Remember the Y2K bug? Ha ha, how funny that we all took it seriously, thinking planes would fall out of the sky and utilities would fail and computers in businesses and governments would stop grinding. How ridiculous we were to believe that back then!!!
Except it was quite real. Ask anyone who works with computers. No, I don’t mean the disaster happened. It was averted, and as a result, many, I’m guessing most people, think it was all wrong or all fake or something. That’s what I mean by disaster averted is disaster disbelieved. There’s something in our psychology that inclines us to overlook the big hulking asterisk on disasters, “*unless such and such is done to avert it”. Yes, I’m getting on to the impending default by the federal government. Bear with me.
The asterisk with the Y2K bug was “*unless we fix the buggy code”. Nobody wanted to be the one who didn’t get their computers fixed. COBOL programmers were in heavy demand to fix old mainframes. Many organizations decided to replace their old computers with new ones that didn’t have the bug. I had a theory that a driver of the tech bubble was the effort to fix the Y2K bug before New Year’s Day 2000, and spending would plunge when it was done. I’m sure there’s more to the bursting of the tech bubble in 2000, but I will claim a partial vindication.
However, my tech bubble theory is a tangent. The point is the disaster was real, the warnings were heeded, prevention efforts were successful, and now — most people think there was nothing there.
Of course, if someone wants a financial example of an averted disaster, considering it more relevant for the debt ceiling disaster, we need look back just three years.
Other than maybe bankers who got bailed out, it’s hard to find anyone who won’t express hatred of the bank bailout. I hate the bank bailout too. However, I don’t hate that it was done. I didn’t want a complete collapse of the financial system and a Second Great Depression. I hate how it was done, and I hate that it had to be done, but it had to be done. Now, we actually have many Americans confused about whether the deficit spending to fight the recession might have cause the bad economy. If you’re confused, it’s just a matter of chronology. The explosion in the national debt was a response to the bad economy, and therefore can’t be the cause. Ask people why they hate the bailout, and besides the principle of it, you might get an answer like the bailout caused the recession. That’s why it’s a classic example of disaster averted is disaster disbelieved. We had a very bad recession, but how much worse would it have been if the financial system collapsed? Banks literally would not have been able to open their doors the next business day. ATMs might not have worked very long into the day.
Think that wouldn’t cause a depression? That disaster was averted — and now it’s mostly forgotten. Financial reform to address the causes took nearly two years and a political fight dwarfed only by health care reform, and it still mostly ignored derivatives because special interests demanded it. Conservatives still persist in believing the problem was excess regulation, even though the practices that caused the crisis were banned until the deregulation of 1999-2000. Wall Street learned nothing, understandably since even those who were fired for their mismanagement and excessive risk-taking got paid well to leave. Instead of trying to avoid disaster coming so close again, they’re spending their time and money watering down reform, especially the executive pay incentives that encouraged stupid risks.
So now we get to the impending federal default. It doesn’t much matter whether the government misses debt payments, payroll, or doesn’t send out Social Security checks. The immediate failure to pay and the expected future failures to pay will undermine a global financial system that is based a great deal on US treasury bonds. They’re so safe and so salable that they’re almost like cash. The only reason we can’t say for sure what will collapse is that this has never happened before. It’s never come close before. Do you believe this?
Republicans don’t. At least conservative Republicans mostly don’t, and they’re the healthy majority of Republicans.
When conservatives deny the founding fathers were seeking to create a secular nation instead of a Christian theocracy, it’s mostly just another culture war fight. When conservatives deny evolution, the only immediate problem is biology becomes endlessly confusing for them. When conservatives deny global warming, that’s harming all of us, but at least we have a little time left to fix it and we can still take some measures to slow it down. This time however, their denial could cause an immediate disaster. I’m sure the tea party caucus will still deny their actions or lack thereof bear any relation, but for anyone not completely divorced from reality, it will be clear what the consequences were. So I’m actually thinking the only course left open is let the disaster happen. Can’t believe I just wrote that sentence.
Yes, this is still the most easily avoided disaster in history. Economic history anyway. Raise the debt ceiling, and it goes away. However, the Republicans keep adding demands. Maybe they’re swapping them out in private negotiations, but they’re still demanding some combination of a balanced budget amendment, repeal of health care reform, and cuts to entitlements (Social Security and Medicare are not part of the deficit, but they seem not to care), all of course with zero tax increases. Give them these things, and we know what will happen the next time the ceiling gets close. They’ll have more demands, and still insist that nothing bad will happen if we default. There’s the 14th Amendment solution, but it probably wouldn’t stand up in court, the conservative Supreme Court anyway, and again, Republicans will refuse to believe default is a problem.
Moreover, we know they’ll go hard after Obama for using the 14th Amendment and make political hay out of it. If they get what they want, they’ll just plan on using the next approach of the debt ceiling the same way. So I find myself thinking the disturbing thought, let the disaster happen. The price of prevention is just too high.
Yes, I get the scale of the disaster, how many diaries and quick hits have I posted about this now? The problem is averting it assumes the other party wants to avert it. Apparently, they don’t if they can’t get everything they want. We even have some admitting they think a crisis would be a good thing. Some of them really would prefer to bring down the economy than raise a tax. Some would rather bring down the economy than not gut entitlements. Sen. Mike Lee says he want to bring the house down — lower case “h” house, as in the whole country.
Just something on some left-wing blog? Guess where this description of modern Republicans comes from: “It’s hard not to conclude now that dysfunction is the Republicans’ goal – even if the cost is unthinkable.” That’s the New York Times editorial board. Conservatives think they lean way left and they probably do lean more left than right, but that’s the center-left, moderate-left, acceptable-in-polite-society left. Not exactly the Daily Worker. At long last, maybe the Serious people are at last figuring out what Obama has been up against.
So what should Obama do? Asking for anything other than a clean debt ceiling increase was a mistake. Going for some “grand bargain” as if there was a responsible negotiating partner never made sense. I get that Obama really does care about fiscal matters (unfortunately, we somehow have to get across to him the overwhelming concern outside the DC bubble is jobs). I’m coming to the conclusion he isn’t caving consistently, but rather he’s a centrist who fancies himself a liberal. At least he’s sane and is trying to solve real problems, and does care who gets hurt. He probably saw the obvious, that default would hurt people Republicans care about as much as everyone else, and big business would be on top of Republicans to fix it.
Here’s the problem though: while Democrats have won the PR fight, the Republicans don’t care. As Lee was getting at, as Republicans say once in a while, if we’ll only listen and accept that they mean it, they see this as a one-time only opportunity to destroy everything liberalism has built. Even if they can be convinced the disaster is real, they’re OK with disaster. That’s why compromise is so difficult and frankly, it’s awfully hard to see it happening. If somehow Democrats can conceded enough to avoid disaster, then once again, the disaster won’t be believed.
So what I ask Obama and congressional Democrats to do is accept that default is going to happen. Even giving Republicans their balanced budget amendment, repealing health care reform, and privatizing Social Security and Medicare might not be enough. They want this disaster. So focus on making sure Americans understand who is at fault. The economic disaster that can’t be avoided must be a political disaster for the Republicans. Obama actually got a good start in his speech where he tlkaed of compromise being considered a dirty word and showing how far he’s gone to accommodate Republicans, and then Boehner helped by essentially saying in his speech that Republicans are right and Obama must do the giving. Pound that message in. Stop making nice in false hopes of a deal. Demand a clean increase because it’s not only the best policy, but hte public can grasp that.
One last note: what’s being called the Reid proposal isn’t awful, which helps explain why the Republicans are saying no. If sense does get through the collective insanity (ironically, insanity is the only collective thing Republicans seem OK with) it doesn’t have tax increases or even cuts in special interest tax breaks, but the all-cuts part does hit defense hard, and counts the withdrawal from Afghanistan and Iraq in the savings. Republicans used the same counting method in the Ryan budget plan so they’re a bit hypocritical to complain about Reid using it, but they have a point, that Reid’s all-cuts approach uses cuts already planned. On the other hand, we’re facing a crisis, and they’re still real cuts. At least entitlements aren’t being hit. If Republicans somehow accept it, we can live with it. On the other hand, looking at the whole rest of this post, I clearly don’t expect Republicans to accept it, not when disaster is either seen as a good thing, or they don’t believe it’s real.
Sadly, I see little choice but to find out the dangerous way the disaster is real.