There seems to be a lot of celebrating without actually understanding much of what has happened as of late. One reason is that it looks like House Republicans will agree to raise the debt ceiling but only for 3 months until the budget gimmick of all Congressmen supposedly either passing a budget or denying their own pay as if that will ever happen. There will be infighting on whether there should be heavy or light deficit terrorism terrorizing the unemployed as usual, but now we can expect these dysfunctional austerity celebrating battles to go on and on. And as I pointed out when I predicted all of this 3 years ago, when this is the debate in Washington DC we have already lost.
This budget gimmick fight is already on top of what the last debt ceiling fight created with the negotiations coming up over the self induced sequester on the basis that 4 trillion bipartisan austerity is awesome. That is the problem for all debates and all fake "progressive" political rhetoric in DC we heard at the Inauguration even though it was a great speech.
The plans to kick this austerity shit can down the road continually every few months is not a victory; it's also not even a clean debt ceiling raise because it's not even going to be for a fiscal year. It also means the White House was really posturing as I said they were when they claimed they wouldn't negotiate on the debt ceiling; this shows that all this so called new-found post reelection "strength for progress" is a myth. That also means that all the hyp being bandied about, about the low-balled 60 billion to merely 9 billion Sandy relief bill passing weeks late and 51 billion dollars short breaking the Hastert rule did not have the significance of the spin behind it at all. It's simple: John Boehner was looking out for his own ass as speaker(shocking!). That's it.
The idiotic bipartisan sequester created by the last grand self induced standoff over the last debt ceiling fight will come to a head on March 1. I don't expect a lot of defense cuts despite the posturing and fully expect more cuts to SS and Medicare to be floated and bargained with within multiple negotiations that show nothing but contempt for the public. Yves Smith goes into the real reasons why a Republican grand standoff on the debt ceiling looks like it won't happen despite the coming miniature ones every few months that will happen where plenty of deal making and deficit terrorism will take place.
It’s not quite that simple.
First, if you widen the frame, the budget jockeying is largely kabuki: which team is going to score more points that appeal (or more accurately, can hopefully be spun to appeal) to their base? The reality is that both parties are fully committed to imposing austerity. The only question is whether we get Dem Lite or Republican Hi Test. But rest assured, neither version will be good for ordinary Americans.
Second, the Republicans have not dropped the deficit ceiling cudgel, but they seem to recognize that it is a mutual assured destruction weapon, and therefore not as useful as they once thought. They seem to still be coming to grips with the negotiating implications. As the New York Times reports, the Republicans are willing to extend the deficit ceiling for three months, but that increase was conditioned on having the Democrats approve a budget (during the Obama administration, no budget has been approved; the government has carried on because Congress has passed spending resolutions). Notice that while Obama has said that he would not discuss deficit cuts under a debt ceiling sword of Damocles. But if he accepts this deal (which includes a gimmick, of having Congresscritters go unpaid if they can’t agree on a budget on the normal timetable), he will still be doing that. So why is this a victory of sorts?
The more important part of the New York Times story on the Republican climbdown is that Dave Camp, the House Ways and Means Committee chairman, disabused his fellow party members of the idea that the government could limp through hitting the debt ceiling by using tax proceeds to pay only debt obligations, Social Security, the military, and other critical needs. So the Republicans can’t refuse to raise the debt ceiling and not do serious damage, pronto. And everyone would blame them for their intransigence. So unless they want to play Major Kong, they will probably continue to play ball with the Democrats on debt ceiling increases while trying to save face about it.
These constant negotiations and backroom deals over what was once routine whether debt ceilings or budgets(with austerity on the side) show nothing but a broken government that cannot fiscally handle matters the way they are anymore. When political systems are broken it weakens our ability to function the way we actually can and do need to function to spread resources for the general welfare of the American people. As a sovereign currency we have many advantages but we cannot take advantage of them with a broken political system. This is why the whole game needs to change and why I supported the fully legal trillion dollar platinum coin only as a first step to 60 trillion High value Platinum Coin Seigniorage; that step being gainful attention in the media and a national conversation about our monetary system and what it can accomplish.
The inception of this idea came to being from lawyer/blogger beowulf, whom was not just trying to have an insightful wonky conversation on a blog. There was a reason he thought of this. Given our broken political system, it's not enough that the Federal Reserve as the Treasury's fiscal agent can mark up dollars on a computer and print them off. The Fed operates off of appropriations from Congress which in turn cannot function legally as they let the public debt be questioned which is a violation of the Constitution. Therefore only private banker debt and bailouts are something that won't be questioned thanks to the influence of every member of the Federal Reserve Board and even Jamie Dimon while CEO of JP Morgan sits on the board of the NY Fed the most important regulator that failed in 2008.
The fact that the public cannot have Democratic control of the money that is created to make debt payments and thus the operational ability to create debt free money instead of welfare for the FIRE sector. These bonds are welfare they don't need, and are a problem the framers of the Constitution envisioned. So it's pretty laughable after one looks into it that anyone denies this process is legal.
Author and attorney Ellen Brown was the one beowulf got the high value coinage idea from when he read her 2007 book: Web of Debt. As she points out, the Trillion Dollar Coin was only meant to be a jumping point to all of this since the mainstream media picked it up and stirred the conversation towards this process. It had nothing to do with the dumbass political jam this President and Congress caused; getting out of that was merely a way to get Congress out of the way of a system it is corrupting for good and for the greater good.
PCS was and is a way to defeat austerity policies for good and for more Democratic control of our modern money system which cannot afford to let politics ruin its prospects for those are our prospects. I highly recommend reading this piece by Ellen Brown.
Most commentators have missed the real significance of the trillion dollar coin. It is not just about political gamesmanship. For centuries, a secret battle has raged over who should create the nation’s money supply – governments or banks. Today, all that is left of the US Treasury’s money-creating power is the ability to mint coins. If we the people want to reclaim that power so that we can pay our obligations when due, the Treasury will need to mint more than nickels and dimes. It will need to create some coins with very large numbers on them.
To bail out the banks, the Federal Reserve, as head of the private banking system, issued over $2 trillion as “quantitative easing,” simply by creating the money on a computer screen. Congress, the White House, and the Treasury all rolled over and acquiesced. When it was proposed that the government bail itself out of its budget woes by minting a $1 trillion coin, the Federal Reserve said it would not accept the Treasury’s legal tender. And the White House again acquiesced, evidently embarrassed to have entertained this “ludicrous” alternative.
Somehow we have come to accept that it is less silly for the central bank to create money out of thin air and lend it at near zero interest to private commercial banks, to be re-lent to the public and the government at market interest rates, than for the government to simply create the money itself, debt- and interest-free.
And somehow we have commentators across the blogoshpere proud of the fact they don't know this based on what they think they know; nothing. They're proud of the fact they don't understand inflation and scream hyperinflation no matter how many times you explain to them that any 60 trillion dollar coin will be locked up in the Treasury's General Account at the Fed and only released little by little with Congressional appropriations. Yes, these naysayers are apparently proud of the fact that they can't quite get that trillions in reserves at accounts at the Fed do not chase goods either so they do not understand demand pull inflation at all.
So in the process of taking the time to explain these concepts to people just to have them ignored or ridiculed one gets the feeling one is in an argument with the right about climate change or trickle down economics. The data is there and so are the facts but facts are now not only subjective to the right wing. Some people would just rather cheer the team then think critically about our problems. It's becoming more clear everyday that everything lots of people ridicule about the right can be found in the Democrats own back yard of support.
So now we know what to look for if we want this austerity game to change and little of it could be found in any of the lofty rhetoric at the Inauguration in a way that changes the game and is followed by action. Looking back perhaps people of the future will wonder why many people lived unhappily unable to fill their potential thanks to deficit lies and terror. They will wonder why their life spans continued to decline compared to the rest of the OECD countries or why we didn't act on climate change and instead approved the Keystone pipeline.
Will it be lack of vision? Absolutely not. It will be lack of political will. It will be a lack of character and a lack of principles that the real left had during the 30s that shaped the New Deal many still benefit from today. It will be a lack of standards in which we hold our elected leaders and a lofty sense of accomplishment through vicariously living through politicians without the physics of being part of that tiny club.
Looking back, it's only when the fragile illusions within the minds of the commoners are shattered that they realize there's no place for them despite the rhetoric echoing down from the ivory tower. It wasn't built for you, and there's only a seat if you demand the architecture include plans to accommodate everyone. After all, what people say to excuse this deadly omission when this is not even a subject of political debate is that it's "pragmatic."
However, this third way brand of "pragmatism" might as well be the name of the song Nero played while Rome burned. On war and drones "the end justifies the screams." On income inequality, "the end justifies the lack of means." On no accountability for Wall St crimes, "the end justifies letting government be owned and controlled by fiends."
I truly hope what I speak will not continue to be. But it's increasingly looking that way and we will have to wait and see.