Monday, October 7, 2013

Where's the Good Cop in the Standoff? The Debt Ceiling, Gov't Shutdown, and Obamacare

President Obama is wrong about not negotiating. He already is already negotiating. It's just that the position he's taking in the negotiation is that he won't talk to anybody. It's really that he's not talking to anybody *yet*. But he'll talk if forced to. He's a stubborn and power-loving lawyer, but not an idiot. If he takes this to the point of idiocy, it's up to Republicans to undertake a PR program to show it for what it is. Regardless of all the talking John Boehner and the Republicans are doing, it's not enough. Republicans are not pounding hard enough on the federal debt problem and its relationships with the shutdown, with excessive regulation, with the debt ceiling, and with Obamacare costs.

The President says he won't negotiate this way so as to not establish a pattern? The pattern is already established. It was started in 1995, was confirmed in 2011 and has already continued. Sorry, Mr. President, but brinksmanship, grandstanding, and legislative guns to heads is very much part of the pattern for both sides. So come off the pretend pedestal and get real.

It's a pretty sorry position for the chief executive in the executive branch to take. The executive branch should be herding the supposedly childish legislators to the table and keeping them talking and establishing priorities and negotiable items, the way it is said that LBJ did. If an executive does that, he/she can then say "See, I was a good executive and did everything I could to move the process forward, get the sides together and solve the problem." The President's chance to say that is already gone. He's been an  obstructionist so far, and that's all.

Why Harry Reid and Barack Obama have not played any version of "Good Cop-Bad Cop" puzzles me. They're both willing to be seen as complete obstructionists. The key is making one of them feel enough heat that they're forced to talk to the sides and start some substantive deal-making.

In the present scenario the Republicans and John Boehner are missing opportunities to paint the President for what he is. However, it's a slightly long and complicated message. Some education of the electorate would be called for. It couldn't be done with one 10-second sound bite.

Of course John Boehner can be painted with the obstructionist brush also. But we should keep in mind what the mission is. The original mission is to slow down the rise in federal deficits and the accumulation of federal debt. And subsidiary to that is finding a way to stop or at least slow the damage of Obamacare.

The Democratic side says people like Obamacare. Well, yes, there are some good insurance rules and many givaways for consumers of medical services in the bill. Likewise there are government benefits in many other pieces of legislation. But the vote-buying and the handouts, if you will, are only half of the argument. The costs and inefficiencies to the economy, and forgone wealth and income creation, not to mention the future financial viability of the country and the by extension the world economy are on the other side of the argument. Just poll the Japanese and ask them if they wouldn't like to have seen some economic and banking decisions made differently starting in about 1989.

Again, the mission is based on the fact that the federal debt is too high, and it's rising too fast. And the projections for staying on this course show that this level of government is unsustainable.

That's for two key reasons. The debt cannot be allowed to rise to too high a percentage of GDP. Also, having fiscal policy very much out of sync with monetary policy creates market distortions, the effects of which are large, have long lags, and result in a lot of wealth and income not being created. But these last two issues have been explored by others and are widely known in reasonable economic circles.

The Democratic side essentially says Obamacare is law, it's court approved, the debate's over, let's move on, and we got our prize so keep your hands off it! Well, not so fast. Anyone who was paying attention as the law was being created and passed will recall that it was a highly flawed, and I would observe actually dishonest affair.

A low point was when then-Speaker Nancy Pelosi famously said "We have to pass the bill so that you can find out what is in it - away from the fog of the controversy." She wasn't referring to San Fransisco bay fog, but to DC fog. The catch is that the controversy was legitimate. The bill was rammed through the process.

The vote should have been held up, and time provided to read the bill and debate its points. Then the proper conferences should have been held to either craft something that was financially sound and market-oriented enough for Republicans to support or to kill the bill in that congress. Harry Reid and Nancy Pelosi may have to answer for their effective but defective guidance of the legislative process some day. I hope they do.

Later the Supreme Court gave Obamacare a pass, but with a wink and a kicker. The kicker essentially said that the law stinks but that the problem must be solved legislatively.

Which brings us to the present standoff.

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