November 26, 2009

Thanksgiving Day Musing: Obama's Ratio Decidendi

A little odd, I suppose, to crank out one of these posts on this holiday morning, but I awoke last night in the middle of the night (it may have been cat-related; they are nocturnal hunters, you know, even if the prey comes in a can) and something occurred to me that may be worth passing on (and "passing on" can be taken in either the transmittive or dismissive sense).

I think I understand President Obama's M.O. It was prompted by recent stories that he fired his White House Counsel, Greg Craig (whose parents really should have dug a little deeper for names), because Craig kept bringing up uncomfortable "discontinuities" between Obama's campaign positions and his policies in office; to wit, closing Guantanamo within a year (will not happen), warrantless wiretapping of American citizens and telecom immunity therefor (Obama was vehemently against during the campaign, it's okay with him now), military commissions as trial courts (Obama was completely against them, now he plans to use them), the state secrets doctrine (Obama demanded transparency, now he freely uses the doctrine to get rid of troublesome lawsuits prying into war crimes), publication of photos of detainee abuse (Obama wanted full disclosure, now he helped Lieberman permanently withhold them from the reach of FOIA requests), and, of course, the enforcement of the investigatory obligations under the Convention Against Torture (which Obama used to honor by saying "no one is above the law," but now says, "if a putative war crime happened in the Past, it cannot be prosecuted; only crimes which happen in the Future can be prosecuted Now, except they can't, because they haven't happened"). You can add to the list the unconstitutional decision to exercise preventive detention for those who can't be convicted but might do something someday, and the denial of habeas corpus to Bagram detainees (who sometimes wind up there by being shipped from Guantanamo, where they do have such rights). Craig had a problem with every one of the Presidential positions on these issues; so he got canned, having become an irritant.

It's quite a list. Even if Greg Craig's parents had an off-day when christening came around, they must have instilled in him something we used to call ethics and principles. I guess Obama made a mistake by appointing someone so "unpragmatic" to such a key spot.

So back to the thesis: you read everywhere about Obama's yearning for "bipartisanship," which I'm beginning to see is off the mark. That isn't it. It works this way, I think. The key lies in his reason for abandoning the idea of Single Payer in the health care debate, another principle he advocated on the campaign trail but abandoned once in office. If you're going to reform the system, that's about the only thing that would really work. Trying to restructure health care around the existing system of for-profit insurance companies just creates a Rube Goldberg contraption that combines the worst of government incompetence and insurance gouging. But Obama said that "single payer" would be "too disruptive," and that was that.

That's the answer, the sword that slices through the Gordian Knot. Can you imagine FDR in 1932 shying away from some big initiative to turn things around because it was "too disruptive?"Being disruptive" was the whole idea. That's how you effect change when the system is highly dysfunctional. Obama's great gift as a politician is his uncanny sense for the consensus status quo. The current status quo on many issues was formed by Obama's predecessor, who didn't mind being "disruptive" at all. Bush/Cheney were blatantly illegal, unconstitutional and radical; in time, the country sort of got used to it, but they got rid of Bush because they wanted their country back in some recognizable form. The precedents that Bush established, however, became a kind of new status quo or consensus position. The Washington/New York media, always following a herd instinct, stopped pointing out the unconstitutionality and illegality of many political actions. Thus, we became a lawless country.

It was probably within Obama's reach to bring the country back within a legal and constitutional framework, but he decided not to do so. I think, again, it was because the actions necessary to do so would have been "too disruptive." We've gotten used to the idea of being a country which tortures people, fights major wars without formal Declarations of War under Article I of the Constitution, which disregards the Bill of Rights, conducts show trials which allow the introduction of evidence produced under torture, and which scoffs at its treaty obligations under the Convention Against Torture. If we went the other way and operated within a framework of laws, it would require a major shift in public policy. Obama does not use such guidelines as his North Star; instead, he figures out the consensus, however illegal the premise on which the consensus is based, and uses that as his starting point for consideration of "Change." Since the country drifted fairly far to the Right during the Bush years, the consensus position on may issues of civil rights and legality also drifted to the Right. Since Obama rules from this position, he himself has become a Rightist or conservative President who is actually far more at home with Republicans than with his nominal affiliation.

His transmutation will become more apparent during the Afghanistan surge discussions and the speech he will give next week. You will hear him preach the gospel of fiscal restraint, sanctity for human life, of the necessity of "off-ramps" (he seems sometimes more like an L.A. traffic engineer than a chief executive), and "partnering" with the Afghan leadership. All glad noises designed to make him sound kind of liberal and rational. Then he'll announce the only part that matters, a big commitment of more troops on an open-ended basis. When I first heard that McChrystal wanted 40,000 more troops, I knew instinctively (using my new decoder ring) that Obama would decide on a number which was closer to McChrystal's number than to zero, because that's how he operates: in an ingratiating way, where he gives the status quo the benefit of the compromise. I thought the number, therefore, would be about 25,000. It will apparently be 35,000, or roughly the same number as the Iraq surge.

Sic semper gloria mundi. We're all just Pilgrims here, I guess.

November 24, 2009

Can you run that one by me again, Nancy?

See, this is how I get confused sometimes, and why I come around to Dmitry Orlov's idea that there is a Uniparty formed by two branches of the same party, both of the Center Right, which pretend to disagree on policy issues to maintain the marketability of their respective "brands."

I am certain that you recall, as I do, the dynamic leadership of Nancy Pelosi (D-Golden Gate Bridge) who, upon ascending to the Speakership of the House in the fall of 2006, immediately withdrew funding from the Iraq War except as necessary to bring the troops home. She knew that the American populace had grown completely disenchanted with this pointless misadventure, saw it as a colossal, counter-productive folly, wasteful of lives and scarce American treasure, and saw the big victory of the Democrats in the 2006 midterms as a mandate for change. Which is why she immediately said:

“We will not cut off funding for the troops,” Pelosi said. “Absolutely not,” she said.

A reporter had asked Pelosi if the new Democratic-controlled Congress would vote to end the funding of the war if Democrats were unable to persuade President Bush to change his Iraq strategy.

“Let me remove all doubt in anyone’s mind; as long as our troops are in harm’s way, Democrats will be there to support them, but… we will have oversight over that funding,” she said.

Correct me if I'm wrong, but I think the Constitution pretty much guarantees that the House has "oversight" over that and all other funding. So that's not as reassuring as it sounds on first hearing. But along with taking "impeachment off the table," Nancy, while playing various games designed to demonstrate that the Democrats would certainly end the war if only they could (which they always could, by ending funding), decided that the voters didn't really mean it in 2006, and that the public opinion polls demonstrating the massive unpopularity of the war (along with the polls taken in the voting booths) should not be taken too literally, and certainly not to the extent of actually ending the war. So the war went on and on. Which, since Nancy Pelosi remained Speaker then and now, must in turn be taken to mean that despite occasional noises to the contrary, she must have really believed in the Iraq war. Because any contrary inference would mean she was just as cynical as Bush, and kept funding the war for Bush just so she could position the Democrats to retake the White House in 2008. Which is to say, Nancy Pelosi was willing to leave soldiers in harm's way, getting blown up and killed, or their limbs traumatically amputated, or blinded or brain-damaged, simply for a political leg up.

And I'm just not going to buy that. So I must conclude that she supported the war funding because she believed in the mission, the war in Iraq, and the sacrifice of our soldiers. Although, here I go again (and I'm getting whiplashed from all the volte-faces), then I heard her say to a group of econobloggers by conference call just yesterday::

"What did we decide, that Iraq was at least $2 trillion? And for what? I mean, God bless our soldiers for their courage and their sacrifice and that of their families. But $2 trillion for what?" said Pelosi. "Think of the opportunity cost when you break it down, when we talk about cancer, for example. We spent in two weeks in Iraq what we spent in a year on cancer research. With all that scientific opportunity that was available to us, we couldn't afford to do more. But we certainly could afford -- or so they told us -- to be in Iraq."

Um, okay Nancy, but you see where I'm getting confused. I completely agree with you about the opportunity cost, and we've all become acquainted with Joseph Stiglitz's estimate of the long-term costs of the Iraq War, where $2 trillion is the low estimate. And really, when you think about it, there was only one person in the United States, beginning in January, 2007, who was actually in a position to put the brakes on the Bush/Cheney war juggernaut, who had the political power as the head of the funding branch of Congress under the U.S. Constitution, to end the war by the only means that Bush would have been forced to recognize: by defunding the war. That person is you, Speaker Pelosi. You were the leader with the power. So when you say, "so they told us" that we could afford the war, who is it you're referring to?

So just to sum up: what the hell are you talking about? You are absolutely the last person in America who should be talking about all the lives and money wasted in Iraq, because you're right: the war was for nothing, your sops to the troops in the midst of your latest political posturing are insulting and disingenuous, and you completely blew it for you and the rest of us when you had the chance to change things but decided to be a politician instead.

And you're hinting now that Obama is going to have a tough time getting funding for his Afghan surge? Since that's not actually what you mean, what is the lie for this time?

What kind of country can we actually afford?

One aspect of number analysis that I find very satisfying is the coherence that a consideration of Large Numbers seems to bring to any issue. I'm not primarily a quantitative guy (I have a nephew who handles that role), but I prefer the mathematical analysis of issues to general, how shall we call it, bullshit argumentation that passes for so much public discourse in these here United States.

For example, there is currently raging (sort of) a big argument about whether the "deficit hawks" or the "Keynesians" occupy the intellectual high ground on how to get the American economy moving again. The deficit hawks are numerous: Kent Conrad and Byron Dorgan of the Senate Democrats, the Blue Dogs of the Democratic Caucus in the House, many others. The Keynesians are the Nostalgic Liberals, such as Paul Nobel Krugman and Dean Baker. The latter notes in a recent essay on the HuffPost:

"There is another side of this Japan story that makes the idiocy of the deficit scare stories even more apparent. According to the deficit fear mongers, the dollar has been falling in recent months because investors are becoming increasingly worried about the U.S. government's ability to pay off its debt. But one of the currencies that the dollar has fallen against is the yen. Are investors who are worried about the U.S. government's ability to pay off its debt selling dollars to buy the bonds of the Japanese government, which has an even higher debt burden?"

It strikes me that it's a little harsh, in this day and age, to talk about the "idiocy" of deficit scare stories. Mr. Baker has also co-written a book about the "myth" of the Social Security crisis, and has also, tellingly, co-authored with Paul Nobel. I think I'm beginning to understand their underlying thesis: the United States and its economy are in a sense Mathematical Constants, like the Speed of Light (C) or the force of gravity in falling body equations. We are, and always will be, preeminent among nations, and any slump (such as the current "recession") is simply a negative deviation from the mean. Thus, it is perfectly alright to take on debt in any amount, regardless of how dire current finances are (and they are very dire indeed), because the stimulus spending enabled by massive borrowing will fire up the economy, improve the tax inflow, and restore us to fiscal balance.

Really, when you think about it, no other analysis of their arguments makes any sense. That must be what they're contending. So sure is Mr. Baker of this thesis that he feels confident in labeling those who think otherwise "idiots" and "deficit scare mongers." This "Recession," you see (which often seems like so much more than that) is a cyclical dip, like all those before it since World War II, and will pass soon, and we'll go back to our merry life where 72% of our commercial activity was based on trips to Sonoma Williams or picking up the newest version of XBox360 Call of Duty World at War for the little kids at home. Thus, if current tax inflows to the Treasury are about $1.9 trillion, consisting of approximately equal flows of income tax and FICA (plus minor contributions from estate tax and other payroll taxes), which they are; and if our budget is about $3.4 trillion, which it is; that even if this looks horrifying at first glance, it's only because you're an idiot and a scare monger, and you don't understand economics as well as people who write books and win Nobel Prizes.

But suppose, just suppose, that the figure of $1.9 trillion is about what the American people can now afford to pay in taxes, that it's a best case for years to come because of a fundamental shakeout in national economics. Isn't there, really, a pretty good case for that? Does that number really seem like it was picked out of a hat? How could it be? It's what the American people are actually paying. Krugman/Baker and others who use ad hominem terms to describe their lesser fellow mortals (not that I don't appreciate the use of the ad hominem) are assuming that the tax receipts will soon soar up to the $3 trillion level or so, to match the budget expenses, if we'll just do the sensible thing and spend another tril keeping teachers and firefighters on the job and extending unemployment benefits to some of our 20% nonworking citizens. That's all it will take; Keynes said so. It's just not that big a deal.

Yet (and here's where the Big Number Ideas come in) I keep coming back to that "insight" I had long ago that the U.S. economy is fictitious, as a sustainable matter, to the extent of about 35% of its nominal worth. I admit it was a guess; but I had the hunch that the stock market, when it was at about 14,000 Dow, would fall to about 9,000 (it went me one better, of course). I based this intuition on reading I had done, specifically, books by Kevin Phillips and Chalmers Johnson. They went deep, way down into the ugly entrails of the American economy. What they found was that we weren't really earning all the money we were spending, not by a long shot. We borrowed all that money and that made the economy seem more robust than it was. Thus the Pond Thesis: half the money during the Bush "boom" years was borrowed on the basis of real estate (re-fi, lines of credit); 70% of economy = spending, take away half, what ya got? 35% reduction.

Now consider this: during the Bush years, the top tax receipt year was about $2.7 trillion (that was the era when even corporations were paying income taxes, which essentially they do not anymore.) What percentage drop is implied by a reduction from $2.7 trillion to $1.9 trillion? Gee, it seems right in the range of 30%, doesn't it? All that borrowing enabled spending, which enabled corporate profits, which enabled employment, which made possible an actual Federal budget based on income instead of a Ponzi scheme where we pretend that a ridiculously inadequate cash flow supports unlimited borrowing in order to pay interest on previous borrowing.

Oh sure, it could be a coincidence. But have you looked around at your America lately? We're in trouble. Borrowing huge sums is not going to restore us to prosperity. It's going to be the work of years, not a financial trick where we "get well" because the loan came through. I have no idea what kind of country a $2.0 trillion dollar federal budget would support, but it probably would put an end to speculations on how many Middle Eastern countries we can afford to rebuild at any given moment. Those folks in the Emerald City (D.C.) should get out a little more; take a drive through East Oakland or Riverside, California, or overbuilt Florida, Phoenix or Anywhere, U.S.A. This isn't going to be over soon, but the fantasy that it will is a very dangerous delusion.

Although, before closing, I would add one thought. There is something that could be done to bring us much closer to balance. 40% of the Treasury's income taxes are paid by 1% of the population, the plutocrats. Remarkable, eh? So restore marginal tax rates to their Eishenhower-years levels, and......oh right: hahahahahahahahahahahahahahahahahahah!!!