Trump, the road to serfdom, and the debt ceiling
During last night’s CNN “town hall” fiasco Trump had this to say about the debt ceiling:
Former President Donald Trump on Wednesday urged Republican lawmakers to let the United States default on its debt if Democrats don’t agree to spending cuts.
“I say to the Republicans out there — congressmen, senators — if they don’t give you massive cuts, you’re going to have to do a default,” said Trump, who is again running for president. “And I don’t believe they’re going to do a default because I think the Democrats will absolutely cave, will absolutely cave because you don’t want to have that happen. But it’s better than what we’re doing right now because we’re spending money like drunken sailors.”
When pushed by CNN anchor Kaitlan Collins to clarify his remarks, Trump said: “Well, you might as well do it now, because you’ll do it later. Because we have to save this country. Our country is dying. Our country is being destroyed by stupid people, by very stupid people.”
This is deeply troubling on at least two levels. First, Trump’s rhetoric will make it more difficult for Republicans in Congress to reach agreement with Democrats on a measure to raise the debt ceiling and thus increases the risk of a catastrophically bad outcome.
The road to serfdom meets the debt ceiling
The point I want to emphasize, however, is that Trump’s muddled argument is superficially plausible. There is widespread agreement among elites that current and projected deficits are too high. Trump is wrong to claim that we face a dire emergency and need to do something immediately. But fear-mongering works. People are loss averse, and certainly they are catastrophe averse. Trump is making a bullshit argument, but it may be good enough for Republicans to lay the blame for a default on Biden and the Democrats: “we had no choice, we were on the road to ruin anyway”. Republicans use this kind of road to serfdom logic because it is persuasive. And this persuasiveness will put pressure on Biden and the Democrats to settle on terms that are more favorable to the Republicans than they would otherwise have to.
It’s all about Social Security, Medicare, and Medicaid
To gain political leverage, Democrats and President Biden need to reframe the debate to focus on the long term, and on the future of the major social insurance programs.
They need to acknowledge that we will probably need to raise revenue or cut spending over the next three decades as the population ages. They need to bash Republicans for not putting Social Security, Medicare, and Medicaid on a secure financial footing. Accuse them of setting these programs up for failure by running up deficits. Instead of explaining how they propose to deal with the looming shortfall in the Social Security and Medicare trust funds, the Republicans have proposed harsh cuts in programs for the poor and for veterans healthcare. They want to reduce the ability of the IRS to audit the tax returns of the ultra-rich, which is unfair and will only reduce revenue and create more pressure for cuts in programs that ordinary people rely on. And nothing Republicans are proposing will have a significant effect on deficits, which reflect long run demographic changes and changes in health care costs that Republicans do not address.
In all likelihood, we really will need to make significant adjustments to our fiscal policies over the next few decades, and there is a good case to be made for starting sooner rather than later. Democrats can seize the high ground by acknowledging this and defending highly popular programs from Republican attack.
Defying the Supreme Court
Finally, Gerald Magliocca has an interesting paper on how Roosevelt prepared to defy the Supreme Court if the Court overruled Congress and insisted that contracts denominated in gold had to be repaid in gold, despite the deflation of the great depression. A lesson for our times.
“…Our country is dying. Our country is being destroyed by stupid people, by very stupid people.”
Best self-fulfilling prophecy ever.
The economic catastrophic effects of Treasury Security defaults are not exactly clear because there is a wide range of duration and scale conditions that will determine those effects that will occur from the first failures to pay current bills or roll over past debt. Framing the opposing political positions as fracking big oil Republican climate chaos deniers versus financialized Wall Street Democrat limousine liberals does shed some light on potential winners and losers.
“…How will the U.S. Treasury operate when the debt limit binds?
One cannot predict how Treasury will operate when the debt limit binds, given that this would be unprecedented.
Treasury did have a contingency plan in place in 2011 when the country faced a similar situation, and it seems likely that Treasury would follow the contours of that plan if the debt limit were to bind this year. Under the 2011 plan, there would be no default on Treasury securities. Treasury would continue to pay interest on those Treasury securities as it comes due. And, as securities mature, Treasury would pay that principal by auctioning new securities for the same amount (and thus not increasing the overall stock of debt held by the public). Treasury would delay payments for all other obligations until it had at least enough cash to pay a full day’s obligations. In other words, it will delay payments to agencies, contractors, Social Security beneficiaries, and Medicare providers rather than attempting to pick and choose which payments to make that are due on a given day.
Federal employees would likely continue working during a debt-limit impasse in contrast to the government shutdowns that occur when Congress hasn’t enacted appropriations bills. That’s because federal agencies would still have legal authority, provided by Congress, to obligate funds. Thus, national parks and other government agencies would likely remain open, but federal workers’ paychecks would be delayed.
Timely payments of interest and principal of Treasury securities alongside delays in other federal obligations would likely result in swift
legal challenges. While the motivation to pay principal and interest on time to avoid a default on Treasury securities is clear, lawsuits would probably argue that Treasury has no authority to unilaterally decide which obligations put in place by Congress to honor. (Imagine the legal challenges if the executive branch were to indefinitely postpone payments related to a particular program enacted by Congress.) Courts would have to determine whether Treasury could prioritize interest payments while the legal challenges were being resolved—adding another layer of uncertainty. Moreover, it is not clear how such litigation would turn out, as the law imposes contradictory requirements on the government. Treasury is required to make payments, honor the debt, and not go above the debt limit: three things that cannot all happen at once…..”
Past experience in the US indicates that price levels may vary across the wide array of goods and services, but not in a bifurcated manner separated by the price levels of domestic goods and services pulled down by financial repression, high unemployment, and deflation on the one hand while globally priced goods and services have their prices in dollars pushed up by a foreign exchange rate crash of the US dollar. If our political system brings to an end the exorbitant privilege of the US dollar that has flourished since the July 1944 Bretton Woods Conference, then we will indeed be floundering in uncharted waters.
What secret does Mitch McConnell know that he isn’t sharing with us?
‘The US has never & will never default.’
It looks like he’s re-thinking this POV.
Bloomberg – May 8, 2023
Senate Republican leader Mitch McConnell warned he won’t come to President Joe Biden’s rescue on the debt limit by breaking a partisan deadlock as a catastrophic US default looms.
So maybe it’s time to start worrying big time.
Mitch McConnell Warns He Has No ‘Secret Plan’ to Solve US Debt Impasse
I’m cool with that. It’ll hit the welfare states, the red states, fastest and hardest.
Good morning Eric (8 AM here):
There is widespread agreement among elites that current and projected deficits are too high. Trump is wrong to bluster we face a dire emergency and need to do something immediately. Republicans will ride on his coat tails and blame him later.
Are we not monetarily sovereign? Is Labor really the issue as the attorney Powell tries to make us believe? But fear-mongering works. People are loss averse, and certainly they are catastrophe averse. Republicans and trump is making a bullshit argument,
Of course, trump is making a BS argument. Trump only knows how to bluster, lie, and create false narratives. Creating false narratives is what Republicans are good at doing. Trump is good at bringing it to bear with out being held to the former two issues. But rather than get caught up in a narrative about trump, would it not be better to lay a foundation for what is occurring here?
In 2025, the tax cut will die due to not creating a positive return. It was passed under reconciliation , promoted by then president trump and largely supported by Republicans. In effect. Much of the deficit will go away with higher taxes on people. Start the conversation about the Republican failure to stimulate the economy by the massive cuts given by Republicans and how the larger percentage of it went to those making $500,000 or greater. Also include, how corporations will not be effected by the end of reconciliation for trump’s bill,
That is my proposal in the rough. Wiser diplomats can surely eliminate my rough edges.
Since 2020, Biden has had to resolve the issues with Covid and a failing economy. He has also had to work with a lesser intake of taxes due to trumps bill which had little to do with improving the economy other than a give away to those in higher income brackets and corporations.
To the positive, Biden and Dems need to talk up what was accomlished and how Labor was not used as the fall guy for economic failure. Where would citizens be if Dems had not taken over in 2020? Why is this narrative missing from the pushback on the Republican story and fable tellers.
To your last question: probably because alternate timeliness aren’t good selling points
The pushback, or lack thereof, is the problem. I’ve long advocated Operation Just Let Them Speak, but that just doesn’t seem to be enough. We, collectively, need to get a bit more aggressive in highlighting What They Say. The only pushback I’ve been seeing is in the media and that’s just theater, they’re in bed with it …
If the deficits are too high there are two solutions to the problem, cut spending or raise taxes. One party refuses to raise any taxes are are in thrall to one Grover Norquist. I’m sick and tired of having government services, the IRS, Veterans Affairs, Social Security administration just to name a few, that are difficult to access, overworked, and underfunded. I think the Democrats opening position if they are to negotiate over the debt ceiling should be “how much do we raise marginal tax rates by”.
I agree on the VA. It should be open more to all veterans due to the issue of disorders and sickness arising years later and after discharge. To thwart care, there exists a series of denials, misdiagnosis, delays, etc. causing frustration.
and david. i agree with david. the problem is how to create politicl acceptance of this idea. my modest proposal is that the Left accept the need for an increase in the “marginal” rate of the Social Security tax. the need is only about a dollar per week per year, yet the left acts like this would be a crushing burden on the poor, and anyway the real need is to punish the rich for all their crimes against humanity…such as inventing facebook.
this is not the way to win friends and influence people.
my two stories about VA. as a student i was sent as a sort of intern to the VA, where I watched intake interviews with prospective patients. in one of those i watched a team of doctors ask the patient what year it was. since his answer was a little confused, they decided his back complaint was all in his head, despite the x-rays showing damage from a service relted back injury.
second interview was a young man looking for a medical excuse to beat a rap for selling quaaludes (?). they thought his case merited at least a few “therapy” sessions with…me. at the time i had no idea how to deal with a pathological liar (still don’t). so i quit the police department and got myself a steady job.
a few years later as an ordinary citizen i became aware of a dispute about the VA dismissing agent-orange complaints as non-service related conditions. i wrote to someone in Washington suggesting they just treat all medical problems presented by veterans as insured because of their service. they forwarded my letter to someone in VA who wrote me a polite dismissal of my suggestion. i haven’t kept up, but it sounds to me like you are saying that nothing has changed.
i’m not so sure about that. i know a vet who is being “treated” for alcoholism by VA. the “treatment” is not very good: the don’t seem to be able to deal with alcoholics who behave like alcoholics.
unfortunately your essay tends to just add to the panic that will allow the bad guys to get away with destroying SocialSecurity.
Social Security must NOT be “debated with expert liars. They make a false case thet the public swallows, and the Left is too fumble fingered to answer them effectively.
SS needs to raise it’s “tax” about one dollar per week per year for a few years. it is worker paid and has absolutely no effect on the deficit/debt.
you don’t say, but i get the idea that you don’tbelieve that.
by the way, “the elite” are the bad guys.
We do need to cut unnecessary spending. We can start with the tax breaks for fossil fuels since big oil is very profitable and burning them harms the planet. Some of the agricultural subsidies seem obsolete, especially when they keep trying to cut food benefits. Spend money on permanent things and the needs of people who can’t meet their own. Let those who can pay for themselves. And develop a revenue system that can adequately fund all the necessary functions and programs.
Would be difficult but not impossible, but only if the legislators want to serve the public not their donors. That is the part that may be impossible.
If it needs Republican support, that does make it impossible.
In American macroeconomic nirvana, had 1950’s Ike tax rates on corporations and the wealthy stayed in place for 79 years fairly distributing wealth, and had American corporations been incentivized to produce American products via tax and political Ross Perot policy stratagems, what a difference would there have been in the 2023 outcome. What if political parties had worked together for an American first policy with American manufacturing incentives , retirement benefits, and appropriate social assistence to promote future contributions to the system. Maybe a 2023 3 trillion dollar surplus and American manufacturing 2023 world dominance would be present.
It didn’t happen that way. American corporate greed for the easy buck and the rich man’s party siphoned away the scenario that could have been.
There will be a great deleveraging reckoning that is unrelated, albeit temporally, to the debt-limit discussion underway.
You raise a good question or topic. Understanding the background or progression of the costs of US Labor since the fifties is important. Labor in the fifties was pretty much employment at will. The cost of direct labor was greater then, then it was when Drucker made his comments about it being smallest cost of manufacturing. What has added cost too manufacturing is the Overhead tied to it Healthcare, Workman’s Comp, Overtime, OSHA, etc. Costs which are not incurred if you take manufacturing overseas. There are other Overhead costs not tied to Labor but tied to Manufacturing.
If a company can avoid such costs in manufacturing and not pay a similar amount bringing product back into the US, then why not rellocare manufacturing.
The other cost reduction is the amount of Labor involved in product. It has decreased due to efficiencies. Setups are less time consuming, muti-functional equipment, and cells all of which requires less Labor input and less travel across a plant.
If planned properly, raw material and WIP inventory decreases. Shorter lead times playout in less finished goods. Forty-plus years I have watched this play out and been a part of the improvements. Much of it was a good run.
Points well taken … and nirvana doesn’t exist. Tesla’s Shanghai plant is an outcome result of real world economics involving the elements of manufacturing labor cost. It’s ‘American owned’ with 300-400 million dollars in taxes paid annually to the CCP. The revenues from sales mostly to Europe and the US likely make the CCP leadership (leader) think a little harder about its relationship with Russia and promote a degree of greater stability and restraint.
Looks like CNN (new owner!) wants to give Fox a run for its money.
Why billionaire John Malone’s shadow looms over CNN
Vox – Aug 26, 2022
CNN is in flux. It has a new owner, and a new boss, who promises to remake the news channel and has told employees to be prepared for “a time of change.” …
But the bigger question floating over one of the world’s largest and most important news organizations is why it’s changing. Is it because the CEO of Warner Bros. Discovery, its new owner, wants an overhaul? Or is it at the behest of a conservative billionaire investor in the company who sits on its board?
That billionaire is John Malone, a legend in the cable TV business and one who has deep and longstanding ties with David Zaslav, the CEO of WBD. People close to both men insist that Zaslav is remaking CNN because he wants to for both business and editorial reasons, and not because Malone has told him to.
But complicating that narrative is the fact that Malone has repeatedly wished, in public, for CNN to remake itself. And his prescription happens to sync with the new CNN agenda: a plan to steer the channel away from what Malone and others call a liberal bias they say muddles opinion and news. And to shift it toward a supposedly centrist, just-the-facts bent. …
“I would like to see CNN evolve back to the kind of journalism that it started with, and actually have journalists, which would be unique and refreshing,” he said. Then he suggested a model: “Fox News, in my opinion, has followed an interesting trajectory of trying to have ‘news’ news, I mean some actual journalism, embedded in a program schedule of all opinions.” …
‘One of the worst hours I’ve seen’: CNN faces blowback for airing town hall with Trump
Boston Globe – May 11
Criticism of CNN was swift and unrelenting after the network gave Donald Trump a prime-time platform in New Hampshire Wednesday to spew election lies, mock a woman who accused him of sexual abuse, and insult the event’s host as the former president seeks a second term in office.
Media analysts, observers, and politicians alike were withering in their denunciation of CNN for holding the town hall event in front of an apparently pro-Trump crowd, calling the decision “profoundly irresponsible” and “disgraceful.” They argued that giving Trump the opportunity to repeatedly spread misinformation and air past grievances was profoundly damaging for both journalism and democracy.
While moderator Kaitlan Collins challenged Trump’s repeated falsehoods, she was largely unsuccessful, with one headline summarizing the heated exchanges as “Trump steamrolls CNN.”
Some of the harshest disapproval came from inside the network, with CNN staffers expressing disgust for hosting the event, which included no other candidates.
“It’s hard to see how America was served by the spectacle of lies that aired on CNN Wednesday evening,” Oliver Darcy, a senior media reporter for the network, wrote in an analysis. He referenced Trump’s lies about the 2020 election, his refusal to take responsibility for inciting the deadly Jan. 6 insurrection, and his mockery of “E. Jean Carroll’s allegations of sexual assault, which a jury found him liable for on Tuesday.”
“CNN aired it all. On and on it went. It felt like 2016 all over again. It was Trump’s unhinged social media feed brought to life on stage. And Collins was put in an uncomfortable position, given the town hall was conducted in front of a Republican audience that applauded Trump,” Darcy wrote. “For most of the night, the nation’s eyes were transfixed on Trump’s abuse of the platform that he was given.” …
yep. just shut our eyes and it will go away. apparently we have discovered that in a democracy the people can’t be trusted to recognize insanty when they are allowed to see it.
When Winston Churchill said that ‘Democracy is the worst
form of guv’mint except for all the others’, he was not joking.
Why the CNN crowd cheered Trump’s comments on E. Jean Carroll
Boston Globe – May 15
During last week’s CNN town hall, the audience laughed and applauded as Donald Trump mocked E. Jean Carroll as a “wack job.” This happened the day after a federal jury found the former president liable for sexual abuse and defamation in a civil trial that arose from allegations he raped Carroll some 30 years ago.
Trump’s cruelty, not to mention his absolute moral corruption, is well-documented. Going back to his observation that he could shoot someone on Fifth Avenue without losing a vote … think about the little voice in our head that tells us the difference between right and wrong. With this crowd, that voice died a long time ago.
Social science has a term for it. It’s called “motivated reasoning,” said Liane Young, director at the Morality Lab at Boston College, where a team of researchers study the subject of morality and society’s reaction to it. People believe in right and wrong, said Young. But they are also motivated to protect favorable impressions “of those on our side, on our team,” Young told me. Trump supporters practice it to an extreme, but motivated reasoning drives all of us, Young said. …
probably true enough, though i don’t think it tells us anything we didn’t already know.
maybe they laughed for the same reason we laugh when Wile E Coyote gets hoist by his own petard,
just as an exercise pretend that you did not believe Carroll, then would their laughing seem “wrong” to you?
CNN didn’t cover a town hall; it covered a political rally, essentially giving free TV time to Trump.
RE. CNN ‘townhall’ ~ I think the whole thing was scripted, kayfabe, right down to the faux outrage that followed. Trump got a free campaign rally, CNN got a few eyeballs and millions in advertisement revenue, and the rest of the repub contenders are just the cream the turd floats on …
Donald Trump’s wacky comedy night in New Hampshire
Boston Globe – May 11
As CNN’s New Hampshire town hall forum on Monday made clear once again, Donald Trump’s wit is a big part of his appeal to today’s GOP.
No surprise, then, that some of the Republicans in attendance at Saint Anselm College enjoyed a hearty laugh when Trump called writer E. Jean Carroll a “wack job” and went on a mocking riff about her. For them, it seems to have been like watching a beloved comedian perform some of his best-loved bits.
Sadly for Trump, however, there are some scolds who simply won’t see the humor in his demeaning a woman a Manhattan jury just judged him to have sexually abused.
It is lucky, then, that there were other mirth-inspiring bits — at least for those who enjoy unintended irony.
Like, say, one of the moments when he rebuked CNN host Kaitlan Collins.
“This is what she does,” the former president said of the CNN interlocutor.
What had Collins done that was so objectionable?
She had, heaven forfend, tried to inject actual facts into his revisionist history.
In this particular instance, Collins noted that Trump hadn’t succeeded in building the southern border wall he campaigned on in 2016, all the while asserting, hilariously, that Mexico would pay for it.
Trump insisted he did. Collins noted, accurately, that he hadn’t. Whereupon Trump sneakily tried to transform the notion of completion. In Trump talk, it now apparently means attempting or hoping to finish something you actually weren’t able to do.
It’s an arduous job, trying to correct Trump’s many misstatements in real time. As those with an annoying affinity for facts know, a Trump event is a full-employment project for fact-checkers, and as he demonstrated on Wednesday, that is not about to change.
Still, Collins went gamely about that task during an hour or so that stretched like eternity.
“You are a nasty person, I’ll tell ya,” Trump said when she pointed out the difference between his conduct in the case of the missing presidential documents and that of Joe Biden. This earned him another big laugh.
And if by nasty Trump meant “pointedly insistent on the truth,” why, his gibe can hardly be disputed.
Trump also made it clear that he had no intention of backing off another piece of his electoral comedy routine, his risible assertion that the 2020 presidential election was stolen. That contention, of course, has now been conclusively refuted by a wide variety of authorities.
Collins repeatedly pressed him on whether, with his team’s scores of lawsuits having failed and his other claims of fraud refuted by Republican election officials — as well as his own appointees and aides — he would now acknowledge that that wasn’t so. …
Instead, Trump engaged in the same old argle-bargle.
When an impossibly hopeful attendee asked if Trump would at least quit talking about a rigged election during this campaign, the former president said he would — and then immediately revealed that what he really meant was: Of course not. When Collins asked him if he would commit to accepting the 2024 election results, he offered the same kind of formulation: “If I think it’s an honest election.”
On Ukraine, the man who trusted Vladimir Putin over US intelligence agencies and otherwise comported himself as an admirer of dictators and strongmen around the world, claimed the Russian czar would not have invaded if he had been in office. Even more pricelessly, Trump asserted that as president, he would be able to end the war in 24 hours.
And so it went, an evening that oscillated between falsehood, fiction, and fantasy.
Yet there was an area where even Trump’s considerable skills as an artful dodger couldn’t quite square the circle: abortion.
He claimed credit for getting Roe v. Wade overturned — and rightly so. He, after all, appointed three hard-right justices who, despite their confirmation-hearing evasions, were determined to get that done, and they did. …
After Trump’s CNN town hall, (NH guv Chris) Sununu slams former president as ‘three-time loser’
Boston Globe – May 12
After Donald Trump took the stage at a CNN town hall in New Hampshire this week to repeat lie after lie, the state’s Republican governor, Chris Sununu, appeared on the network to slam the former president as a “three-time loser going on to be a four-time loser” who is hurting the party’s electoral chances. …
Hours later, Sununu appeared on CNN to criticize Trump and voice concerns about his influence on Republican performances in local and state races across the country.
“He is a loser … and as a four-time winning Republican, I’m tired of losing,” Sununu told Anderson Cooper.
In the 2020 and 2022 elections, “we got our clock cleaned because of his leadership and his message isn’t getting it done,” Sununu said of Trump.
“I supported him in 2016, I supported him in 2020. But he’s a three-time loser going on to be a four-time loser, and it’s not just him I’m worried about. I’m worried about the US Senate races. I’m worried about the governorships. I’m worried about the ballot that he affects up and down the ticket,” he continued.
In another appearance on CNN on Thursday, Sununu said Trump’s performance was “weak,” “kind of wimpy,” and “didn’t have a lot of conviction.”
“He was kind of angry, bitter, and overly defensive,” Sununu said. “That’s not leadership.”
As Sununu mulls entering the race for the White House himself, the popular governor has become a vocal critic of Trump …
“Everyone’s tired of the drama — Republicans and Democrats,” Sununu told CNN. “Everyone’s just tired of the drama. They want leaders that actually get stuff done, and I think that’s the opportunity that Republicans will be able to show. And at the end of the day, whether you support the former president or not, he can’t win in November of ‘24, the math does not work out any which way.”
He said he’ll decide whether he’s going to run “in the next month or so.”
“My family’s behind it,” he said. “We see a clear path to doing this and being successful and victorious.” …
Chris Sununu is the son of former Governor John H. Sununu and Nancy Sununu. He is one of eight siblings, including older brother John E. Sununu, a former U.S. Senator and U.S. Representative. …
John H. Sununu is an American politician who was the 75th governor of New Hampshire from 1983 to 1989 and later White House Chief of Staff under President George H. W. Bush.
Sununu on MSNBC today offered an enthusiastic defense of armed teachers in classrooms to deal with intruders carrying firearms.
New Hampshire has no law prohibiting persons who are not pupils from possessing firearms in a school zone.
There is no permit, background check or firearms registration required to buy a handgun from a private individual. Open carry and concealed carry are legal in New Hampshire without a license for anyone at least 18 years of age who can legally possess a firearm.
New Hampshire has not passed any meaningful gun safety laws in years, and recently enacted a law that allows people to carry loaded, hidden handguns in public without a background check or permit. …
Gov. Chris Sununu signed a bill barring state and local law enforcement from enforcing federal firearms statutes and rules Friday (June 24, 2022), handing a victory to firearms rights groups that have bristled at recent federal gun regulations. …
and yet he supported him in 2016 when he was what he is. So sounds like Sununu is just mad at Trump for being “weak,” that is, “not successful.”