Tuesday, October 8, 2013

The US shutdown and default crisis: Why The Tea Party's tactics would make Ayn Rand turn in her grave

We've been here before. There's an now-annual sense of deja vu in Washington whenever a budget vote in Congress comes up. Taking advantage of the tripartite political system, The Tea Party's hold on the Republicans in Congress means that they threaten to hold the government finance "hostage" to their demands whenever they have the opportunity. Democracy has nothing to do with it: it's called extortion.

I wrote previously about The Tea Party last year, when they had the chance to use "guerrilla tactics" to make their point on a national stage.

Until now, threatening financial paralysis has generally been a successful strategy for them; on almost every opportunity, The Tea Party have been able to wrangle some kind of compromise out of Obama and the Democrats who control the Senate.

But this time was different. The Tea Party's demands were over the repeal of a piece of legislation close to Obama's heart - The Affordable Care Act - and Obama decided that enough was enough.

As the legislation had been already passed, was law, and the Republicans had lost the presidential election, Obama clearly thinks that right is on his side. Not only that, but the other reason that Obama has stuck to his guns and allowed The Tea Party to carry out their initial threat (to refuse to pass the annual budget at force a partial closure of government) was that it would set a dangerous precedent. it would mean that any faction that had effective control over one arm of the legislature could hold the rest of government hostage to their demands.
Obama may as well have said: "I don't negotiate with terrorists". Morally, this is how low The Tea Party has sunk.

The "hostage crisis" and the "nuclear option"

So Washington effectively has a "hostage crisis" on its hands - the government being "held hostage" by The Tea Party, a group of ideological extremists. The shutdown that afflicted President Clinton's government for three weeks in winter of '95-'96 was the last time this happened.

But this occasion is much more serious. For one, the Clinton shutdown happened through a fit of pique by Newt Gingrich, the Republican Speaker of the House. This time, the motivation is about the repeal of an existing piece of legislation. Worse, the "hostage crisis" is more immediately time-dependent. While holding government finances "hostage" is the first stage of the crisis (and can in theory go on indefinitely until one side caves in), the impending vote of extending the national debt is a matter of national and global urgency. The Tea Party refusing to pass this bill is the "nuclear option".

So now we're in a game of chicken, heading towards an unprecedented financial train-wreck.

In an odd way, this reminds me of the closest moment that the world came to a real nuclear apocalypse, during The Cuban Missile Crisis. The "Thirteen Days" of that crisis show a parallel with Nikita Khruschev's tactics of attempting a fait accompli on the USA by placing nuclear missiles in Cuba, forcing the USA to recognise Cuba's independence. This backfired, resulting in a stand-off of wills between the two premiers. However, both leaders were rational enough to never seriously consider the "nuclear option" for real. Khruschev backed off and was satisfied with concessions from Kennedy that left Cuba's status protected by the Soviet Union.

The US fiscal crisis of 2013 seems fronted by two sides intent on testing each other's will, to the brink, and even beyond it. In other words, while the two belligerents in The Cuban Missile Crisis were still fundamentally rational (though the USA was paranoid, and the Soviet premier's tactics erratic), in this US fiscal crisis the two belligerents seem conversely deluded and/or irrational.

An accidental apocalypse?

A piece by The New York Times explains how a default may well happen almost by accident, in much the same way how the leaders involved in The Cuban Missile Crisis feared nuclear war could be provoked in spite of their intentions. As the article explains:

  "The more Wall Street is convinced that Washington will act rationally and raise the debt ceiling, most likely at the 11th hour, the less pressure there will be on lawmakers to reach an agreement. That will make it more likely a deal isn’t reached"

While the rhetoric from the Speaker of the House, John Boehner, seemed to soften before the weekend, it had done an about-turn by Sunday. Now firmly in the clutches of The Tea Party, Boehner has switched the blame back on Obama's unwillingness to compromise (i.e. cave in) over The Tea Party demands. 

In the crisis over the impending default, it appears that both sides are hardening their stances as they get closer to the deadline, rather than the reverse. Obama refuses to budge because he believes has conceded enough to The Tea Party in previous stand-offs; while the The Tea Party refuse to budge because they think that Obama will concede, because he has done before.

Apart from the game of chicken going on, The Tea Party have three main motivations for their refusal to budge:
1) the lack of panic seen on the financial markets (as also mentioned in The New York Times article), which they see as a sign that...
2) they think the US government is bluffing, as it has other options that could delay the default, and in any case...
3) they think that nothing major will happen even if the US did default on its financial obligations.

The hardening of Boehner and The Republicans' stance seems to be now based mainly on point number three: they believe that nothing major will happen if the US defaults on it's financial obligations. 
This looks like an odd turn of strategy. Now their approach appears based on dismissing the "crisis" (that they started) on the other side's scaremongering. In other words, they have created a crisis situation, then just as suddenly declare that there is no crisis; the "crisis" in all in the heads of the Democrats. 
Trying to get your head around the irrationality of the strategies going on is enough to make your head spin. After Boehner declared before the weekend that he wouldn't let a default happen because the consequences would be too terrible to contemplate, his side now seem to have convinced him that nothing will happen if the default deadline is passed. 
This tells you how completely irrational The Tea Party are. Their rationale makes no sense at all.

The financial stability in the markets can't last forever if nothing changes; panic is likely to hit the markets by the end of Friday if (as expected) no-one budges. This may then make one side think twice; but just as likely, it may not. The Republicans have three reasons for not changing their mind, as I mentioned.
While, theoretically, the White House may have options it could use if the US defaults, it is adamant that it is Congress' responsibility to deal with the debt obligations, not the White House's. 

The US defaulting on paying off existing financial obligations (debts) is unprecedented, and for this reason no-one is sure what would happen. And this uncertainty is what is fueling The Tea Party's ambivalence. The appalling irresponsibility of this behaviour barely needs mentioning: like pressing the "nuclear button" just to see if the missiles really would reach their targets. 

This is the behaviour of psychopaths. The President is staring into the face of a group of people who are devoid of fear of the consequences, and lack empathy towards the wider effect of their actions on their own people.

It is for this reason that a default looks more likely now than it did several days ago.

Ayn Rand's disciples following "Atlas Shrugged" too closely

This reminds me of the plot of "Atlas Shrugged", albeit with a hideous twist of fate. In Rand's seminal novel, it was the unions that brought the country to a standstill, encouraging enterprising captains of industry to detach themselves from the economic dysfunction and strike up a new "capitalist utopia", free of interference.

In 2013, The Tea Party seem close to emulating what the unions did in Rand's novel; paralysing government and holding the entire country to hostage.
It seems The Tea Party want to make government as dysfunctional as possible in order to bring about the collapse of government; to make their distrust in government a self-fulfilling prophecy. They are the "Trojan Horses" of the democratic system they claim to hold dear. Fascists in the inter-war period did much the same thing.

Rand may not have been a huge fan of "democracy" as such: she saw it as the tyranny of the majority. But Rand herself would surely never have condoned the tactics that one extremist faction, The Tea Party, seem intent on carrying out till the bitter end.

No wonder some moderate Republicans also call The Tea Party "The Taliban"; they neither care about their own fate or that of the countrymen they claim to love. 

Five years on from the horrible autumn of 2008 that brought about the first financial crisis, some members of The Tea Party seem keen to finish the job.

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