The Failure of Mutually Assured Destruction

For decades, the Soviet Union and the United States held each other at bay in an uneasy stalemate. It was an active, “hot” war despite the “cold war” moniker, and each side lose thousands of troops. But it never broke into a nuclear conflagration, because each side realized the destruction that would come from it. And that once begun, it could not be undone. The Soviet and American leaders were, in a sense, much alike. Neither side would risk it, though both got very good at the brinkmanship involved.

This concept does not work at all if one side are suicide bombers. They plan to die; it’s merely a question of doing the most damage on the way out.

There have been about half a hundred debt ceiling increases since the concept was put in place. The original concept was created in 1917 to control Democrat Woodrow Wilson’s spending, specifically to protect the brand-new concept of “taxpayer.” Wilson’s initial tax rates, after the 16th Amendment made them constitutional, were 2%, then  3%, then  quickly up to 77% — and the idea began dawning on people that some protection was appropriate.

The Roaring Twenties happened when taxes — and government spending — were vastly reduced. The Depression in the 1930s was exactly the opposite.

Debt Ceiling Compromises

But debt ceilings and budget measures really got going when President Nixon refused to spend all the money that Congress wanted him to in 1974. That had to end, and it did. From that point on, the debt ceiling has been frequently used to force concessions on spending, either between the two houses of Congress or between Congress and the President. That was what happened in 1979, when the Democratic Congress forced Democrat Jimmy Carter to agree to review spending and budgeting processes. In the subsequent weeks, the Treasury screwed up its technology and failed to pay Treasury bills on time.

Most of the time, the party refusing to raise the debt ceiling has been the Democrats, not that this matters much. A deal was always ultimately reached, because the president valued the US economic stability more than his personal agenda.

For the first time, the old “cold war” style of brinkmanship no longer works. We have a president who is willing to inflict pain upon the country as a negotiating point. A failure to raise the ceiling does NOT automatically mean that the US would default on debt payments — but President Obama has trotted out rationales on why he would do this anyway. For example, that other countries would look down on us if we didn’t do all the spending we planned and took care of our “needy” (which often translates to government employees).

So, we have the financial equivalent of a suicide bomber who does not care about the consequences. The consequences of such a course of action would be severe, and in the face of realization that we have a president who would do this intentionally, the Republicans folded.

While many have correctly discounted the notion of a default being automatic, I think they they are not appreciating that President Obama was planning on it to force the hands of his “enemies.”  Unfortunately, that enemies list apparently includes the American people.  Hard to imagine, but the evidence is abundant. And now we’ve seen that this process was evidently plotted out months ago.

My Prediction

Where can we go from here? I will make a specific prediction. This morning, Jim at Finding Ponies wondered:

The administration bothers me a bit. I’m almost convinced that the administration so wanted to win so bad that it was willing to default and risk the credit rating of the country to do so. Again, you don’t win in these things. You execute and compromise to get to your goals.

Obama did win on this, because he was willing to do exactly that. There was no meaningful “compromise” it seems to me.

So what has been settled is the fact that, if you are willing to actually do it, whether “it” is kill the puppy, drive into the other car head-on, pull the trigger, push the button … you will always win such contests.

There is now no way to force the county into fiscal responsibility. Not with Obama in charge, and the media protecting him. This episode proved that conclusively. I predict that:

  • there will be no further threatened shutdowns, and thus
  • no repeat of this fiasco with him in office. And
  • no serious restraints on spending, unless fiscal conservatives (not the same as Republicans!) can get control of both houses of Congress.

===|==============/ Keith DeHavelle

  • Citizen Tom

    Obama may not like us, but try to convince the corporate news media of that. Try to convince the Senate.

    Since the corporate news media is owned by the big corporations — and the rich — we have to wonder whether they hate us too. And our senators? Who owns them? I fear our elites have become something I don’t know how to describe, but not very nice is a good start.

  • http://DeHavelle.com Keith DeHavelle

    With both houses, they’d have a shot. Otherwise, the rails are already greased to slide a “doomed from the get-go” narrative in place, in my opinion.

    ===|==============/ Keith DeHavelle

  • Jim Fister

    One decent strategy would be to continue to threaten shutdowns because the pettiness of the administration would turn people off. Even if it hurts the R’s in the polls, the fatigue for the administration could push the country to vote for the non-incumbent party. It’s a faint hope, though.
    JimF