Government Shutdown Press Conference: In Which President Obama reassures the media, “We’re not turning into Greece! Really! I think. Umm…uh…I hope.”
So in the light of the fact that the US federal government has not been operating for over a week, Obama gave a speech yesterday and then took questions from the press.
The message of the speech was simple: Republicans, this whole government shutdown thing was your idea. It’s now plunging our economy right back into the toilet again. Pass a damn budget already. And don’t say”we won’t pass any budget that’s got Obamacare in it” because that’s not negotiating, that’s holding the entire country for ransom. Also raise the damn debt ceiling, don’t try to use that as a bargaining chip either, because if the debt ceiling is not raised the US will go into default. Which means:
It would disrupt markets, it would undermine the world’s confidence in America as the bedrock of the global economy, and it might permanently increase our borrowing costs which, of course, ironically would mean that it would be more expensive for us to service what debt we do have and it would add to our deficits and our debt, not decrease them.
In other words, it would turn us into Greece.
(I hear there are some very pretty barrier islands off the coast of North and South Carolina. Perhaps the U.S. can put a few up for sale? No? Well, how about Amtrak?)
(Now, a country defaulting on its loans isn’t always the worst thing in the world. Sometimes countries seriously consider it, like when they’re faced with a shitty choice between defaulting and submitting to austerity requirements that essentially shut down the government. But of course, that’s not what’s happening here.)
Obama then took questions from the press. This part was much more educational.
Julianna Goldman from Bloomberg asked the question most important to the type of people who use Bloomberg terminals, i.e. investment bankers and other professional financial speculators:
You laid out the economic consequences of default, but if we were to get to that point, would you prioritize and pay bondholders first to maintain the semblance of credit or — rather than Social Security recipients or military servicemen and -women? And how would you go ahead and make that determination?
You can just picture all the bond traders out there, fingers hovering over their “sell” buttons, all those Wall Street assholes who really believe it’s a mark of financial sanity if Obama says “let’s pay the bondholders first.” Because we must always and forever prioritize the holy bondholders! It’s what “the markets” want!
Obama gets this deer-in-the-headlights, oh-shit-I-have-to-answer-this question? look, and takes some time replying. It’s clear from his answer that he really has no idea what the government would do if it got to that point, and is hoping to never have to think about it. But it also seems most likely that he won’t pay the bondholders first, that he’d rather prioritize Americans who desperately need the money over foreign financial speculators. His logic is that if the US goes into default on its loans, its creditworthiness will be shot to hell and it’ll be charged higher interest rates, regardless of who gets paid off first. He uses the metaphors “no silver bullet” and “no magic wand”, which, in this time of potentially catastrophic economic crisis, inevitably make me think of vibrators.
He urges Congress to put re-funding the government to a simple, up-or-down vote:
[…] let every member of Congress be on record. Let them — let them vote to keep the government open or not, and they can determine where they stand and defend that vote to their constituencies. And let them vote on whether or not America should pay its bills or not. And if, in fact, some of these folks really believe that it’s not that big of a deal, they can vote no.
And that’ll be useful information to — for voters to have. And if it fails and we do end up defaulting, I think voters should know exactly who voted not to pay our bills, so that they can be responsible for the consequences that come with it.
Of course, House Speaker Boehner also thinks that’s useful information. And that’s exactly why he won’t let it come up for a vote. Because if he did, they’d vote to re-fund the government. And that would mean the far-right Republicans who engineered the shutdown would achieve neither of their two goals:
1) To show the Democrats who’s boss. Oh, they say it’s about how evil Obama’s healthcare plan is, how they’re willing to shut down all kinds of important government services because they think Obamacare is a socialist train wreck of a bill that will destroy the country, but let’s be real here. The last big game of political brinksmanship we had was over the “sequester”–a series of destructive across-the-board government spending cuts that would automatically take place if the two parties couldn’t agree on a deficit reduction bill in time. At that time, the Republicans’ big sticking point wasn’t so much Obamacare as the prospect of tax increases and cuts in military spending.
The “sequester” went into effect. Which brings us to the Republicans’ other goal:
2) To shut down the government.
For a long time now, the Republican party has denounced any government spending that looks like it might help people. The campaign that runs ads using “spending” as a dirty word wasn’t going to really mind across-the-board spending cuts as a whole, even if some of the cuts kill jobs in the district of this or that Republican Congressperson. It’s the same with the government shutdown. As influential right-wing fundraiser/lobbyist Grover Norquist put it, they want to reduce government “to the size where I can drag it into the bathroom and drown it in the bathtub.” Right now, key economic data is not being published, toxic waste sites are not getting cleaned up, and programs that give poor people the money they need to feed their young children and heat their homes in winter are very close to running out of cash. (See: “The ‘non-essential’ parts of government that shut down are actually quite essential” and “How the Shutdown Hurts the Poor”.) When was the last time you heard a Republican congressperson speak favorably about any of that stuff?
Back to the press conference. Mark Landler from the NY Times talks about how Obama had to skip a going to a big trade summit in Asia because of the shutdown. He asks,
Does China benefit from the chaos in Washington?
I think, for the first time, that maybe it’s a good thing we have so many in our media willing to stoke American fear about China becoming the dominant world power. Because without that fear, we might never get anything done.
Then again, maybe “getting things done” is not such a good thing:
And the one that occurs to me is the trade deal that you’ve tried to do in Asia. The leaders today announced that they still want to wrap it up, but they no longer are able to say they want to wrap it up by the end of this year.
Had you been there, do you think you could have gotten that additional push?
The trade deal he’s referring to is the proposed Trans-Pacific Partnership (TPP). As the name suggests, it’s pretty crappy. So far the text of it is classified. But from what we can tell so far, like every other major free-trade agreement in the past few decades, it serves to make it easier for corporations to offshore jobs from the US to countries with low wages and few to no laws protecting workers, while beefing up enforcement for laws about intellectual property, which primarily benefit corporations.
Obama says that his not being able to visit didn’t help to close the trade deal, but that
they understood that the most important thing I can do for them and the most important thing I can do for the bilateral relationship and America’s reputation is making sure that we reopen our government and we don’t default.
Richard McGregor of the Financial Times would like to, as the name of his newspaper suggests, get back to “the issue of debt prioritization”. Obama tells him and his readers to wait for Thursday, when Treasury secretary Jack Lew will make a formal presentation on the mess. So now all the dollar-watchers and Treasury-bond-watchers can mark Thursday down on their calendars. It reminds me of back when I used have a side business trading currency. The big central bank honcho makes a speech, the herd jumps accordingly, and if you can correctly guess which way the herd jumps, you’ll make a pile of money in short period of time. It’s all lots of fun–if you’re financially secure enough to have money to lose on trades. If you’re not…well, food stamps are funded through the end of October. Head Start’s had to turn away an estimated nineteen thousand children from their preschool program. In part, how hard you’re hit will depend on where you live: Georgia’s Meals on Wheels program has calculated that it has enough federal money on hand for fifteen days of food. In Connecticut, officials have warned that funds for their low-income energy-assistance programs, which help the poor heat their homes, could run dry in November if the shutdown continues. In western Massachusetts, more than 30,000 households could be left without heating assistance because of the shutdown.
(If this shutdown continues, will the first deaths be reported as such? Or will it be a second-page article in a small town’s local paper, reporting that such-and-such old person froze to death at home?)
Stephen Collinson of Agence France Presse asks about fighting terrorism in Africa:
And if we’re going to see U.S. military operations all around the continent, how does that square with your contention that America cannot be at war forever?
President Obama’s answer is surreal.
We’ve got to engage in a war of ideas in the region and engage with Muslim countries and — and try to isolate radical elements that are doing more damage to Muslims than they are doing to anybody else. We’ve got to think about economic development because although there’s not a direct correlation between terrorism and the economy, there is no doubt that if you’ve got a lot of unemployed, uneducated young men in societies, that there is a greater likelihood that terrorist recruits are available.
But where you’ve got active plots and active networks, we’re going to go after them. We prefer partnering with countries where this is taking place wherever we can, and we want to build up their capacity, but we’re not going to farm out our defense.
Well, the first thing is fine–talk is cheap. But economic development? Sending troops to “go after them” in yet more countries? Why is this the only thing we ever have money for anymore? To prevent terrorist attacks that kill large numbers of people at once? Please. Tell that to the CDC.
So, to summarize: winter is coming and we’re in a recession. If the government shutdown doesn’t stop by November 1st, we run out of money for poor people’s groceries and much, much more. If the debt ceiling isn’t raised by November 1st, the US is no longer able to pay its bills, and the global financial markets tank. And the kicker: there is no real economic reason for any of this to be happening. Yes, the US has a big deficit, but there are still plenty of ways the country can pay down its debt without going into austerity mode, like cutting the bloated millitary budget, or imposing a small percentage tax on financial speculation. And shutting down the government is just stupid, if you care at all about the economy. If what you really care about is looking tough to the hard-liners in your party, it makes more sense. But it’s still really stupid.