Friday, October 04, 2013

To avoid a Stansberry collapse: Democrats: do your math; Republicans: end the Super Hastert Rule: Both parties, you have to negotiate again

Most rational people want to see policy changes implemented gradually.  That certainly goes for dealing with the national debt and entitlement reforms.  It also applies to environmental issues like climate change. 

But catastrophes happen, often enough just in nature, but also because of man’s own doing.  They destroy individual lives and the idea that they happen argues for the need for “social capital” and the need for people to accept interdependence – and personal, permanent sacrifice.  It’s the “it has to cost you something” idea.

I’m particularly offended when I see politicians take relatively identifiable groups of people hostage in order to extract policy concessions.  In fact, I sometimes think that the current battle in Congress is more about a desire of some right-wing extremists to destroy Obama’s presidency and bring about a right wing “purification” of the country, as in the NBC show “Revolution” (where the ideology behind the blackout has been explained once or twice). Some see a warlord-ruled world of "doomsday preppers" as offering "freedom".  
The latest talk is that the hardliners in the GOP will allow a few short term debt-limit extensions with the help of Democrats (breaking the “Super Hastert Rule”) if Democrats will at least engage them in some policy matters, not just Obamacare, but especially entitlement reform.

The possibility of “destroying lives” if we have a major default is real.  For example, look at the latest Wonkblog piece by Brad Plummer in the Washington Post, link here.   Do the hardliners have a real case for asking (that is, forcing) individual citizens to go “cold turkey”, change their lives, accept the world of Santorum-like social capital (actually, libertarian Charles Murray argues for the same), and accept the consequences of a partial revolution, if the country simply stops honoring all its obligations?

Well, maybe.  There is a real danger that if we just print more money, mint platinum coins, or declare the debt limit unconstitutional and just issue more bonds, and don’t do something about an unsustainable entitlement system, that the rest of the world will stop accepting dollars.  That’s the Porter Stansberry scenario, and some people think its cheesy and nutty.  But I think the danger is there. 

There's something more sinister.  The continuing partisan political spectacle makes us more vulnerable to enemies, to real terrorist attacks, maybe unprecedented in nature or in personal viciousness.  What happens then?  Or what happens if we have a big solar storm, or a huge earthquake?  "Following the rules" makes sense when one believes that society is stable and somewhat just at some level; but increasingly more people have stopped believing this.  

Bottom line.  Democrats should allow separate bills to re-appropriation bills to open the government.  Let another debate on funding Obamacare happen (you might need more funds to handle the pre-existingc conditions and anti-selection problems if you don’t want an individual mandate for a while).  But you have to fund it.  But separate bills (rather like “Star Wars” franchises) have been done in the past, and they don’t imply giving in to extortion.  Democrats should also start more discussion on entitlement reform, including doing the actuarial math on figuring out how much retirees are really “owed” based on past FICA taxes (hint: the payroll tax holidays of the past means that some are now owed less).
Republicans, on the other hand, must give up the “Super Hastert Rule” and allow normal votes in the House on what’s good for the country.  (Don’t, as Barney Frank once said, “punish the country”.)  That almost certainly means moderate debt ceiling extensions, as well as ordering the actuarial numbers on what we really owe to “entitlement” recipients.

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