Sunday, September 29, 2013

I'M SUPPOSED TO BE REASSURED BECAUSE A GUY FROM GOLDMAN SACHS THINKS GOP RATIONALITY WILL PREVAIL?

Ezra Klein thinks it's good that House Republicans are throwing a fit now, when the almost certain consequence is a government shutdown, rather than waiting until we're on the verge of a debt default. As evidence that this is good news, Klein brings in ... a guy from Goldman Sachs?
Moving the one-year delay of Obamacare ... maximizes the chances of a shutdown but makes a default at least somewhat less likely. If a shutdown begins Monday night, Republicans and Democrats will have more than two weeks to resolve it before hitting the debt ceiling.

As Alec Phillips put it in a research note for Goldman Sachs, "If a shutdown is avoided, it is likely to be because congressional Republicans have opted to wait and push for policy concessions on the debt limit instead. By contrast, if a shutdown occurs, we would be surprised if congressional Republicans would want to risk another difficult situation only a couple of weeks later. The upshot is that while a shutdown would be unnecessarily disruptive, it might actually ease passage of a debt limit increase."
Yes, Phillips actually wrote that:
if a shutdown occurs, we would be surprised if congressional Republicans would want to risk another difficult situation only a couple of weeks later.
What shred of evidence is there that crazy-caucus Republicans are ever motivated by an aversion to bad publicity and plummeting polls and other manifesttions of a "difficult situation"? As Ryan Lizza noted a few days ago, the craziest House Republicans live in overwhelmingly Republican districts, which means, given the nature of modern Fox-crazed Republican voters, that there's no chance whatsoever that the crazy caucusers be punished for any level of extremism. The craziest senators -- led by Ted Cruz and Mike Lee -- are also from overwhelmingly Republican states. What's to prevent them from just holding a gun to America's head all over again when we reach the debt limit? If anything, their crazy voters would be inclined to punish them for shying away from a second hostage crisis in a month.

Sorry, Ezra -- you're giving us pearls of wisdom from a Goldman analyst as if he's supposed to seem like an unimpeachable authority. I see the source of that prediction and think, This is a guy who's going to make gobs of money for the rest of his life no matter whether he's right or wrong. His company will make gobs of money forever whether it's right or wrong. So, no, this doesn't impress me.

****

Klein goes on to write:
One way a shutdown makes the passage of a debt limit increase easier is that it can persuade outside actors to come off the sidelines and begin pressuring the Republican Party to cut a deal. One problem in the politics of the fiscal fight so far is that business leaders, Wall Street, voters and even many pundits have been assuming that Republicans and Democrats will argue and carp and complain but work all this out before the government closes down or defaults. A shutdown will prove that comforting notion wrong, and those groups will begin exerting real political pressure to force a resolution before a default happens.
That makes no sense. Klein's "comforting" scenario is a situation in which Republicans would be saying they were avoiding a shutdown so they could concentrate on a debt limit hostage crisis. They would be shouting from the housetops, We didn't blow up the government now because we've planted explosives under the global economy, set to go off a couple of weeks from now. Why would corporate CEOs find that comforting, or lulling? And even if they thought it was just a bluff, as the debt deadline approached, wouldn't they rally and apply plenty of pressure even if they had been lulled? They're corporate CEOs, for crissake. They're used to getting what they want from government.

The business community will step in no matter what, whether or not there's a shutdown crisis first. This intervention will be forceful. The question is whether it will work -- crazy caucus Republicans are so crazy they may not respond even to our Galtian overlords. But that won't depend on whether there's a warning shot in the form of a shutdown crisis.

8 comments:

Matthew Stephens said...

Remind me, was Ezra Klein ever not naive? I vaguely remember reading Pandagon back in the day, but now that he's officially a pundit, I just don't find him worth the effort...

As for the GS commentator, you're right: he'll get rich regardless of being right or wrong, so f*&k 'em.

Dark Avenger said...

His naivety is a feature, not a bug. He's going to go down in history as the only UCSC graduate who smoked too little pot during his time there.

Victor said...

This 'Confederacy of Seditious Dunces' makes Newt's group back in the 90's seem like paragons of rationality.

They're actually looking forward to both a government shutdown, and not raising the debt ceiling.

They're like pyromaniacs with lighters in both pockets, two cans of gas, and two piles of wood, tempting them.

Leslie Galen said...

I think that Ezra is trying to say that Wall Street isn't panicking because they really do think the R's will back off. Wall street thinks that they have the leadership in line, and that the tea partiers will ultimately lose. It's not the worst argument I've ever heard; if the markets really thought that the debt ceiling was in danger, the markets would be chaotic already.

Of course, there's always next week. For reasons passing understanding, I've been reading the #tcot twitter thread, and it's a suicide pact. Maybe the nice guy at Goldman (not to mention Ezra) should try reading that stuff.

brett said...

" no chance whatsoever that the crazy caucusers be punished for any level of extremism"

I don't know. I think they stand a chance of having the press turn against them, of upsetting the fake balance the media offers that has given them so much power. I don't think it is a good chance but I think it is nonzero.


Their power would shrivel under honest media coverage, even if they wouldn't loose seats right away.

aimai said...

This is typical Ezra: he tries to apply a set of logical propositions to the behavior of a group of people, in this case the Republican Tea Party caucus, which does not operate logically. They are not embarrassed by what they are doing. They do not want to "avoid" being associated with the shut down. Their goals are not his goals. So his logical attempts to reason for them and with them are always doomed to sound absurd.

Examinator said...

the problem with empowering the ignorant. They don't know that they're ignorant. It's a bit like floating down an African river admiring the *free* Hippos enjoying their freedom. Ahhh beeyoutiful big fat and lazing in the river.

NB Hippos kill more people each year that any other 3 groups of wild animals together in Africa.

Even Zoo carers are concerned about getting into the pens with Sumatran pygmy hippos! They are THAT unpredictable and dumb.

PS I think the logo for TBers and Texan Republicans should be the Hippo not the elephant.

Examinator said...


Steve is correct if someone ran a corporation the same way the republicans say they want to run the country they would either send themselves out of business or become a predatory buyout target for the likes of Bain. Who would strip the assets capitalise the debt used to buy it out and claim the tax loss. or sell the loss on. ...and guess who pays for that yup the wage earners.