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Sunday, October 13, 2013

Paul Krugman, "The Dixiecrat Solution": American Roulette

"The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies. . . . Increasing America’s debt weakens us domestically and internationally. Leadership means that 'the buck stops here.' Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better."

- Senator Barack Obama, March 20, 2006

In 2006, Senator Obama was opposing an increase in America's debt ceiling to $9 trillion. Today, the US, under the stewardship of President Obama, is facing default unless Congress raises the current $16.7 trillion debt ceiling.

In his latest New York Times op-ed entitled "The Dixiecrat Solution" (http://www.nytimes.com/2013/10/14/opinion/krugman-the-dixiecrat-solution.html?_r=0), Paul Krugman compares Republican opposition to raising the debt ceiling to the antics of a neighbor from hell. Krugman writes:

"So you have this neighbor who has been making your life hell. First he tied you up with a spurious lawsuit; you’re both suffering from huge legal bills. Then he threatened bodily harm to your family. Now, however, he says he’s willing to compromise: He’ll call off the lawsuit, which is to his advantage as well as yours. But in return you must give him your car. Oh, and he’ll stop threatening your family — but only for a week, after which the threats will resume."

Krugman's solution:

"Despite denials from Republican leaders, everyone I talk to believes that it would be easy to pass both a continuing resolution, reopening the government, and an increase in the debt ceiling, averting default, if only such measures were brought to the House floor. How? The answer is, they would get support from just about all Democrats plus some Republicans, mainly relatively moderate non-Southerners. As I said, Dixiecrats in reverse."

Query: Is Krugman's comparison between Republican objections to raising the debt ceiling and an obnoxious neighbor making your life hell a correct analogy? Or is it more apt to compare such objections to a wife threatening her husband with divorce if he doesn't stop his drunken spending spree, which is threatening their household with bankruptcy?

Don't get me wrong: A compromise needs to be reached. Quickly. A default by the US government would decimate the world economic order.

On the other hand, as Douglas Elmendorf, head of the Congressional Budget Office, recently declared, "The federal budget is on a course that cannot be sustained indefinitely" (http://www.cnbc.com/id/101065200).

Peculiar how President Obama is capable of bending over backwards to avoid conflict with overseas bullies, but is willing to play "tough guy" at home and jeopardize what's left of the economy. I suppose the way he sees it, voters would place most of the blame on Republicans. However, this is not a time for politics.

Krugman's conclusion:

"The question for the next few days is whether plunging markets and urgent appeals from big business will stiffen the nonextremists’ spines. For as far as I can tell, the reverse-Dixiecrat solution is the only way out of this mess."

A "reverse-Dixiecrat solution is the only way out of this mess"? I don't think so. The damage in the interim would be immense.

Instead, how about both sides attempting to control their inflated egos and engaging in round-the-clock talks until a settlement is reached. The alternative is disaster.

Who blinks first? Who is to blame? Who cares.

Settle it.

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