So, phrases like "there is a lot of forced liquidation" and "it's only one rating agency; if others follow that would be a bigger problem," (from The Wall Street Journal) are making me grind my teeth today. This is not because the economy is breaking in a fundamental way that we have not seen in my lifetime, but because, and I say this with a fondness for conservatism as an ideal, this entire fiasco is a politically manufactured event that resulted from, as Sen. McConnell put it, placing the number one priority on making sure Obama is a one-term President. I'm not saying the Republicans wanted to trigger a depression, which we might be on track for, now; but I am saying that you don't set a political goal as priority number one as the country slowly extracts itself from a recession.
Let me also be clear that I wasn't entirely against the idea of using the debt ceiling as a wedge. We've known for over a decade now that we needed to control certain elements of our spending that were out of control, and instead of controlling that spending we increased it over the last 10 years and instituted a series of deep revenue cuts which magnified the problem. Then, when recession hit, we spent our way out of it, further rubbing salt in the wound. We needed a political wedge, but when a reasonable plan, or at least an excellent start to one was worked up by Boehner and Obama, that should have been where we planted the flag. Yes, we still needed more work, but it was the first time I'd heard someone admit that we needed "both parties taking on their sacred cows." That quote is from Obama's address to the nation. Boehner was, at one point, willing to discuss such a radical plan, not because it was good politics for either party, but because it was good governing and the kind of compromise that benefits the nation.
The Tea Party, however, forced his hand. A compromise could be seen as Obama "winning," and first-term Tea Party Republicans would almost certainly be in jeopardy in their first re-election bids. They would never sign on to such a deal.
Revenues were a sore point because many had signed oaths that they would not raise taxes, and even closing tax loopholes was seen as a violation of that pledge, regardless of the fact that massive tax cuts constituted a defacto increase in spending which it was impossible to account for without pillaging critical services.
Now, we have S&P saying that Washington's unwillingness to address revenue shortfalls was central to their downgrading U.S. debt. I've addressed, previously, why such a move was disastrous and why it was critical that we avoid it. Yet, here we are. The Tea Party and revenue oaths brought us here, and there's no contingency plan. In a decade or two, we'll recover from this. We might see very hard times until then, but we'll recover. Americans are resilient in the face of adversity, but I just wish we hadn't been forced into that adversity in the first place.
I'm a moderate who really lives on the Democratic side only by virtue of a handful of social issues. And yet, here I am: forced to view the current batch of Republicans as, quite literally, the enemies of the value of my currency. I would really like them to think about that, but I doubt it's going to happen.
There's a pattern to the Obama Presidency. Health care legislation was an omen. Obama compromised deeply out of the gate, scuttling the plan for a single-payer system on-par with Canada or the U.K., where health care costs are around half of what we spend in the U.S., per capita, for far less coverage. Instead, he proposed an extremely conservative, market-driven, insurance-based approach where existing insurance companies would control most of the system (for an excellent, point-by-point rundown of the health care legislation, see PBS's breakdown, which I've discussed previously in early 2010). So, what did conservatives, knowing that health care is actively bankrupting the U.S., do in response? They pledged to repeal this icon of socialism (!), with no alternative plan for the future of health care in the U.S., which would return us to a state where we would be the only wealthy nation that didn't have a comprehensive approach to health care.
The pattern is that Obama tries to compromise, but the goal of his opposition isn't legislative. Whatever line he draws in the sand, no matter how deep into conservative territory it is, that is the battle line, and Republicans are not allowed to cross it, even if they would have done so before Obama got there. That's not governing. That's not even effective politics. It's just mindless antagonism.
As a result, there's only one thing to call the resulting recession (or depression or whatever this becomes): The Tea Party Recession. This is the outcome that the Tea Party fought for. This is the tearing down of the status quo that they desired. It might well achieve the goal of Obama being a one-term President. We might end up with President Romney (essentially the architect of the heath care plan we ended up with) as a result. But ultimately, this economic result must be the sign that they carry along side their other political slogans. They need to own this result because they fought for it.
As a side note, we're not going to solve this problem until we reform voting in the U.S. Plurality voting (where everyone gets to vote for one option and the largest number of votes for any one option wins) is broken. It's been demonstrated mathematically and in practice that it forces a two-party system. If we want to get away from polarizing politics, we need strong parties that represent the spectrum of views held throughout America. We need to dump our polarizing voting system and institute something like an approval voting system (where everyone votes for every option they like, and the largest number of votes for any one option wins). There are other options to be sure (from Instant Runoff Voting to much more esoteric systems), but which option we choose isn't the concern. Changing the voting system is not a solution, but it's the right first step. If we did that, the Tea Party would be a vocal fringe that the Republicans wouldn't be saddled with. There would actually be a Socialist Party on the left, and compromising with centrist Democrats wouldn't be seen as a slippery slope toward the far-left, because there's a political buffer there.
The next step, of course, is to change the way we seat members of Congress, but a more party-representation model is probably not going to be helpful until we first address voting.
So... can we start working on this? Can we move the ball forward now that the current system has been proven poisonous?