Donkey, Elephant Play Chicken

Debt Ceiling Crisis Impends,

But Catastrophe Is Unlikely

Unless Sides Are Obstinate

The impending national debt crisis, now anticipated for August 2, nineteen days from today, is not taken extremely seriously by many Americans because of their lack of trust in our government and skepticism over the statements, particularly threats, made by public officials.

The risk, however, is more substantial than anxiety induced by the Doomsday prophet from California who predicted the world would end on May 21, 2011. The prognostication of fiscal disaster is about as credible as the firm budget pronouncement this spring by the administration that the City of New York would lay off the 4,100 most recently hired schoolteachers at the close of the school term on June 28. That forecast was repeated day after day in the tabloids, and may have induced some older teachers to retire, but it alarmed only the faintest of heart. This is New York.

In Washington, the widely publicized negotiations now taking place appear to have degenerated into a game of chicken, with each side maneuvering to place the blame for any loss of services or entitlements on the other. Part of the problem is that there are more than two interests at the table, the White House, and the Senate and House Democrats and Republicans. Each has an interest in the outcome, and their demands and requirements are not the same.

We believe that compromise is the obvious solution, with a package of measures disagreeable to all constituencies. That was the way the budget deal was worked out between the President and Congress that was announced April 8, which now seems like a long time ago.

We also observe that the President got credit (and poll points) for the budget agreement, even though it did not comply with the demands of what is called his core constituency. On the other hand, and we don't know exactly why this happened, Newt Gingrich ended up being widely blamed for the Federal government's partial shutdowns in 1995 and 1996. This came after his "Contract with America" campaign in 1994, which led to Republicans winning the House and Senate. "Uneasy lies the head that wears the crown."

Rule 20-E as it applies to politics is "Everything is personal." We don't know enough of the scheming within the Republican party intended to isolate the Speaker, but our sympathies are basically with people who are trying to put an arrangement together than with those trying to extract the maximum political gain from a potential Constitutional crisis by placing others and themselves at risk. Card games for high stakes have a romantic appeal to many Americans, but the nation's credit and standing in the world economy should not be jeopardized by elected officials who dislike government in general and would take advantage of any opportunity to weaken or discredit it.

What government's fiscal problems usually come down to is that people want more benefits for themselves and their businesses at lower costs than they are willing to pay. This is to be accomplished by slaying a devil named "waste", which often means what the other fellow is getting. When this combination of high rewards for low payments is found to be unattainable, as usually occurs, borrowing is the easiest way to postpone the reality of earning what you spend. This happens in households, in corporations, and in nations from Greece to other lands which are basically subsistence economies, often ruled by tyrants with large appetites.

We predict, without the gifts of a soothsayer, that impending disaster will be staved off, at least for a while, although we cannot foresee the machinations that will be relied upon to achieve that result. The immediate outcome of the dispute, however, will be diminution of the reputations of the squabbling parties, especially if they display excessive self-interest and righteousness in their public statements. In times of crisis, there is a tendency to support the President, especially when those trying to destroy him are unappealing and not particularly interested in the plight of the less fortunate.

We have no idea who the public will ultimately blame for whatever may or may not happen in the weeks to come. Much will depend on who the media choose to hold responsible. On one hand, a debt ceiling is like a rent stabilization level or earnings standard, which should resemble but not surpass inflation. On the other, if you really hate government, you want to take any occasion you can to keep it from functioning.

Ultimately, victory will go to those who are perceived as more moderate, which suggests the arbitration process in which both parties are coaxed into making their best and final offers, and the arbitrator must choose one of them, which is a powerful inducement to the parties to be reasonable, lest their offers be rejected.

To put it more simply, that is the equivalent in the home of having one child divide the cookie, or the slice of cake, and having the other then choose which slice he or she prefers. It promotes equality of sharing, which is accomplished on the basis of self-interest.

We watch the trains approach on the track, but unless politicians have become even more foolish than they have been, it is likely that a crash will be averted. Of course, in that situation, neither train will be able to get very far down the track, much less arrive at the next station on time.

Cuckoo Coupday

$125 Billion Spent,

What Do You Get?

Another Year Older

And Deeper in Debt

Day 69 without a budget - en francais, soixante-neuf.

The Battle of the Budget continues, with both the Senate and the Assembly acting as if time were on their side. Time does seem to be working to help Governor Paterson, who has included budget reductions ("poison pills" to the spenders) along with the weekly extender to keep the state operating without an approved budget for FY 2010-2011, which began on April 1, 2010, almost ten weeks ago.

The political issue at play is who will be blamed if the government, at least the part of it that does not affect public health and safety, shuts down. The last such near-death experience took place with regard to the federal government from November 14 through November 19, 1995 and from December 16, 1995 to January 6, 1996. The cause was a dispute between President Clinton and House Speaker Newt Gingrich over whether the legal limit on the national debt should be increased.

For the government to be able to pay its bills, the debt limit would have to be raised. Gingrich, the fiscal conservative, refused to do that. As a result, federal offices were closed nationwide and many functions involving the public could not be performed. The public blamed Gingrich and the Republicans for the shutdown. In January 1996, the Republicans relented and raised the debt limit to $5.5 trillion. BTW, today the national debt exceeds $13 trillion.

In the current budget war, Governor Paterson is likely to increase the pressure by including additional budget cuts in the weekly extension legislation. Under this strategy, the Senate and Assembly would either have to swallow the cuts or take responsibility for shutting down the State, which would displease, among others, the employee unions upon whose generosity the legislators feast to the tune of millions of dollars each year, and on whose phone banks the solons rely should anyone have the impertinence to oppose their candidacies for re-election.

Today marks the first anniversary of last summer's inglorious Senate putsch, in which Senator Pedro Espada, Jr., President and CEO of Soundview Health Network, and his sidekick, former Senator Hiram Monserrate, joined with 30 Republican senators to take control of the 62-member body. Monserrate redefected to the Democrats a week later, but Espada hung on for a full month, returning only when promised the Majority Leadership that he desired. One year after his successful insurrection, Senator Espada said today that he might not vote for another extender because he wanted the budget agreed to this week. The governor's cuts to the State's health budget also have an adverse effect on the Senator's business, Soundview. If Espada does not provide the 32nd Democratic vote, the state will again be on the brink of a shutdown.

Espada's co-conspirator, Monserrate, gained for his return to the fold the chair of the Committee on Consumer Affairs, to which his colleagues had been reluctant to elect him while he was awaiting trial for slashing his girlfriend. He was subsequently convicted of a lesser charge, expelled from the Senate, and defeated 3-1 for re-election to his old seat. Espada is currently the target of a lawsuit by the State Attorney General and the subject of a Federal investigation, but so far neither proceeding has resulted in a judgment.

The Senate in 2010 is close to anarchy. Since the 30 Republicans will support nothing, even if they had previously promised to, all 32 Democratic votes are needed to pass anything. For example, the Gender Expression Non-Discrimination Act (GENDA), which died in the Judiciary Committee. Every Democrat supported it except Senator Rev. Ruben Diaz, Sr., father of the Bronx Borough President, Ruben Diaz, Jr. No Republican supported it, even though two were said to have previously indicated that they would. Rev. Diaz is acting out of his religious convictions; he has always opposed legislation to help gays. Several of the Republicans are acting out of their political convictions, that it is better to show that the Democrats are unable to run the Senate than it is to help bisexual and transgender(ed?) New Yorkers.

It is difficult to determine from the course of events over the past two years whether the Democrats or Republicans are more qualified to lead the State Senate. Since we do not endorse or recommend candidates for public choices, we would not normally make choices between individuals or parties. This year we feel understanding for our readers who will have to make those choices on Primary Day, September 14 in New York State, and Election Day, seven weeks later on November 2. We hope that candidates for state office, incumbents and challengers alike, commit to a program of legislative reform, transparency, strong ethics codes and honest redistricting by an impartial commission. The next weeks will give us an idea of how many will promise to support specific legislation in this area.

Candidate Andrew Cuomo has asked all Democratic candidates to subscribe to this program. We would ask Republican and other party candidates for public office in New York State to make similar commitments. We do not view reform as a partisan issue. Our observation is that partisanship is often an impediment to reform because it requires legislators to be subservient to party leaders, rather than rely on their independent judgment on the issues. Party leaders make decisions on what they believe is best for their party rather than for the State of New York or the general public.