Budget debates - A political wasteland?

Debt default is starting to look like a real possibility. From a pragmatic point of view, that didn't seem reasonable last week. Something is starting to sink in. The Tea Party folks really are willing to force a default if they don't get pretty much everything their way.

Although this has been said hundreds of times by hundreds of others in the last few weeks, it bears repeating: If we default, we might unleash something we cannot control or cause damage we cannot recover from for years or decades - we therefore must not default. At the least, that seems to be the opinion of most business people, unbiased economists and most other unbiased non-political people who ought to know what they are talking about.

What are we jumping for?

Exactly why is it that we might leap off the fiscal cliff? What drove the minority Tea Party folks to inflexible intransigence, sort of like Grover Norquist and his absolute belief about tax policy?

Maybe this. Congress and special interests have operated for decades in their own interest, not the public interest. People in congress freely admit that they are afraid to do necessary things if it means losing the next election. Congress routinely sells out to special interest money, e.g., massive tax breaks, without any obvious regard for the financial impacts or the general welfare. That special interest money goes to great lengths to hide from public scrutiny and many people in congress do their best to help them hide. Congress operates mostly behind closed doors while sitting atop a byzantine opaque machine with millions of employees. Congress habitually breaks promises about spending restraint and being responsible e.g., the nonexistent social security "lock box". People in congress spend 25-30% of their time precious time with lobbyists and others who mostly only want something for themselves.

History is clear on all of that. That would seem to argue to do what the Tea Party wants to do - not compromise and force a default if that's where the chips fall. Logic supports that because it would force a change of some sort. It is true that something has to change. The questions are what needs changing and how to effect it?

If that logic is sound, then why not jump off the cliff and default? Unlike "normal" people in congress, it looks like most Tea Party folks are not there to get reelected. They are there to do a job as they see fit. Part of the job seems to be sending Washington a message, i.e., no more politics as usual.

The Tea Party approach and rationale, if all the foregoing characterization is reasonably fair and accurate, appears to be grounded in strongly held political ideology and driven mostly by emotion. The emotion seems to be some combination mostly of fear, anger and/or frustration with congress' inability to act in the public interest. It is understandable.

A non-ideologue pragmatist rationale

Well, all of that context, logic and emotion, good as it is, isn't persuasive. The analysis has to include consideration of all relevant factors, options and outcomes. It has to be based on cold, unbiased logic and a brutally honest assessment of all of our options and their outcomes (pros and cons) as best we can discern them. Although seeing reality and formulating political policy on the debt and spending issue isn't grounded in a hard science, like climate change science assessing climate change, it still requires discipline and focus.

What reality is missing?

The context and reality discussed above that apparently drives the Tea Party isn't the whole story. And, they are not fairly assessing the reality. The reality not fairly assessed is the fact that consensus opinion from unbiased people with relevant expertise is this: If we get this wrong, the effects could be devastating for the U.S. economy and our standard of living. Some (most?) Tea Party folks deny the potential gravity of defaulting. Michele Bachmann characterizes it as a "minor inconvenience". Some call President Obama's "threat" to withhold social security checks on August 3 a bluff that won't come to pass if we do default. Democrats blame Republicans for not being willing to compromise. Republicans blame Democrats for not being willing to compromise. Each party blames the other for fear mongering and flat out lying.

Politics as usual

As usual, the public is faced with two contradictory versions of reality. As usual, those two versions of reality are come to us through the distorting lens of hard core political ideology. One reality has to be closer to the truth than the other. The public is forced to choose. How is one to chose? The best way is to assess reality is to accept unspun facts, if any can be found, and accept unspun expert opinion if that accords or is all there is. The other way is to just cave in to what feels comfortable with a preconceived reality that fits the ideology.

A relevant fact

There is one fact that seems to be relevant. The U.S. accidentally defaulted on a bond in 1976 by not making a payment (redeem) on a $120 million bond when it was due. That mistake cost taxpayers billions (about $6 billion per year for some period of time) because the interest rate on all of our $800 billion in bonds increased. That says that if we default in 2011, we will have to pay tens or, maybe more likely, hundreds of billions more per year. That isn't a "minor inconvenience".

That, coupled with what seems to be reasonable expert opinion* says defaulting is a bad idea and it should be off the table. If that threat goes away, does that guarantee that congress will change its behavior and do better. Unfortunately, it doesn't. That may be an unacceptable reality for some people, but that's where reality seems to lie.

* Opinions from a range of sources that seem to be genuine and not spun. There is always risk in trusting anyone about political matters, particularly politicians in Washington. Except for most politicians, it is usually hard or impossible to spot spin (lies, including political advocacy) and hidden agendas. What we get from politicians is mostly a wasteland of empty rhetoric - they usually aren't a reliable source for much of anything except spin.

For some ideologues, like some (most?) Tea Party folks, that reality isn't acceptable, so it gets denied, distorted or downplayed. The situation is like climate change where consensus science says we have a problem that we ought to do something about but the reality is denied by some because it is ideologically uncomfortable to accept the facts. To ease the psychological pain, reality is denied, distorted or downplayed for ideologues who don't like it. For both climate change and defaulting on our debt, we ignore reality at our peril.

Ideologues who let their ideology dictate reality take needless risks. They take risks just for the sake of pounding the peg of inconvenient reality into the hole of their 'infallible' ideology. That works fine when the peg and the hole both are square or round. It fails when they aren't.

If the Tea Party minority in congress forces a default and refuses to compromise, they do so in the face of whatever consequences will come. According to consensus opinion, the one fact I did find and common sense, we cannot and will not default. According to that reality effects of a default are completely avoidable. The effects are likely to be moderately to highly damaging, maybe catastrophic if we do jump off the cliff.

The fact that default is not an option may indeed let congress off the hook. That leaves the burden on voters to put an end to politics as usual. Voters will have to do that in the face of opposition from mainstream politicians and special interest money and lobby. If we do default, the Tea Party minority will bear much of the blame. The rest of us will be forced to suffer the consequences for the sake of their rigid, blinding ideology. That would be needless and pure waste.