Diatribes of Jay

This is a blog of essays on public policy. It shuns ideology and applies facts, logic and math to economic, social and political problems. It has a subject-matter index, a list of recent posts, and permalinks at the ends of posts. Comments are moderated and may take time to appear. Note: Profile updated 4/7/12

13 October 2013

Know Thy Extortionists


[For a new take on financial Armageddon, click here.]

I don’t usually link to political cartoons, but a superb one appeared in the New York Times Monday, by Pat Oliphant. The drawing is exquisite, and the message resonates on so many levels. It brought tears to my eyes, and I’m not even Irish. It shows what we’ve lost as a nation, and what we once had.

The link may not last, so look at it now. For readers under 50 who are not political junkies, the two men pictured are Ronald Reagan, Republican, and Tip O’Neill, Democrat.

Introduction
Who is the “Tea Party”?
What do They Really Want?
Conclusion
Is Chicken Little Wrong?

Introduction

As we all prepare for tomorrow’s stock-market crash and the usual mealy-mouthed expressions of concern ostensibly intended to avoid it, we might ask a relevant question: “Who’s holding us hostage?” Fortunately for us, our extortionists don’t all wear the ski masks appropriate to their trade.

Of course the short answer is just one person: John Boehner. He could end this phony crisis—and preserve our nation’s good name and credit—in a single hour, while the House is in session. All he has to do is bring a clean debt-limit-raising bill before the whole House for majority rule, as our Founders intended. With the help of Democrats and independents, Republicans who still value their country and its business over extreme and abstract ideology would pass it in a minute.

But no good Mafia capo acts without backup. Boehner is no exception. He’s got at least 32 strong-armers behind him, or (as he might claim) extorting him with loss of his Speakership.

The Atlantic magazine has given us a helpful roster of these strong-armers, complete with their names, photos, districts and key juicy quotes. My state-by-state and regional analysis of the list, shown below, reveals why we are in the pickle we are.

Who is the “Tea Party”?

As I have outlined several times, the so-called “Tea Party” has absolutely nothing to do with Massachusetts, the original Boston Tea Party, or the Founding of this nation. It is an entirely regional movement, dominated by the Old South, with a few fellow travelers from our rural outback.

As my regional analysis indicates, just over half (17) of the Tea Party’s 32 self-designated House members are from the Old, Deep South. Adding in the border states of Kentucky, Missouri and Tennessee accounts for just under two-thirds (21) of the 32 members. So now we know what this movement represents: a belated and covert attempt to refight the Civil War. More on this later.

The remaining eleven extortionists all hail from various parts of our rural outback. Their districts are mostly in the Midwest, with just five—all together one-sixth of the total—in the North and West.

Don’t be fooled by states like California, Indiana, Michigan, Ohio and New Jersey appearing in the roster. Their Tea Party goons don’t come from any notable or highly productive places. They come from towns that can charitably be described as in the middle of nowhere.

The California goon represents Elk Grove, a retirement town in the far southeast of Sacramento. The one from Indiana votes for Howe, a town 53 miles south of Kalamazoo, Michigan. The rep from Michigan hails from Great Falls, a town far from the universities of Ann Arbor and Lansing and the industrial conurbation of Detroit. The one from Ohio represents Urbana, a no man’s land in the outback, about equidistant from Columbus and Dayton. (Don’t confuse Urbana, Ohio, with Urbana, Illinois, the site of the well-respected University of Illinois.) And the one from New Jersey represents Wantage Township, a town in the far northeast corner of the state lying between a national wildlife refuge and a state park.

Needless to say, these places are not part of our industrial, commercial, or financial heartland. They are rural outposts or far suburbs that time, progress and apparently education have passed by.

Not a single listed Tea Party member outside the South hails from a city, and only two from the South or Border States do (Houston and Charleston). There is not a single listed member from the industrial states of New York and Illinois. And the sole member from California hails far from the great industrial conurbations of the Bay Area, Los Angeles, and San Diego, let alone Silicon Valley.

What do They Really Want?

Don’t all these rubes deserve their representation, too? Of course they do. But the Tea Party’s extortionists comprise only 7.3% of the House’s 435 members. They are nowhere near a majority. They aren’t even a substantial minority. That’s why they wouldn’t have a prayer of bringing our nation to its knees if our Congress still operated by majority rule. And that’s why they think they have to resort to the extortion in which they are currently engaged.

I’ve posted another whole essay on the pathological perversions to our supposedly democratic system that permit this extortion and have brought us to this pass. I won’t repeat that analysis here. This essay is about what the Tea Party really wants: to refight our Civil War in a hogtied Congress.

Think I exaggerate? Consider the views of Andrew Johnson, who succeeded to our presidency when a confessed Southern partisan assassinated Abraham Lincoln. Johnson was a Southerner who supported the Union but was virulently racist. He vetoed a bill that would have created a federal “Freedmen’s Bureau” to help freed slaves get on their feet and start normal lives in the Civil War’s immediate aftermath. He also vetoed the first civil rights bill, designed to effectuate the Civil-War Amendments to our Constitution (13th through 15th). But a Republican-led Congress overrode this second veto. (In those days, the Republicans were the good guys.)

It exaggerates little to say that Johnson served as a Southern fifth column at the very head of our government. He worked hard to undo much that the bloodiest and most brutal war in our national history had tried to accomplish. But what he did is not nearly as interesting today as why he did it. He vetoed both the Freedman’s Bureau Bill and the first civil rights bill at a time when his vetoes were the first of major legislation in our national history. And he did so for reasons that precisely prefigure the South’s political culture today.

First, Johnson argued vociferously against federal power and for states’ rights. He was not above lying to press his point. He characterized as a permanent federal intrusion the Freedman’s Bureau, which the bill explicitly proposed to make temporary, i.e., an interim expedient for Reconstruction only.

Second, Johnson made, in another context, the same argument repeated just this year about so-called “Obamacare.” He claimed that the Freedmen’s Bureau, by helping blacks get on their feet after a lifetime of slavery and the ubiquitous destruction of a brutal civil war, would lead them into “a life of indolence.” The proposed aid, he wrote, “would injure the ‘character’ and ‘prospects’ of the freedmen by implying that they did not have to work for a living.” Isn’t that precisely the argument that Southerners make today against giving subsidized health insurance to “freeloaders” and “takers,” or food stamps to starving people who can’t find jobs?

Even then, Johnson was not oblivious to economic arguments. He argued, thirdly, that the federal budget was too tight to help freed blacks become truly independent citizens.

Isn’t that rich? The South exhausts the nation’s wealth by seceding, thereby precipitating the bloodiest war in our history, and fighting that war fiercely until it could fight no longer. Then its representative, now our president by assassination, claims there is no money to complete one of the principal tasks for which the war was fought: freeing the slaves and making them fully American.

This claim recalls the parricide who kills both his parents in cold blood and then asks the court’s mercy because he is an orphan. It’s also much like today’s Southern pols, whose districts have outlandish proportions of uninsured, and who claim that “Obamacare” will bankrupt the country and raise premiums.

But the fourth and final point of Johnson’s world view was and is the most important. His personal ideology elevated individuals (usually bosses) over communities and the states over the federal government. For him and his ilk, our Constitution was a step in the wrong direction, away from our Articles of [loose] Confederation among truly independent states.

Johnson laid out this worldview in his message vetoing the Freedman’s Bureau Bill. Congress, he wrote, had never felt called upon to “provide economic relief, establish schools, or purchase land for ‘our own people.’” Doing so would only promote indolence and reduce states’ rights to mistreat their people, including just-freed slaves, as they chose.

Conclusion

Although almost a century and a half old, Andrew Johnson’s views are strikingly similar to, if not identical with, those our our Tea-Party extremist-extortionists. The only salient difference is that racism is no longer a fundamental and explicit axiom, but only a tacit undercurrent. The foundational pillars are the same: unfettered states’ rights, social Darwinism, bossism, and unwillingness to protect fellow citizens from suffering, for reasons of utter selfishness, sold to us as tradition, “common sense” and social “wisdom.”

This worldview is an anachronism. It was appropriate to the South’s original eighteenth-century landed aristrocracy founded on slavery. It may have been appropriate to nineteenth-century imperial Europe, although it caused some of the bloodiest and most pointless wars in our species’ history.

But it’s no longer appropriate today. Outside the few remaining tyrannies, mostly in the Middle East and Africa, and on the northern part of the Korean Peninsula, the whole world has abandoned it. Europe did so long ago, as they did Down Under. Even authoritarian China and Russia now arrange their policies for the benefit and economic sustenance of ordinary people, or at least they try to. Our own nation may be the last one on Earth to expound social Darwinism and deliberate (or negligent) oppression of the less fortunate as matters of national principle.

In our own country, this view has proven as hardy as tumbleweeds—resilient, irrepressible and popping up everywhere, borne on political winds of self-service. It has survived our nation’s rancorous division, our bloodiest-ever war, the freeing of our slaves, Robert E. Lee’s unconditional surrender at Appomattox, the anguish of Reconstruction and Jim Crow, our tumultuous civil rights revolution of the 1960s, and even one and a half terms of our first half-black president.

But it remains as it has been from the beginning: decidedly a minority view. Today the minority that holds it is vocal and adamant but tiny.

That sobering truth raises the key question: what now? Can the South and its fellow travelers impose this unwanted world view on the rest of us, by subverting our Congress, extorting us, and using an ex-Australian’s world-crushing propaganda machine to delude us?

At first glance, there seems to be no resolution short of war or separation. We tried war about a century and a half ago. We even won it, but the victory ultimately did us little good. The former slaves are free but still disparaged, and medieval ideology is still at large. It spreads like tumbleweeds in our sparsely populated outback.

And so, as I argued half a year ago, maybe separation beckons. It certainly is better than another civil war or continuing to live as we are. Even someone as dumb as Rick Perry can be right some of the time.

In the meantime, we have a country to run and a default to avoid. The President, with all his political skill, is trying to thread the needle. He’s going to wait long enough, and make us all endure pain strong enough, to show us just who and what these extortionists are. Only he, with his extraordinary empathy and political skill, will know precisely when to stop. Then, he hopes, the Tea Party will go the way of the Whigs, at the election just over a year away, and the party of business, trade and moderation will shake off its tea fever and convalesce.

It’s a good plan, perhaps a necessary plan. And there is no one in national politics today whom I would trust more to make that hard decision than our President.

But a vital question rings: how much of our Republic and economy will remain when all the dust has settled? Our hybrid Republic, from the start an awkward mix of enlightened democrats and self-obsessed aristocratic slave owners, never had a guarantee of perpetual life.

And the slave owners have jinxed us by planting numerous time bombs in our Constitution, which their successors have shamelessly exploited. Whether we can overcome the South’s medieval ideology and procedural manipulation, or whether we should go our separate ways, remains our central question for the twenty-first century, just as it was in the middle of the nineteenth.

Well over two centuries after ratifying our Constitution, we still have two cultures—a dominant, productive and largely enlightened one, and a virulent minority one left over from the days when tobacco and cotton were kings, whom slaves served. This minority culture shows few signs of subsiding. On the contrary, it is spreading like a virus, taking over Congress with procedural machinations that make a mockery of our Founders and their ordered democracy.

Despite our Civil War and the century and a half we’ve had to recover from it, we are no closer to resolving the conflict than we were when our Great Compromise decreed that Wyoming, with 576 thousand people, would eventually have the same two senators as California, with 38 million, or about 66 times as many. Perpetuating minority rule by subverting what is left of majority rule in Congress is unlikely to make the conflict go away.

The House Tea-Party Roster, in Brief


Following, in declining order of number of House members per state,
is the House Tea-Party’s state-by-state roster:

StateNumberDistrict/TownMember’s Last Name
Texas6Clear LakeStockman
HoustonCulberson
LubbockNeugebauer
PearlandWeber
Round RockCarter
TylerGohmert
Georgia3AthensBroun
MariettaGingrey
RangerGraves
Arizona2Fountain HillsSchweikert
MesaSalmon
Florida2Ponte Vedra BeachDeSantis
GainesvilleYoho
Louisiana2MindenFleming
JeffersonScalise
South Carolina2LaurensDuncan
CharlestonSanford
Tennessee2BrentwoodBlackburn
JasperDesJarlais
Alabama1HuntsvilleBrooks
California1Elk GroveMcClintock
Idaho1EagleLabrador
Indiana1HoweStutzman
Iowa1KironKing
Kentucky1GarrisonMassie
Kansas1FowlerHuelskamp
Michigan1Grand RapidsAmash
Minnesota1StillwaterBachmann
Missouri1HarrisonvilleHartzler
New Jersey1Wantage TownshipGarrett
North Carolina1CashierMeadows
Ohio1UrbanaJordan


House Tea-Party Roster by Region


RegionNumberPercentageStates
Old South1753%AL, FL, GA, LA, NC, SC, TX
Border States412.5%KY, MO, TN
Midwest618.8%IA, IN, KS, MI, MN, OH
North13%NJ
Northwest13%ID
Southwest26%AZ
West13%CA


Erratum: An earlier version of this last table listed the Southwest region as having only one member from Arizona, rather than two. I regret the error.

Footnote 1: The quotations are from a section of historian Eric Foner’s 1988 book on the subject that is published on line. Words in double quotation marks are Foner’s and those in single quotation marks Johnson’s.

Is Chicken Little Wrong?

Well, the stock market didn’t tank today as I had predicted. In fact, it went up, albeit modestly. I’ve left some money on the table in the last few days by staying out.

Like any honest scholar or rational investor, I take being wrong as a learning opportunity. What happened?

For days, if not weeks, Chicken Little has been saying, as is his wont, that the sky is falling. His avatars on Earth, including the Administration and most of the financial pros, have been predicting financial Armageddon if the debt ceiling isn’t raised on time. And for all the progress our pols have made so far, it looks as if any accommodation between the irresistible force (Tea Party) and the immovable object (the President) is still days, if not weeks, away.

So what gives? One possibility is that Armageddon is just not as close as claimed. That seems be true. The October 17th date appears to be verrry conservative. In fact, it seems based on the government not being able to pay every single penny of its debts on time and in full.

But is it going to default on its Treasury bonds, notes or bills? That’s what will really call down financial Armageddon. A small business with an invoice for computer programming or janatorial services will probably just grumble and wait.

So is it just that we have a few more days before the sky starts falling? I think not. If you’ve lived as long as I have, and you try to remember your math, you get a feeling for these things. The stock market just isn’t acting as if Armageddon is a couple of weeks, let alone a few days, away. And since no one can predict when the pols will drop their macho posturing and start deal-making, I just have to believe that maybe The End is Not Near. (The Tea Party may be mad as hatters, but Wall Street and global investors are not.)

So what’s the explanation? It appears to be the distinction between mandatory and discretionary spending. The easiest way to see the point is to look at the summary page for the President’s budget here. [Table S-5. Proposed Budget by Category, page 210] For fiscal year 2013, the total budget for mandatory programs is $2.293 trillion. That includes Social Security, Medicare, Medicaid, and (I think) military retirement programs.

Now the Armageddon trigger is default on Treasury obligations. The same budget page lists “Net interest” as $248 billion. But that can’t be right. I have no idea what that number means, but this Treasury Direct page lists total interest expense on US debt for fiscal year 2013 as $415.7 billion. That number seems more reasonable.

So add up the mandatory spending ($2.293 trillion) and the Armageddon-critical Treasury debt interest ($415.7 billion), and you get $2.736 trillion. But the President’s budget lists expected Receipts for the fiscal year as $2.902 trillion. Therefore, if these numbers are right, and if we don’t pay any of our discretionary bills, we can squeak by the whole year with over $160 billion to spare.

What about the principal on T-bonds, notes, and bills? Well, when you pay principal, the total debt goes down. So if we’re right up at the limit, and we pay a bond’s principal, our outstanding debt goes down by that much, and we can sell bonds in that amount again legally, under the existing debt limit.

There may be little problem with finding the cash to pay the principal, but that’s why Treasury people, and bankers generally, earn big bucks. There is no solvency problem or, if there’s enough slush in the slush funds, no real violation of the debt limit at all.

This seems to be the Tea Party’s reasoning in disparaging Chicken Little. If you stop discretionary spending almost altogether, it’s just like a more massive government shutdown, which the Tea Party and John Boehner have already caused. It’s like the Sequester on steroids. For people who like to drown the government in a bathtub, it’s hog heaven.

There are two practical problems with this view. First, expenses and revenue are not steady streams. They’re spiky. If a big interest bill or a big bond redemption comes in when revenue is low, we may have trouble making the required payment without additional borrowing. But if we’re really willing to stiff those discretionary creditors, and if we use the $160 billion annual cushion wisely, we might get by, at least for a few months.

The second problem is more fundamental: those discretionary payments are not bean bag. In fact, if you look at the budget numbers, about two-thirds of them are for security. But don’t worry. Neither China nor Russia is likely to mount an invasion force in the next couple of months. And we can always hope that Al Qaeda won’t get lucky, or that our spooks will work without pay, as true patriots. (Funny how the Tea Party never seems to think that patriotism costs anything, or at least anything out of their pockets. Blowing hard is enough for them.)

So that seems to be the Tea Party’s and John Boehner’s plan. They’ll continue to do their utmost to impose minority rule on the rest of us. And they’ll balance the budget, at least for a while, on the backs of the innumerable contractors who work for the feds, and the people who put their lives and brains on the line to keep us safe.

They’re hoping that, at the end of the day, we won’t notice the difference—as we haven’t yet with the Sequester—and so they’ll get to keep more of their money. On the other hand, their strategy might backfire, and we might come to realize, as a nation, that our government actually delivers value for money after all.

At very least, all the contractors waiting to be paid, and their employees, are going to be mighty unhappy. And of course the economy’s going to take a big hit when the estimated $1.2 trillion in discretionary spending never gets spent.

That’s half again the amount of the stimulus that helped bring us out of the Great Recession in the first place. Think a hit that big might push us back in? Apparently, we’re about to find out.

Stay tuned. But in the meantime, we don’t have to worry about financial Armageddon, at least for a little while. The people who keep and balance the books are about to earn their pay. And the rest of us will soon know for sure whether our government does useful things. Experiential learning is quite the modern thing.

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2 Comments:

  • At Sun Oct 13, 11:36:00 PM EDT, Anonymous Anonymous said…

    This post was way, way too long for even me! I'm a guy with an MSEE degree and a law degree in intellectual property law! And as former student of about 4 of your classes at Akron U! You simply must shorten your thoughts or risk loosing many interested readers. Jay you are super smart and have a lot to contribute but posting very lengthy diatribes is hurting your cause. Yes, I know you like to muster facts to prove your point and to enhance the context of your opinion of your post, but in today's rapid fire "Fox News" style of gathering "viewers" to "make money" in the name of ""journalism""...

    Yes, it is a very complicated mess.... but we need to see the real problem before we can try to fix it.... Often through the cloud of miss-used "facts"...

    I am not as smart as you and I don't have any real answers but I just wanted to share my thoughts, bad, terrible, worthless or completely useless...a majority of the republicans in 2014 should be defeated due to this (changing topics now) this illogical government shutdown....I think 80+ percent of Americans would think we would have a much, much better America without the crazy republican shutting down our government for essentially no reason!.... I have many thoughts after this but in the effort of shortness....I'm going to end my thoughts here....
    Warmest Regards, Rod

     
  • At Tue Oct 15, 11:15:00 PM EDT, Blogger Jay Dratler, Jr., Ph.D., J.D. said…

    Dear Rod,

    Thanks again for your support and your honest views.

    I try hard to strike a balance between length, facts and credibility, on the one hand, and brevity and readability on the other. It’s not easy.

    When I read others’ short, conclusory online comments, devoid of facts or reasoning, I don’t credit them at all unless I already agree with their conclusions. Why should anyone treat my writing any differently? I’m far from a celebrity.

    That, I fear, was the fate of several online comments of mine recently, asserting that the “Tea Party” is nothing but a cleverly disguised front for the Old, Deep South and Border States.

    But when I named names and showed in detail how and why that’s true, I got the largest number of hits that I’ve had in years.

    Quite a few of them were from places like China, France and Russia, where readers are trying to figure out what is going on in what used to be the leader of the free world. But most of them were from right here in the US.

    That said, I take your point. I’m always trying to figure out how to say things shorter, quicker and better. Apparently this post didn't work for you.

    You might like my current post better. In it, I state why I hope there won't be any compromise this time, by either the President or the Senate. It's certainly punchy. And it shows what hard feelings people like me have toward the South and its “Tea Party,” and how unlikely we are to cave or change our minds this time.

    But as for convincing anyone who doesn’t already agree with my views, I fear that post doesn’t work very well.

    That’s been my modus operandi for some time now. I write thought pieces with lots of links and analysis and sometimes graphs and charts. Them I write another shorter, conclusory post for our Twitter generation. I can’t seem to find a better balance or compromise, but I’ll keep your advice in mind.

    Best,

    Jay

     

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