The horizon is not so far as we can see, but as far as we can imagine

Month: October 2013

If there is a default it is because both Obama and Republicans want it

I don’t know if there’ll be a debt default.  What I do know is this: if Obama doesn’t want to default he has options. Forget the platinum coin nonsense (though he could if he wanted), Obama can just tell the Treasury to keep on keeping on, and continue selling treasuries.  There isn’t anything Congress can do about that, they don’t have the votes to actually impeach him, they don’t have an army, they don’t have the balls to, say, lock up the Treasury Secretary.  In short, they don’t have an army.

Now I assume Obama doesn’t want a default.  But, to be sure, I could be wrong.  Why?  Because a default throws all the cards in the air. It lets you remake the country in your image.  Obama has long wanted a “Grand Bargain” and the ultimate neo-liberal no-no is defaulting on bond-holders.  Then, of course, there are all the SS checks…

If there is a default, whoever sets the terms of the new arrangement gets to remake America in their image.  Obama might want a crack that that.

We’ll see.

Why The Republicans Shut The Government Down and Threaten the Debt Ceiling

HBR has an article by Justin Fox on the government shutdown in Washington in game theory terms.  It’s good as far as it goes, but it amounts to this:

  1. It works, they get some of what they want
  2. People keep doing what works.

Let’s add some more specifics.

The article mentions that the freezing of redistricting in most Republican states means that Republicans can’t lose the House.  What it fails to mention is this: they can lose their seats by losing the primary.  The Tea Party (unlike progressives) is very good at winning primaries.  Even if they don’t succeed in a primary challenge, their challenges are serious, and politicians don’t want to chance it.  Fighting a challenge is expensive, risky and time consuming.

Fox notes that Obama has repeatedly given in.

But has he?  Remember the famous FDR comment, “I agree with you, now make me do it?”

Obama has a long record of statements and actions which indicate he wants a lower deficit, wants to cut back on entitlement and spending and desires a grand bargain.

Were Republicans making him do things he really didn’t want to do?  Perhaps he might have chosen to do things somewhat differently (he wants mostly spending cuts but at least some new taxes, they want no new taxes).  But the goals of the Republicans (cut entitlements and the deficit) and Obama’s goals (cut the deficit and entitlements) aren’t that far apart.  What they differ on is the exact way in which it should be done.

Obama agreed to past debt negotiation events because he wanted to. He did have other options.  He could simply declare that the constitution says that debts must be paid, argue that one law (the debt-ceiling) does not outweigh another (the budget) and tell the treasury to keep on keeping on.  There is nothing the House, alone, could do about that.

Obama, in other words, to use a game theory term, has a unilateral move: something he can do that cannot (or will not) be stopped by other actors.  His BATNA (best alternative to a negotiated settlement) is to simply tell the House to suck it and keep spending.  He chose not to do so.

When you’re dealing with game theory you have to consider all the players possible moves and their goals.  Obama and the Republicans have been in an extended negotiation over not whether to do a Grand Bargain cutting entitlements or whether to cut the deficit, but what that bargain will look like and how the deficit will be cut.

Add in one more player: Democrats.  Obama cannot, using just Democratic votes, get the entitlement cuts he wants, this was true even when Democrats controlled the House.  Republicans can vote for entitlement cuts and get reelected, too many Democrats can’t.  To slash Social Security and Medicare Obama must have Republican votes.

In other words, this multi-year session of threats about the debt limit, the government shutdown, the furloughs, is a multi-year negotiation between Obama and Republicans.

(CORRECTED) If the Republican Bill were to Pass…

Correction: I misread the bill, while the part about the individual mandate is correct, legislators were already going to be forced into the exchanges.  What the bill does is cut staffer subsidies, and most of those staffers are poor.  That’s not something I can support.

 

legislators would have to get their health care coverage from ACA exchanges like other Americans, and the individual mandate would be pushed back one year.  (Remember, the corporate mandate has been pushed backed, it’s only individuals being forced to buy or pay a fine.)

Who is on the wrong side here?  The exchanges would still open, those who would benefit from the ACA could still buy insurance and legislators would have the same experience as Americans instead of gold-plated healthcare.

If President Romney had passed this bill (and remember, it is Romneycare on a national scale), and Democrats were shutting down the government with the exact same bill, most people screaming about this would be justifying it.

The Individual Mandate and the Government Shutdown

Let’s get specific.  The House spending bill linked continued funding to a one year delay of the individual mandate—the requirement that everyone buy insurance.  This is not the same thing as delaying Obamacare, everyone who wanted a policy could still buy one.  While there are subsidies for buying insurance, for many of the working poor they don’t cover most of the cost, and the insurance they buy is very high deductible, meaning that they are forced to either pay a fine, or buy insurance that they can’t afford to use.

Straight up the individual mandate is a transfer of  money from the working poor and the young and healthy to insurance companies and older sicker individuals. It forces people who can’t afford an extra expense every month (and if you have never lived paycheck to paycheck you should shut your mouth, you have no idea what it’s like) to buy something they can’t afford: to choose between food or rent or insurance.

On the face of it, and leaving aside motives, I cannot see that the Republican bill was a bad thing.  Absent a real, robust public option and much stronger subsidies than exist, the individual mandate was always the most odious part of the ACA.  This is not to argue that Obamacare does not do some good, it will save some people’s lives and reduce other people’s suffering. But it does so explicitly by hurting some of the most vulnerable people in America: the price of your healthcare, if it’s helping you, is hurting other, vulnerable, people.

I note, also, that employers were given a delay on their mandate, but individuals: poor people, were not given an extension on theirs.

Let us speak, next, to the details of the shutdown: if you do not like that most of the NSA, say, is still operational, but food and airline safety inspectors are furloughed, that is a decision made by the executive. It exactly reflects Obama’s priorities, it is not a decision made by Republicans.  You can blame Republicans for the shutdown, you cannot blame them for the specifics of how it is carried out, that is entirely Obama’s decision.  Spying on Americans and killing brown people with drones is vastly important to Obama and always has been.  Making sure you don’t die of e-coli, apparently not so much.

The individual mandate, from every poll I can find, is the most unpopular part of the ACA, opposed by straight majorities of Americans and definitely opposed by the Republicans who elected the Representatives who voted to delay it.  This is not a case of Democracy not working, it is a case of Democracy working.  What one House does, another can undo, that is the essence of democratic change.

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