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

2013 October 6
by Ian Welsh

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.

21 Responses
  1. October 6, 2013

    I guess you’re preaching to the choir here, but sometimes I just gotta come to a place where not everyone insanely stupid. Especially after a night like last night were I got into it with a few fellow gays who still, after all these years, think Obama is a great guy. Like he’s President Bill Cosby. You talk about what he’s doing and they demand *facts*, you give them facts and the shout a big, dismissive “oh” as if deficit fetishism, whistleblower crackdowns, Gitmo and drones and illegal spying and killing of American citizens and innocent bystanders without judicial review are a bunch of nonsense. They have no grasp of economics, much less the *facts*, but because they share the same views with a bunch of similar idiots who they consider “thoughtful and well informed”, then the problem is just me and my negative perspective. Basically they are the same as the conservatives except slightly less narrowminded and mean spirited (but they definitely get just as work up if anyone challenges their just so worldview in which they and theirs are always the good guys).

    Some days I just can’t with the human race.

  2. October 6, 2013

    “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.”

    That’s exactly what it’s been. And obama … in particular … and boehner have dragged this country and its people from fiscal crisis to fiscal crisis making it as painful as possible on the american people so that they can point their accusing fingers at the other side of the u.s.’s two-party political see-saw and portray themselves to their bases as saving them from something … now, government default … while they screw their subjects over with universally unpopular ss cuts.

    And now we get to watch the dumbass u.s. political fandom on both sides fall for it while the corrupt, corporate owned media plays it up. Dissssgusting …

    Z

  3. October 6, 2013

    http://politicalticker.blogs.cnn.com/2013/10/06/time-for-house-gop-to-stand-and-fight-says-boehner/?hpt=hp_t1

    House Speaker John Boehner stated Sunday that a majority of his Republican colleagues continue to stand by their demand that any negotiations over reopening the federal government need to be tied directly to talks over Obamacare. The speaker also warned that Congress would not approve an increase in the nation’s debt limit unless the president negotiated with congressional Republicans.

    Boehner’s comments come as Monday will mark the seventh day of the federal government shutdown. And to complicate matters, the White House has warned the country will no longer be able to meet its financial obligations unless its borrowing power is extended by Oct. 17. The speaker said it was imperative for the president to negotiate with Republicans.

    “We’re not going to pass a clean debt limit increase,” Boehner said, appearing on ABC’s “This Week.” “I told the president, there’s no way we’re going to pass one. The votes are not in the House to pass a clean debt limit. And the president is risking default by not having a conversation with us.”

    Wow, this is bad. The House GOP has officially put themselves in a position that is very hard to back down from–kind of like Obama’s “red line” on Syria. I don’t think Putin will come in to save them here… I see 4 possible outcomes:

    1) Dem Capitulation: Obama/Dems cave and negotiate on the ACA. Reinforces recent political trends, probably bolsters the Tea Party’s power further, business as usual as the US continues its slow decline into “post developed” status.
    2) Republican Defection: The moderate/non-Tea Party Republicans defect from their party and manage to pass something by voting with the Dems. Probably weakens the Republicans overall, maybe even presages their eventual breakup in the next 5 – 10 years. Many of the moderates will be primaried by Tea Party candidates, leading to further gridlock in the future. Still business as usual as the US continues its slow decline.
    3) Mint the Coin: There is no negotiation, the government remains shut down for weeks, the debt ceiling approaches, and Obama does something to avoid hitting the ceiling (e.g. minting a platinum coin). If successful, this is a big step toward consolidating more power under the Executive–the power of the purse is a really, really big deal. Remember, there is an increasingly strong chance of a Tea Party President, and this act would provide a huge shot in the arm to that movement. Once in office, said President will use this power rather than rescind it.
    4) Debt Default: The debt ceiling is reached and nothing is done to avoid it. Probable global economic crash, though to be honest I really don’t know how this would look. US debt (i.e. confidence in the US government and economy) still underpins quite a large chunk of the world, so I suspect this outcome should be categorized as “generally terrible.”

  4. Formerly T-Bear permalink
    October 6, 2013

    If any is curious as to the scheme afoot and what transpires, all one need read is Paul Preston The Spanish Civil War, Reaction, Revolution & Revenge (ISBN 978-0-00-723207-9) and note the process used to counter, negate and destroy Spain’s 2nd Republic. Preston has a newer version, less constrained by political correctness and more detailed: The Spanish Holocaust, Inquisition and Extermination in Twentieth-Century Spain (ISBN 978-0-00-255634-7). This history will take the reader through the establishment of the 2nd Republic, describe the political conditions, describe the forces aligned against the republic, and the conditions prevailing at the beginning of the military coup that ensued, the absence of support for an elected government against Italian and German fascists by world powers and the reign of terror that began as a military tactic and continued unabated until the death of General Franco and reverberates strongly and bitterly in Spain until this day.

    Preston has written the step by step directions on how to dismember a republic and install a tyranny, the names change but the road is the same, (spoiler alert) ignorance and what you don’t know are deadly and will definitely change your life in unexpected ways.

  5. Celsius 233 permalink
    October 6, 2013

    @ Formerly T-Bear
    (spoiler alert) ignorance and what you don’t know are deadly and will definitely change your life in unexpected ways.
    ~~~~~~~~~~~~~~
    Indeed. This is why Americans are in deep doodoo.

  6. Jerome Armstrong permalink
    October 6, 2013

    I could see the House letting the moderate Republicans vote for it (RJ’s #2), and I think the insurgents in the Republican side would be fine with that outcome (after the outrage), cause then they’d have their orders on who to primary.

    But, you are right to go with Obama giving up as #1, Occam’s razor and keeping it simple– there’s a script that this plays too.

    #4, going Icelandic on the banksters. Well, it at least it would show the know-it-alls that the world doesn’t end the next day.

  7. October 6, 2013

    Mahalo, Ian…! This expat Canuck loves your work…!

    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.

    Calvinball with the Corporatists…! 8-(

  8. S Brennan permalink
    October 6, 2013

    Great Post Ian, great insight, smack on…and TC, don’t give up, it can be lonely, it’s not easy, but you have your soul, I respect you for enduring that crap, hang tough.

  9. October 7, 2013

    tc,

    Yeah, I went through the same idiocy in regards to the big corporate lapdog clinton, who, though not as bad as obama, basically laid the blueprint that obama follows as far as fellating wall street and corporate america to no end and then getting the pay off once he leaves office. I heard all the dumbshits that defended him … and still defend him to this day … chirp out “it’s just about sex” like a bunch of parakeets … or accuse you of cds … or from the particularly dim ones who would huff and puff and snort: “that’s just utter bullshit” … when the Lewinsky situation had little to do with why he was such a terrible and damaging president. They refused to utilize their tiny partisan-infested brains … or selfishly looked at how they did economically well during the clinton years … and were too stupid to realize the long-term economic damage that clinton’s free trade and deregulation policies did to this country.

    And now some of the same fools … well, hypocrites actually … shake their heads at obama’s deeds and ask themselves why he’d ever sell us out the way he has when billy boy has made over 100 million dollars after he left office from the same 1% people that he so dutifully served. And, to boot, is still our most popular ex-politician. Hell, why wouldn’t obama think he can get away with it …

    Z

  10. October 7, 2013

    Seconding so much of what’s being said here, but especially by “tc” and “Z”. Dark days ahead.

  11. BDBlue permalink
    October 7, 2013

    I thought Banger’s comments at NakedCapitalism today were interesting (the main one is http://www.nakedcapitalism.com/2013/10/democrats-and-republicans-pedal-to-the-metal-in-debt-ceilingshutdown-game-of-chicken.html#comment-1473907, but there are others in the thread as well). He has spent a good deal of time in and around DC. I’m not sure what I make of them, but would be interested in the thoughts of others here.

  12. Bernard permalink
    October 7, 2013

    i wouldn’t let Clinton pass, period. Clinton gave us so much i couldn’t write it all. Rubin gave us Obama for one. Summers, Don’t Ask, the End of Welfare as We know it, NAFTA in particular, the repeal of Glass Steagall aka TBTF. There is so much Clinton is responsible. Power crazed Clinton.

    Clinton is by far worse and Obama couldn’t do what he plans to without the groundwork Clinton did. and then of course, Hillarycare got us Romneycare/Obamacare.

    the web of EVIL that is Third Way, Both Sides BS. well let just say Clinton give Cheney a run for the money in his own “particular” way.

    The more i learn about Clinton, and Gore too, for that matter, the deeper the evil goes. Something this way (Clinton) wicked comes. lol

  13. Bernard permalink
    October 7, 2013

    I meant to say Clinton gave us Rubin who gave us his band of Merry Thieves, especially Summers, who enabled his coterie of EVIL upon the country

  14. October 7, 2013

    Bernard,

    I agree with you: clinton laid the groundwork for obama. Why I think obama is worse than clinton is primarily on civil liberties grounds. obama is more fascistic than clinton was, though clinton, who played a large role in our growing police state (look at the stats of the prison population growth during the big corporate lapdog’s tenure), was hardly a civil liberties champion.

    I can understand though how one could rate clinton as worse than obama though if you put a lot of weight on precedence and on how much he corrupted the democratic party and, again, laid the groundwork for obama to do the audacious things he’s done. Plus, he proved how principle-less, stupid, and easily played the democratic party fandumb really is and obama definitely took notice.

    You’ll see a lot of the clinton apologists that have had their eyes temporarily opened with the shit that obama has pulled. but that is mainly because they’ve cast a critical eye on him since he beat their heroine hillary, ms. dlc, aipac’s darling herself. But if and when hillary does similar stuff … well, she was obama’s sos for goodness’ sake … they’ll change face because they have no principles … they’re just political fans … and though they might not cheer hillary on when she does it, they’ll excuse it and do exactly the same as the obamabots do right now: blame it on the republicans.

    Their fandumbs are just different flavors of the same fool …

    Z

  15. October 8, 2013

    …the White House has warned the country will no longer be able to meet its financial obligations unless its borrowing power is extended by Oct. 17.

    Being unable to meet financial obligations without borrowing money is the definition of insolvency, but we define it as “maintaining the full faith and credit of the United States.” The conversation has descended into babble.

  16. BDBlue permalink
    October 8, 2013

    But it’s stupid we have to “borrow” when we create the money (and even stupider that we do so by giving Wall Street a vig). And I say that as someone who does not consider themselves to be an MMTer. It’s just that I’m not sure what it means to be unable to meet your financial obligations when you create both the debt and the money used to pay it back. And it gets even more arbitrary when Congress has already approved the spending, but somehow the Treasury is still not permitted to spend it because of some “debt ceiling”, which I’m not sure has much societal use beyond providing an excuse to cut social security, medicare and other government programs that actually serve people. I think we’d be much better off if we focused on things like the fact that oil supply appears to be the real “ceiling” from what I can tell and, not unrelatedly, we’re destroying the planet and the very things we need to survive and create any kind of sustainable world, including an economy (which is not separate from the world, but of it). Like, for example, fresh water. But instead, we’re stuck in this created economic world, which seems to make less and less sense every damned day if you’re just a regular person.

    Full disclosure – I know very little about economics. I’ve found it difficult to even discern what books are worth reading and what aren’t and given my life commitments, I don’t have time to read so many books that I can actually decide that for myself. I chalk it up to yet another thing I should be doing – educating myself – that I’m failing to do because of work, family, and – okay – video games. Judge away!

  17. Chipper permalink
    October 8, 2013

    Which also raises the obvious notion that Obama won’t tell the House Republicans to suck it up and pay because they will do the same when they are in power and the Democrayes don’t like that…

  18. WWQ permalink
    October 8, 2013

    3) Mint the Coin: There is no negotiation, the government remains shut down for weeks, the debt ceiling approaches, and Obama does something to avoid hitting the ceiling (e.g. minting a platinum coin). If successful, this is a big step toward consolidating more power under the Executive–the power of the purse is a really, really big deal.

    1. “Power of the purse” is the BS excuse not to invoke the 14th Amendment, not the BS excuse not to coin money. It’s an act of Congress that grants that power, and a simple act of Congress could easily remove it. That hasn’t happened yet because the Dems hold the Senate, and for the Dems to openly hand the Republicans a gun to “hold them hostage” with would ruin the kayfabe for even the most naive observer.

    2. It’s a BS argument against invoking the 14th Amendment, since Congress still has the exclusive power to commit funding, the 14th just means that they can’t pass a law that says “You have to spend this money, but you’re not allowed to get it from anywhere.”

  19. WWQ permalink
    October 8, 2013

    In case my wording above was unclear, by “It’s an act of Congress that grants that power” I meant the power to coin money, not the “power of the purse”.

  20. October 9, 2013

    Completely agreed, with regard to Obama’s motives and why we’re here.

    Let’s not forget the Catfood Commission, or Obama’s attempt at the Grand Bargain during “Super Congress”:

    The Republicans, Speaker Boehner or Majority Leader Cantor did not call for Social Security cuts in the budget deal. The President of the United States called for that,” Conyers, who has served in the House since 1965, said.

    http://www.crewof42.com/news/conyers-on-jobs-weve-had-it-lays-out-obama-calls-for-protest-at-white-house/
    ~

  21. selise permalink
    October 10, 2013

    on shutdown: house rules for CR (via rep. mcgovern tweet)

    http://talkingpointsmemo.com/dc/the-house-gop-s-little-rule-change-that-guaranteed-a-shutdown

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