Belmont Club

Going to the Well

Peter Roff at US News and World Report argues that politicians are like cats. You can’t tell from the caterwauling whether they’re fighting or mating. In particular he argues that neither the administration nor the “mainstream” Republicans really want a ‘government shutdown’. Both simply want to use it as a bargaining chip — “crowbar” might be a better word — to extract political gain. They’ve set it up so when the crisis is resolved they’ll have more public money than ever before.

Truth be told, Obama and Reid want a shutdown – unless they get everything they want. That means not just the survival of Obamacare but the busting of the spending caps so that the federal spigot can be turned back on and the money can start flowing once again to the constituent groups that are such an important part of the Democrat’s electoral coalition. Anyone who doubts this should just look at the way the White House has been handing out waivers on Obamacare and to whom. In the political sense, they’re the next best thing to cash.

There are some in the conservative coalition who really do want to force a government shutdown as they see it as the only way, the last gasp if you will, to stop Obamacare before it starts to be implemented. What most of the Washington punditocracy won’t tell you is that the White House, Harry Reid and the Democrats want a shutdown just as much if not more They see it as the pathway back to control of the House after the 2014 election, which would allow Obama to finish his term much the same way he started it – with no checks and balances on him whatsoever.

After all that’s what they live on: public money. The shutdown process is as simple as it is cynical. While much of the government, like Homeland Security, keeps going for the duration, any resulting inconvenience will be pointedly inflicted on the public. It’s like waterboarding the taxpayers, until they cry “uncle”  and give up one more bit of control over their wallets for the privilege of getting their money unfrozen and their debts increased. What could go wrong?

Megan McArdle despite her long career as a pundit never quite “got it” until she looked at the Detroit pension plan. McCardle wondered why the pension trustees were handing out “bonuses” to the recipients when all investment logic demanded that the funds in their care be reinvested. Being a logical and decent person McArdle cast around for an explanation without success.

I literally slapped my forehead while reading some of the explanations that the trustees offered for their behavior. The spokesman for the trustees has the nerve to complain about the actuary’s report that outlines these wild deviations from sanity. Here is how she justified draining the pension fund assets:

She said that the trustees were administering benefits that had been negotiated by the city and its various unions and that they had established an internal account to set aside “excess earnings” that would cover the cost. She said it was appropriate for retirees to benefit from market upturns because they had paid into the pension fund, so their own contributions had generated part of the investment gains.

“People were having a hard time, living hand-to-mouth, and we thought we would give them some extra,” Ms. Bassett said.

It does not seem to have occurred to Ms. Bassett, or the other trustees, that people would have a very hard time when the pension that they were depending on went up in smoke.

Then she got it, like a light coming on in her head. The pension trustees were draining the pension because they were so sure, so absolutely certain that the taxpayers would have to refill the pot they felt safe helping themselves to whatever they wanted. She wrote:

they were thinking the pensions would have to be paid, one way or another. After all, it’s in the Michigan State Constitution. So they could pay out bonuses, please various constituencies, and then force the city or the state to make them whole when it all came tumbling down.

What could go wrong? To everyone’s amazement something completely unprecedented happened: City Hall went broke. “They didn’t reckon with the possibility that the city would simply run out of money, and the state would decline to step in, leaving them with no deep pockets to make up for their mismanagement.” And so the Detroit pension is bust unless they find something they can siphon off to replenish it.

This is exactly the game the administration is playing. However, the one danger the Obama administration, smug behind its wall of tame media and government bureaucracy, has not provided against is an emergent event like that which crushed Detroit. What if the money really runs out? What if this time they go too far?

The insiders are probably laughing at the very idea of limits, saying to themselves that no you can’t go too far. The Fed can always print more money. That yes, have to raise the debt limit, because we always did. That sure it’s going to happen because it always has. And so forth. Until one maybe one day it just doesn’t happen.

Is this the day? Nobody can say for sure. But there’s one thing to bear in mind. President Obama was all set to strike Syria on his own authority until suddenly he found that he couldn’t. He never saw it coming. One day his foreign policy car wouldn’t start. Oh well, he has tried to console himself by arguing that however diminished he has become abroad, he is still a giant at home. Maybe he is. But then again maybe not.

Only one thing’s for sure. When the music does stop, nobody — least of all the administration — will see it coming.

PS: Readers may want to look at an experimental app I threw together which lets the user examine every bill in every state of the Union by subject. It also lets you look at the voting records of each legislator. Choose your state, then type a search term in “Find in Bills” and get a list of bills pertaining to that subject. Then if you click on a bill, you are taken to a screen which reads out the sponsors, description and vote record of the bill, right down to the commitee votes.

Try clicking on a vote row see the individual voting record. Click on an individual legislator and see his entire voting record for the bill search set. You can also go direct to the Legislators tab and find a legislator and click on him/her and get a similar voting record.  It’s useful in a cool kind of way, though I have yet to think of a business case for it.

Did you know that you can purchase some of these books and pamphlets by Richard Fernandez and share them with you friends? They will receive a link in their email and it will automatically give them access to a Kindle reader on their smartphone, computer or even as a web-readable document.

The War of the Words for $3.99, Understanding the crisis of the early 21st century in terms of information corruption in the financial, security and political spheres
Rebranding Christianity for $3.99, or why the truth shall make you free
The Three Conjectures at Amazon Kindle for $1.99, reflections on terrorism and the nuclear age
Storming the Castle at Amazon Kindle for $3.99, why government should get small
No Way In at Amazon Kindle $8.95, print $9.99. Fiction. A flight into peril, flashbacks to underground action.
Storm Over the South China Sea $0.99, how China is restarting history in the Pacific
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