justice held discussions about the President nominating a moderate, and then Roberts spoke publicly about the need for quick consideration, the political logjam might be broken.

Absent that, it’s hard to avoid the feeling that we are heading towards a breaking point in this country as the polarization stretches the functioning of our government in every arena.

Our Constitution gives the Senate veto power over executive and judicial branch appointments with no mechanism for resolving a deadlock. That is a bug, not a feature.

It’s amazing that the system has remained functional for as long as it has.

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