An Analogy for the Debt Limit

Given the likelihood of a debt limit showdown, I'd like to outline my views on the subject.

We hear a lot of analogies on the debt limit, most of them about why it should stay low.  The most common example is this: if you already owe $10,000 in loans, you shouldn't borrow another $20,000 to pay it back.

Unfortunately, this fails to adequately capture the situation.  A better analogy, to my mind, is this; the budget is like a home contract, the debt limit the loan for the property.

Let's say you're selling a house, and someone wants to buy.  You haggle a bit, and eventually settle on a price, let's say $500,000.  The buyer signs the contract, agrees to pay on such-and-such a date after moving in, and everything looks swell.

Now, let's suppose the payment due date rolls around, but the buyer tells you, "I only have $100,000 in the account.  Take it or leave it."  When you demand to know why he can't pay the full $500,000, he replies "I don't want to take a loan."  Not "I can't take a loan," but "I don't want to take a loan."

Obviously, as the seller, you're steaming mad now.  This man signed a contract, moved into your house, and now he's saying he won't--not can't, won't--pay his bill.  In fact, you can sue the guy, and any reasonable court would rule in your favor; the man broke his contract, and he's on the hook for the other $400,000.  If he needs a loan to find it, he'd better take the loan.

Here's how this relates to the debt limit.  When Congress passed the budget, it essentially signed a contract saying "I will pay X amount of money to creditors and agencies Y."  By signing that contract, Congress has committed to paying.  The debt limit is the loan that allows Congress to pay.  It's all very well to argue that we can't go deeper in debt--that is an argument that needs to be had--but Congress has already agreed to pay the money, so it needs to find that money from somewhere.  If the only way to find the money is to borrow, we had best borrow.

Okay, so question: when should we have the spending and revenue debate?  When we pass the budget.  The budget sets how much money we spend, how we spend it, and where it comes from; as such, we get to debate those things when we pass the budget.  However, once the budget is set, we are going to spend the money one way or the other--we've contractually agreed to do so--so having this debate after the budget passes serves no purpose.

In sum, here is the situation on the debt limit and why holding it hostage is the height of stupidity:

• We've already set our spending levels, so not raising the debt limit won't affect spending one red cent.
• We've already set revenue levels, so keeping the debt ceiling won't magically generate revenue.
• By not raising the debt ceiling, we essentially say, "We don't like these bills, so we won't pay them," even though we have already legally agreed to pay them.  That's called a default, it's illegal, and it casts doubt on the security of U.S. bonds.
• The world considers U.S. treasury bonds the safest investment.  Throw the world's safety net into doubt, and we risk a financial and economic crisis that makes 2008 look like a mouse against a tiger.

In short, there is absolutely no advantageous effect for anyone from not raising the debt ceiling, and catastrophic results for everyone unless we do.  So holding it hostage is moronic; sooner or later, the bluffer has to blink.

On Compromise and Democracy

Hi, all.

So, in the spirit of the first government shutdown in 18 years, I think it's high time for a discussion of compromise and why the government needs it.

Now, the first rule of democracy is that the majority set the rules.  A danger is that the majority may enact rules that unjustly persecute a minority of the population.  Thus, the a good governing document will provide protections and means of recourse for a minority.  In the United States, the first recourse is compromise between different parties of Congress; the last recourse comes from the court system.

A dirty little secret: no one likes compromise.  Hell, the Founding Fathers disliked compromise, not least because they fought like cats and dogs.  Why?  Well, because no one likes giving up their position, and the first rule of compromise is that everyone has to give up something.  Not everything, but something, and presumably something they want.  My father (a lawyer) likes to say that a good compromise leaves all parties equally unhappy.

Now, the Founding Fathers may not have liked compromise, but they recognized its necessity.  Their recognition may have been helped by the fact that no two Founding Fathers agreed on much of anything; if Jefferson and Hamilton couldn't agree how to organize an economy, there were certainly going to be other disagreements.  It was also helped by a mutual agreement that no one side has a monopoly on truth; the best course is seldom the most extreme one, and compromise helps protect the minority.  As such, the Senate was designed to foster compromise between differing views.  Over the centuries, it has, by and large, done so--the largest counterexample was a little thing called slavery.  You may have heard of that one.

So what happened?  It seems that compromise is dead in Congress, despite the entire legislative branch being designed for compromise.  I mean, we have a supremely inactive legislature, we are still fighting a fight four years old, and yesterday the government stopped paying itself, all because no one is willing to meet anyone else halfway.

Now, personally, I largely blame the House Republicans, but hey; I'm liberal, I've made no secret of that.  I'll lay out some thoughts of mine: feel free to challenge them.

• The President of the United States does not respond to blackmail, and neither does the Senate.  They can't afford to.  End of story.
• The President has tried to speak with the opposition, but the hard right wing has grown so nutty that even speaking with the President is anathema for hard conservatives.  I am not exaggerating; it's like he's a leper.
• The hard line will not give up anything.  Their way or no way.  Well, see the first rule of compromise.  As long as they won't give anything up, they can't compromise.  [Edit: I have received criticism that the Republicans have offered to negotiate.  Well, what have they offered in return for defunding the ACA?  Funding the government?  That's not a concession.  If they demand surrender and offer nothing in return, it is not compromise.]

How did we get here?  I mean, politics is always a high-stakes game, but this is absurd.  Well, I'm no political action expert, but here are some initial thoughts.

• The Fathers never intended a two-party system.  They envisioned something more like the coalitions of Europe, where a large number of small parties, each of which has a narrow political focus, compete and negotiate for leverage.  This would be a much clearer, more transparent system; the current two-party system makes for some strange bedfellows and masks the true priorities of the voters.
• Gerrymandering has become both commonplace and absurdly extreme.  Most Congressional districts are not competitive in any meaningful way.  That shifts importance to the primary, not the general election, and the person who most excites the base--i.e., the extremist--has an advantage in primaries.
• The Internet allows for unprecedented communications, but also for an unbelievable echo chamber.  Voters and politicians can easily find views and pseudo-science that backs their view, even if those views and "facts" are the fringe of the fringe.  It's too easy to shut out reality online, and ignore the reasoning of the other side.  Example: the claims that "no one is seriously affected by the shutdown," despite suspension of national parks, SNAP benefits, army pay, etc., etc.  By the way, a whole lot of army guys are on SNAP, so double whammy.  Congrats.

So now what?  Personally, I have no desire to live in a society ruled by a government that can't fund itself--I like my food inspectors, drug regulators, environmental protections (including air and water--you know, that stuff we breathe and drink), and so on, thanks.  Again, I'm a physicist, not a political expert--and I find physics far more comprehensible, frankly--but here are some proposals to reduce the insane partisanship in the House and Senate:

• No more legislature-drawn Congressional districts.  Let an independent panel or algorithm draw the districts.  This should reduce the number of hard-line Congressmen; competitive districts force the candidates to play to the center, not the extreme wings.
• Lock Representative and Senatorial pay with performance.  In other words, government shutdown also suspends Congressional pay and benefits.
• Force Congressmen to meet opposition member when they start their terms, preferably without labels.  I'm thinking a cocktail party or reception where no one has party affiliation tacked to their coat.  It's harder to demonize a group if you know or respect some members of said group.
• Term limits.  As of now, the number one priority for most congressmen is reelection (can't enact laws without a seat).  Maybe if the politicians were less obsessed with winning the next election, they'd be more focused on doing their jobs.

Will all of these work?  Probably not.  But it's a start.  Lord knows, we need a start at least.