This just in: default is bad.

Will the United States avoid default by refusing to pay its obligations as they come due?

Tweet from Megan McArdle <@asymmetricinfo>:

Hey, quick reminder: you know what’s bad for the economy, and your country’s reputation? Defaulting on the debt.

Megan and I disagree on a wide range of topics, and I think she’s fooling herself about the extent to which the libertarian project boils down to a commitment to worsen the income distribution, but when push comes to shove she’s reality-based.

That matters even more when others on her side of the Red/Blue Divide clearly aren’t. The current Republican line (cf. responses to Megan’s Tweet, or the latest nonsense from the Capitol Hill Republicans and the Feldstein/Mankiw Axis of Weevils) is that the Treasury will always have enough money to pay interest on bonds and bills, simply by stiffing its other creditors (employees, pensioners, contractors, and suppliers) thus avoiding “default” as defined by the Credit Default Swap markets.

This reminds me of a joke that went around during the first New York City financial crisis: that the City would avoid default by refusing to pay its obligations. But it’s not a joke (or, rather, it’s a joke in very bad taste) when it involves the credit of the United States of America.

You can choose to believe that defaulting on the nation’s legal obligations that don’t happen to be called “bonds” or “bills” won’t influence the confidence of world financial markets in Treasury debt, but that is what Mark Twain called “a vagrant opinion, without visible means of support.” But whatever its practical implications, not paying your bills when they come due – given that you have the capacity to pay them – is deeply, unforgivably dishonorable.

I only wish Megan had more company on her side of the aisle. And I hope that her lack of company makes her reconsider whether the Red jersey is one she’s really willing to wear.

Author: Mark Kleiman

Professor of Public Policy at the NYU Marron Institute for Urban Management and editor of the Journal of Drug Policy Analysis. Teaches about the methods of policy analysis about drug abuse control and crime control policy, working out the implications of two principles: that swift and certain sanctions don't have to be severe to be effective, and that well-designed threats usually don't have to be carried out. Books: Drugs and Drug Policy: What Everyone Needs to Know (with Jonathan Caulkins and Angela Hawken) When Brute Force Fails: How to Have Less Crime and Less Punishment (Princeton, 2009; named one of the "books of the year" by The Economist Against Excess: Drug Policy for Results (Basic, 1993) Marijuana: Costs of Abuse, Costs of Control (Greenwood, 1989) UCLA Homepage Curriculum Vitae Contact: Markarkleiman-at-gmail.com

69 thoughts on “This just in: default is bad.”

  1. This is a question, not a comment. What does the 14th Amendment mean in saying that the public debt of the United States shall not be questioned? Does it mean that the President can go over the heads of Congress in order to honor these public debts? If Congress fails to enact laws that prevent the debts from being questioned, does the 14th Amendment give the executive branch any options to ensure that this clause shall be observed? I feel certain that the White House lawyers have been all over this since the last near default in 2011. I hope that some RBC reader has some information on how that clause applies to the current situation.

    1. The problem with parsing the legal technicalities is that if the debt ceiling is not extended the President is forced to break the law. Normal appropriations bills require that he, as head of the executive branch, spend money (if the President refuses to spend money that Congress has appropriated he’s guilty of a crime). But if the debt ceiling is raised he cannot finance the spending.

      The situation is absurd. The whole concept of a “debt ceiling” is a legal time bomb. If Congress wants to pass limits on appropriations as a means of controlling the deficit then the more power to them. But to pass limits on the conduct of the executive branch that are self-contradictory is madness.

      1. Actually this is the trap that the House is seeking to put Obama in:

        The 14th Amendment says the debt shall not be repudiated.
        The law says that The president has to spend what Congress has appropriated
        The law ALSO says that if Congress appropriates more than the income they must raise the debt ceiling to allows sufficient borrowing to cover what they appropriated.

        Failing to raise the debt ceiling forces Obama to break the law.

        INPEACH!!!!11!!Eleventy!

        It doesn’t matter that there’s no way in hell that the President will ACTUALLY be impeached for this, what matters is that they will stoke up the slavering rabid base in time for the 2014 elections in the hopes of taking over the Senate. Burning down the economy is just a bonus for them.

        Obama really really needs to get hacking on that Starfleet computer if he wants to escape the Kobayashi Maru trap he’s in.

    2. The White House has been saying that declaring the debt limit law unconstitutional is not on the table. I don´t see how that can be true if push comes to shove. Come October 17, if there´s no bill for Obama to sign raising the debt limit, he has a choice between complying with the 14th Amendment and the previous debt limit law he signed in 2011. The Constitution trumps a mere law, doesn´t it?

      You can of course interpret the ¨public debt¨ of the Amendment as applying only to bonds and bills, but not to entitlements and contracts. That seems at odds with its wording (¨including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion¨) and SFIK with SCOTUS jurisprudence. However, it´s a colourable interpretation. Making it his own would be an alternative for Obama to just overriding the debt limit law and ordering the Treasury to carry on as before.

      The interpretation could be challenged, if anybody had standing. SCOTUS would then have either to confirm Obama´s narrow interpretation, or declare the separate debt limit laws unconstitutional, or the failure to raise the limit in time an unconstitutional deliberate ¨questioning¨ by Congress of the validity of the public debt.

      Either way, yields on new debt with a new legal risk would spike, and the markets would be in shock, but perhaps Obama would avoid the instant worldwide financial panic resulting from simply declaring default helplessly. The long-term cost of the debt would rise permanently as the USA slid down the credit ratings. 0.5% on $16 trn is $80 bn a year, for ever.

      1. At this point, having spent the last two years painting themselves in a corner, I can’t see Obama relying on either the magic coin or the 14th amendment. In any case, we can’t know if Obama will mint the coin, ignore the debt limit or just start selling Obama bonds until after it is too late. So it’s pointless to speculate.

        The other point is that the 14th amendment gambit might allow him to keep borrowing to make up for cash flow shortages but presumably only for the purpose of servicing the debts. That lease everybody who isn’t a bond holder out in the cold, which is basically the Republican position at the moment. I think either somebody blinks or it’s basically going to be a game of 52 card pickup.

      2. The Constitution trumps mere law, and the Constitution delegates to Congress, not the President, the power to borrow. While the anti-impoundment act is, as “act” suggests, ‘mere law’. This pretty clearly means that the President can not, without Congressional authorization, borrow any more beyond the existing debt ceiling, the anti-impoundment act not withstanding.

        The “debts incurred for payment of” language suggests that the actual pensions and bounties are not viewed as debts, but only the borrowing which has already been done to pay them. But I wouldn’t say that reading is forced.

        I don’t think we reach a genuine constitutional crisis until debt service reaches over 100% of revenue, necessitating borrowing to just service the debt. Prior to that, the constitutional issue can always be resolved by prioritizing debt service. At that point, of course, you’ve obviously got bigger problems.

        Part of the opposition to continually raising the debt ceiling, of course, is to avoid reaching that point where debt service is essentially sucking up all revenue. We are, IIRC, at the point where a return to historical interest rates would result in debt service eating a third of all revenue.

        1. Hard right wing Republicans/worshipers of Sparta love to talk about how a patriotic Jack Bauer type should in times of crisis simply ignore the law and the Constitution to “do what has to be done”: torture, kill, violate rights left and right, etc, all in service of the greater good. However, they are adamantly opposed to the President (a Democratic President, anyway) ignoring a Republican temper tantrum and following the spirit of the law to get Social Security payments out on time. Interesting.

          Cranky

        2. Of course, default (partial or not) would… lead to a rise in interest rates, increasing out debt service costs. So, in order to prevent having too much revenue going to debt service (alleged reason, which I don’t buy), you will threaten to make that happen sooner rather than later. Yeah, ok.

        3. “the constitutional issue can always be resolved by prioritizing debt service”

          So your definition of “public debt of the United States” restricts it to bond holders ?
          I’m not seeing an obvious legal difference between a debt owed to bond holders,
          and a debt owed to federal employees (in particular, once the demagogues get going,
          soldiers on the ground in combat zones). Taking actions whose consequence would be
          an inability for the USA to pay *all* its debts would seem to be questionable under
          the 14th Amendment. And while it may be true, as you claim, that only Congress has the
          power to authorize borrowing, the 14th Amendment, if it means anything at all, must
          mean that Congress also has the *duty* to authorize borrowing as necessary to
          maintain the validity of the debt. Just as the powers of the executive are associated with
          the duty to see that the laws are fairly and faithfully executed (which includes the
          duty to actually gather revenue as enacted by Congress, and spend money as
          enacted by Congress).

          Anyhow, this is somewhat academic. The practical question is not what constituional
          lawyers are going to think, but a) what Social Security recipients are going to eat
          if they don’t get their checks, and b) what happens to financial markets and the world
          economy once the US government stops paying *all* its bills.

          1. The “academic” issue is rather interesting, though. The libertarian/right-wing position here seems to be that the president has the power to pick and choose which of Congress’s spending directives he wants to comply with, and which ones he wants to ignore.

            To me, that seems like a vast expansion of presidential power, and a long step towards the kind of “executive tyranny” that people of a certain ilk like to imagine is just around the corner whenever a Democratic president is in the White House.

          2. The reason for prioritising debt service is not the 14th Amendment but avoiding an instant financial meltdown (Chernobyl), as opposed to a slowly unfolding and more manageable one (Fukushima). I reckon this benefit is worth a strained interpretation of the Amendment, but YMMV, and more important, that of the constitutional scholar in the White House.

        4. I don’t know what you mean by “the Constitution trumps mere law” but without belaboring the point, I would just say that the Constitution really doesn’t speak decisively to this situation. Partly because the framers never foresaw the modern Republican Party. But mainly because the Constitution is riddled with ambiguities and directives that may have made good sense at the time but now seem to be in conflict with other provisions of that document. There is, for example and as we’ve discussed here before, the requirement that the president see that the laws are “faithfully executed” which, arguably, means that the Constitution requires that the president pay for whatever the Congress has spent money on, be that weapons systems, social security or the rent on government offices.

          Apart from that, you still seem to be saying that increasing the debt ceiling involves increasing spending which is absolutely wrong. If you want less money, you should elected people to Congress who spend less money.

        5. The Constitution trumps mere law, and the Constitution delegates to Congress, not the President, the power to borrow.

          The Constitution also delegates to Congress, not the President, the power to authorize spending. So Congress will have exercised two of its constitutional powers in contradictory ways. You have never given any explanation why the executive is more bound to follow Congress’ dictates on borrowing than it is to follow Congress’ dictates on spending.

          If the debt ceiling is breached the administration must, in a strictly logical sense, violate the Constitution one way or the other. There is no way for it not to. So why are you so certain that it must breach the Constitution in one way and not the other?

    3. What does the 14th Amendment mean in saying that the public debt of the United States shall not be questioned?

      I will leave aside its applicability to the current crisis (the reality is that it doesn’t matter what the 14th Amendment says, bond traders will demand high interest rates on any bonds sold without congressional authorization), and just say that the historical purpose of that provision was to ensure that southern states could not treat confederate war debts as valid or union war debts as not valid– the North’s creditors would get paid and the South’s would not.

  2. I agree. And I think that the behavior of the Republicans in the matter of the debt ceiling is morally reprehensible, pragmatically harmful, disastrous as a precedent and politically stupid (And I generally think that the behavior of the Republicans in the matter of the CR is those things, though less so).

    But of course I also think the same thing about then-Senator Barack Obama’s vote not to raise the debt ceiling in 2006. And please don’t try to rationalize his action by saying it was “different” because there was no serious threat of the ‘No votes’ winning the day. When a legislator votes he either votes honestly in a manner consistent with what he hopes will carry the day or he votes childishly and recklessly. If you don’t like the gamesmanship and political theater in Washington then consistently stand up to denounce gamesmanship and political theater.

    1. What you’re saying here is profoundly silly. You’re equating a vote against raising the debt ceiling that had no actual real-world consequences, on the one hand, with a refusal to raise the debt ceiling that will plunge the world into financial chaos. The consequences don’t matter, the motivation doesn’t matter, it’s only the pure, decontextualized act that matters? What kind of a fkd-up world view is that? Debt-ceiling votes have been occasions for decades now that members of the out-party use for a little minor grand-standing. Not American politics or government at its finest, to be sure, but the equivalence you propose is just horseshit.

      1. Can’t really agree with you there. President (and Senator) Obama seems to genuinely agree with the Bowles/Peterson nonsense about “the deficit” being inherently bad, and to have minimal or no knowledge of basic macroeconomic theory (even theory that would back up the incoherent Bowles stance, much less a “team of rivals” understanding of “both sides” in the macroeconomic debate). As a Senator he also loved casting carefully calculated positioning votes (e.g. telecom spying authorization) – almost as if he were planning ahead to a run for higher office. Perfectly legitimate to call him out for those votes now that the position he was positioning for has turned out to be disastrous.

        Cranky

        1. Every economist believes deficit spending is irresponsible in the long-run. The debate centers around the short-run, ie should the government borrow & spend in a depressed economy, particularly when we are at the zero lower bound on interest rates.

          Senator Obama was protesting borrowing as long-term policy: to pay for tax cuts, medicare expansion, and other permanent programs. We weren’t in a depressed economy, nevermind a liquidity trap. And his vote “had no actual real-world consequence”, as Herschel points out.

          Aside from the false but non-existent threat of default, Obama’s stance then was textbook econ. As President, he presided over one of the biggest stimulus programs in American history, so it makes no sense to say he “seems to genuinely agree with the Bowles/Peterson nonsense about “the deficit” being inherently bad”.

          One could argue, has Paul Krugman does like every day, that his pivot to deficit reduction was too early…but an eventual pivot is indeed necessary…as Krugman would tell you too.

          1. “Every economist believes deficit spending is irresponsible in the long-run”

            Not at all. Indefinite deficit spending is no problem at all provided that
            the total debt grows no faster than GDP. And it’s also ok for the debt to grow
            faster than that when debt/GDP ratio is low. So for example, if you had a
            $5T debt and $10T GDP, and then GDP grows 3% the next year, then debt can
            grow to $5.15T. So you could have had $150B of deficit spending without
            hurting your debt/GDP ratio at all.

            What *is* irresponsible is to borrow heavily and spend the money on stuff
            that won’t lead to future growth. For example, borrowing to repair bridges
            and improve schools generates future growth; borrowing to fund an unnecessary
            foreign war is less justifiable. But government accounting doesn’t
            distinguish between productive capital assets and expenses in the way that
            corporate accounts do, so those choices tend to get screwed up.

          2. Not at all. Indefinite deficit spending is no problem at all provided that the total debt grows no faster than GDP.

            Economists talk in terms of real, not nominal, dollars…so what you’re saying is correct in regards to the latter. But “no problem at all provided that the total debt grows no faster than GDP” is just another way of saying that, in real dollars, you can’t deficit spend for the long run.

          3. What *is* irresponsible is to borrow heavily and spend the money on stuff that won’t lead to future growth. For example, borrowing to repair bridges and improve schools generates future growth;

            You’re describing what Keynesians advise us to do (in real dollars) when we are in a recessed economy (trapped in a liquidity trap). The reason we Borrow & Spend instead of Tax & Spend is because if we taxing takes money out of the economy at a time when we need more money in.

            But thats not what Keynesians tell us to do during normal times. During those times, you do what Senator Obama said to do. You pay for the programs with either new taxes or spending cuts elsewhere.

            borrowing to fund an unnecessary foreign war is less justifiable.

            Careful. WWII got us out of the Great Depression.

          4. But “no problem at all provided that the total debt grows no faster than GDP” is just another way of saying that, in real dollars, you can’t deficit spend for the long run.

            No, it isn’t. It’s saying that you cannot perpetually run deficits bigger than a certain size. It should also be noted that in this instance the long term can indeed be very long.

          5. It’s saying that you cannot perpetually run deficits bigger than a certain size.

            Its still the same thing…because the metric “% of the GDP” is an example of a real dollar, as opposed to a nominal one.

          6. Its still the same thing…because the metric “% of the GDP” is an example of a real dollar, as opposed to a nominal one.

            1) No, it isn’t. It might be true, though still a stretch, if real GDP never increased. Since it does, they aren’t at all the same thing.

            2) That still has nothing to do with whether or not it is deficit spending. Your entire argument is nonsensical.

          7. What I’m arguing is this:

            “…what people like me have been calling for is a temporarily relaxed attitude toward deficits as long as the economy remains depressed and monetary policy is up against the zero lower bound.”

            -Paul Krugman

            http://krugman.blogs.nytimes.com/2013/02/15/disco-era-macroeconomics/?_r=0

            “Temporarily relaxed”. The flip side of this is that during normal times, textbook econ says one should have a hawkish attitude towards deficits.

            Or as I orginally said; ““Every economist believes deficit spending is irresponsible in the long-run”

          8. “Economists talk in terms of real, not nominal, dollars…so what you’re saying is correct in regards to the latter. But “no problem at all provided that the total debt grows no faster than GDP” is just another way of saying that, in real dollars, you can’t deficit spend for the long run.”

            What are you talking about? As long as debt increases at an equal or lesser rate than GDP (and real GDP always increases, year on year), you can run deficits in perpetuity, without increasing the debt:GDP ratio. Real or nominal dollars have nothing to do with it, as long as you’re using the same units for both debt and GDP. nDebt/nGDP = rDebt/rGDP. That’s an accounting identity.

          9. “Temporarily relaxed”. The flip side of this is that during normal times, textbook econ says one should have a hawkish attitude towards deficits.

            “Relaxed” is a relative term. You are reading it in an absolute way. And then you’re throwing all sorts of gibberish about what is and isn’t a deficit.

          10. “Relaxed” is a relative term.

            So is hawkish

            You are reading it in an absolute way.

            No I’m not. I’m reading it the way Krugman meant it to be read. If you follow the link, you’ll see that “temporarily relaxed attitude toward deficits” = “fiscal stimulus”.

            And if you read Paul Krugman you know that he believes one should have such an attitude only during one situation:

            “our case has always been that fiscal stimulus is justified only when you’re up against the zero lower bound on interest rates.”

            What about the rest of the time?

            “Part of the answer is the difference in economic conditions. Deficit spending is expansionary when the economy is in a liquidity trap; it does nothing but crowd out other spending when you’re not up against the zero lower bound, and the Fed will just raise rates to offset fiscal expansion.”

            http://krugman.blogs.nytimes.com/2011/12/10/the-long-and-the-short-of-it-2/

            That is why I say Senator Obama was correct in protesting deficit spending during the Bush admin. That was irresponsible then.

            In contrast to Krugman, RichardC does not consider “the difference in economic conditions”. He says “borrowing to repair bridges and improve schools generates future growth” full stop. I’m saying this is wrong.

          11. To those nitpicking about nominal vs real figures, you’re just wrong. We expect,
            hope, and, in a healthy economy, usually see *real* GDP increasing each year.
            And as such, it’s perfectly fine, even in the long run, for debt to increase by
            the same percentage as GDP. In fact, since the debt is nominal (we’re counting
            the interest payments as expenses, not compounding them onto the amount owed),
            it’s perfectly fine for the nominal debt to increase at the same rate as nominal GDP.
            If there’s significant inflation, then the real GDP is less than it looks, but the
            real debt is shrunk in the same proportion. Indeed, a few years of high inflation
            is one way to escape a heavy debt burden (though one with some other unpleasant
            consequences).

            Now, to those who mention WW2 and the advantages of large deficits in a recession,
            I unreservedly agree. When the private economy is so screwed up that productive assets
            are lying idle, government should put them to work. And the corollary is that in
            good times you should try to reduce the debt/GDP ratio, so that you have headroom
            to run a big deficit when it would be useful to do so. That doesn’t necessarily
            imply that you need to run a surplus though – if you’re growing GDP rapidly, then
            you can run a significant deficit and still reduce debt/GDP ratio.

            And everything I’ve said so far is applicable to any nation with a normal growing
            economy. But it’s even more true for the USA, which is in the uniquely privileged
            position of offering what is regarded as the world’s safest investment, allowing
            it to borrow at extremely low interest.

            It’s a continual surprise to me when otherwise apparently sane people talk about
            the virtue of balancing the budget. You don’t need to balance the budget, and
            it’s almost certainly harmful to do so. Just keep an eye on the debt/GDP ratio,
            respect the difference between productive investments and pointless boondoggles,
            and try to avoid disasters like long unnecessary wars and lengthy recessions.

          12. “In contrast to Krugman, RichardC does not consider “the difference in economic conditions”. He says “borrowing to repair bridges and improve schools generates future growth” full stop. I’m saying this is wrong.”

            Well, now we’re getting to an interesting point, so let me elucidate my argument. I think you would
            agree that bridges and schools can be useful and productive in the long term ? And that if the
            population is growing, we’re going to need more and/or bigger schools; and probably more bridges
            to cope with more traffic. So let’s suppose the economy is humming along nicely and we aren’t at
            the lower bound. We have three choices: we can not build bridges and schools; we can borrow money
            to build bridges and schools; or we can raise taxes to build bridges and schools. And it doesn’t
            matter a damn whether we borrow the money, or raise the taxes – either way it crowds out some
            private-sector investment (because the construction workers at the bridges and schools aren’t
            building houses and factories). But so what ? We *need* the bridges and schools; and the private
            sector isn’t going to invest directly in those public goods. But since the benefits of those
            investments will accrue over many future years, it really makes a lot of sense to borrow the
            money and pay it back as the benefits accrue. Unless there are other policy reasons why it might
            be better to raise taxes right now.

            What definitely doesn’t make sense at all is to not build the schools and bridges. But that’s
            what deficit hawks would seem to prefer.

            [Of course there are lots of difficult policy decisions around the questions of which bridges
            to build and what kind of schools … but that’s separate from the macroeconomics].

          13. To those nitpicking about nominal vs real figures, you’re just wrong.

            Richard, read this sentance:

            “Deficit spending is expansionary when the economy is in a liquidity trap; it does nothing but crowd out other spending when you’re not up against the zero lower bound”

            Krugman is not referring to a situation in which debt increases by the same percentage as GDP. Why? Because that not real deficit spending. Its not stimulative or expansionary under almost any circumstance. Its merely nominal deficit spending.

            That’s what I meant when I said “Economists talk in terms of real, not nominal, dollars”. As far as your points about a nominal raise in the deficit, as I said before, “what you’re saying is correct”.

            What definitely doesn’t make sense at all is to not build the schools and bridges. But that’s what deficit hawks would seem to prefer.

            Well, I thought we were talking about Senator-President Obama.

          14. “Deficit spending is expansionary when the economy is in a liquidity trap; it does nothing but crowd out other spending when you’re not up against the zero lower bound”

            Yes, I’m reading it again. And it’s correct as a statement about the short-term
            effect on GDP. Under normal circumstances borrowing to build schools and bridges
            will get you more schools and bridges, but fewer houses and factories. However,
            to maximize long-term GDP growth you do need some non-trivial investment in
            public goods like schools and bridges, and the fact that it “crowds out”
            private sector investment is, up to a point, a good thing. And increasing
            long-term debt to fund long-term investment is just fine, as long as the
            return on investment is worthwhile.

            The current situation in the USA seems to be that we have notoriously decrepit
            bridges and schools (and power grid etc), and lots of oversized McMansion
            houses. So heck yeah, crowding out some of that private-sector activity
            would be a good thing.

            Which may be another way of saying that current GDP isn’t the whole story
            about the health of an economy and a society.

          15. The really dangerous trend since 2000 is that huge spending on the military/CIA/NSA,
            together with rapidly growing healthcare spending, have been allowed to “crowd out”
            investment in education and infrastructure.

          16. Perhaps I’m making it too complicated. If you borrow money to build a school,
            then yes, from a short-term macroeconomic perspective, under normal economic
            conditions, “it does nothing but crowd out other spending”. Building a
            school doesn’t usually stimulate the national economy.

            But building a school builds a school. Now you have the school, and you get
            to use it probably for 50 years or more.

            If you allow paranoia about deficits to keep you from building enough schools,
            you’re making a bad long-term mistake.

          17. “Krugman is not referring to a situation in which debt increases by the same percentage as GDP. Why? Because that not real deficit spending. Its not stimulative or expansionary under almost any circumstance. Its merely nominal deficit spending.”

            I don’t know what you mean by “not real deficit spending”. The government adds up what it gets
            in revenue, and what it spends, and the difference is the deficit. That is what we measure;
            that is what the politicians talk about; the balanced budget freaks would like that number to
            be zero. So when I point out that it’s just fine for that number for that number to be
            greater than zero indefinitely, I don’t think you get to move the goalposts by introducing
            some new concept of “real deficit spending”, i.e. that which increases debt/GDP.

            And some public investments are worth making regardless of whether they have a short-term
            stimulus effect and regardless of whether they cause a short and medium-term increase in
            debt/GDP.

          18. The current situation in the USA seems to be that we have notoriously decrepit bridges and schools (and power grid etc), and lots of oversized McMansion houses. So heck yeah, crowding out some of that private-sector activity would be a good thing.

            Well, there wouldn’t be a crowding out in the current situation, since we are in a liquidity trap.

          19. I don’t understand what manju is talking about with thsi distinction between real and nominal deficit spending.

            Maybe an example would help.

            While it’s true that not all deficit spending is stimulative in a Keynesian sense, tha doesn’t make it a bad idea, even if it does “crowd out” private spending. The issue is whether the marginal government spending is more productive than the marginal private spending it replaces. In many cases it will be. Notice that this is true of non-deficit spending as well. In other words when resources are being fully utilized government spending replaces private spending even when it is financed by taxes. That doesn’t make it good or bad. The source of the financing has zip to do with whether the money is being spent wisely.

            Economic conditions do matter, because when their are lots of idle resources around, and interest rates are as low as they can go there is no crowding out. Businesses simply have no productive investments to make,.

          20. I don’t understand what manju is talking about with thsi distinction between real and nominal deficit spending.

            Maybe an example would help.

            The Bush deficit spending that President Obama was protesting increased the debt in nominal terms, of course. Had it just increased by the same percentage as the GDP” (RichardC) it wouldn’t, despite being a nominal increase, be considered an increase in real dollars.

            But it went further…into real deficit spending. The debt as a % of the GDP increased. Cranky Observer sees Obama’s opposition as evidence of his belief “about ‘the deficit’ being inherently bad” and of him having “minimal or no knowledge of basic macroeconomic theory.”

            I’m saying that Senators Obama’s opposition was textbook econ. The Bush budget tried to pay for permanent programs (Medicare pt D and tax cuts) by deficit spending. Economists see this as fiscally irresponsible…because the economic situation was not a recession plus liquidity trap, and because the programs were permanent.

          21. “Economists see this as fiscally irresponsible…because the economic situation was not a recession plus liquidity trap, and because the programs were permanent.”

            Well, from a fiscal point of view Medicare D was indeed irresponsible in a variety of ways
            (though the previous situation of having the politically powerful group of seniors,
            who are numerous, have high turnout in all elections, and tend to need a lot of medications,
            not getting any subsidies for their coverage, also looked unstable in a democracy).

            But it’s also vastly different from the “bridges and schools” example we’ve talking about
            up to now. Building bridges and schools costs money in the short-term, but gives you
            economic benefits (lower transport costs, shorter transport delays, less fuel use,
            better-educated workforce) in the long run – for a bridge, starting as soon as its finished;
            for a school, starting years in the future when the children graduate (though there may be
            earlier effects since building a good school will boost the value of housing nearby,
            probably leading to more construction, higher tax revenue, increased spending by homeowners
            whose equity has increased etc).

            You’re excessively focused on “stimulus”, i.e. growth that occurs within a year or two
            after the investment. And you’re ignoring the importance of more normal investments
            which will generate growth 5, 10, 20, or 30 years into the future. If government accounts
            were like company accounts, then building a school, while it affects cashflow immediately,
            would be viewed as a non-event in the short-term, since it involves an exchange of
            financial assets for a capital asset (the school) with the same book value. And fixing
            a bridge would similarly show as a loss of money matched by an increase in the value
            of the bridge. The craziness of deficit hawks is that they think there would be some
            magical value in keeping the deficit low by *not* fixing the bridge. And then the damn
            bridge collapses and it turns out that wasn’t such a great idea after all.

            And I continue to think that your distinction between “real” and unreal deficit spending
            is completely bogus. After all, if government does 1000 different things, and the sum
            total of the 1000 increases the debt/GDP ratio, then which of the 1000 things are you going
            to regard as “real deficit spending” and which are ok ? If an investment has good ROI,
            you should be doing it whether or not you’re over the threshold; and if it has crappy ROI,
            then you shouldn’t be doing it even if you’re below the threshold. Like byomtov says.

          22. You’re excessively focused on “stimulus”, i.e. growth that occurs within a year or two after the investment. And you’re ignoring the importance of more normal investments which will generate growth 5, 10, 20, or 30 years into the future.

            The reason I’m ignoring this is because of the textbook, literally:

            “The modern consensus is that monetary and fiscal policy are both effective in the short run but that neither can reduce the unemployment rate in the long run. Discretionary fiscal policy is considered generally unadvisable, except in special circumstances.”

            -Paul Krugman and Robin Wells: Macroeconomics, ch 17 “Events and Ideas”

            I’ll elaborate more on Krugman’s specific views if his description of the consensus is unsatisfying to you. But that’s the quick answer, as this blurb aligns with what I’ve been saying about deficit-spending and the long-run.

            I’ll elaborate more on Krugman’s specific views if his description of the consensus is unsatisfying to you. But that’s the quick answer, as this blurb aligns with what I’ve been saying about deficit-spending and the long-run. (Keep in mind, that Krugman/Wells are not speaking in absolute terms, but general ones).

          23. Your quote from Krugman indicates that running a big deficit in itself,
            under normal circumstance, doesn’t reduce unemployment in the long run.
            And I believe that, in the sense that if you plotted deficit spending
            of a number of governments against unemployment, the results would be all
            over the map and there would be little correlation.

            But that’s because some government deficits are being spent on useful
            investments like education, roads, ports, telecomms infrastructure;
            and others are spending on useless crap like a huge military, pointless
            wars, and market-distorting subsidies for fuel and food. It seems that
            to someone like yourself focused on macroeconomics, you’re not at all
            interested in the nature of the spending. Which is frankly crazy:
            you think that if the USA had purchased $25B of twinkies and fed them
            to kids, instead of building the interstate highway system, then the
            long-term outcome would have been identical.

            Anyway, my real position is that “the deficit”, as currently defined,
            is a useless way to judge government policy. Just as cashflow is not
            a good measure of the long-term health of a business. We ought to
            have a government/national accounting system which distinguishes
            capital investment from operating expenses and exceptional items.
            And then we would have a better chance of taking sane decisions rather
            than crazy ones. And we ought to try to make the optimum level of
            investment in schools and bridges whether or not we have to borrow to
            do it.

            In that perspective, “the deficit”, and macroeconomics, is useful
            as a tool for analyzing and predicting, and influencing, short-term
            GDP and short-term growth. But it’s pretty lousy as a way of judging
            whether your policy changes will have positive effects in the long run:
            there are good and bad ways of spending money, but “the deficit” doesn’t
            tell us which are which.

            As a thought experiment, imagine that you arrive on an unpopulated island
            and set up a government. You have no industry and no population, so there’s
            no GDP and no revenue. SO you borrow a lot of money – there’s no other way
            to get it – and build an airport, roads, a power station, and hotels.
            Now people come and work in the hotels and power station, they build houses,
            the hotels bring in revenue, and you’ve got growth and employment and revenue
            and all kinds of good things. But it never could have happened without
            running a big deficit to make capital investments.

          24. Your quote from Krugman indicates that running a big deficit in itself, under normal circumstance, doesn’t reduce unemployment in the long run.

            What the quote means is this:

            “All economists are impressed with and convinced by the efficiency and desirability of free markets. The field is practically unanimous on this point (which is nice to see in a science!). “

            http://factsandotherstubbornthings.blogspot.com/2012/08/two-types-of-economists.html?showComment=1344121097285#c3201210499122539754

            That’s Daniel Kuehn, a young Keynesian who is on the frontlines of the Krugman-led was against the Austerians (you can find Krugman referencing him).

            He goes on to say that there are 2 types of Economists

            1st group (Right Wing) likes to spend their time “telling people more about this”.

            2nd group (Left wing) “because they think that point is settled scientific fact, think that the more interesting discussions are in the gray areas and the technicalities, so they figure their time is better spent there than belaboring the obvious.”

            Krugman is in group number 2. He enjoys writing about short-term fiscal policy. But you can’t extrapolate what he’s writing about there onto the long-run. He is also “impressed with and convinced by the efficiency and desirability of free markets.”*

            *There is recent development…I’ll get to that. And Krugman is a Liberal, he does indeed believe in more Long-Term Government programs than his Right-Wing counterparts. But for him, its not just a matter of government choosing more useful investments. The reason he says that such choices are generally unadvisable is more fundamental than that. Its basically what Kuehn says.

          25. Yeah, sure, free markets are good. Up to a point. You and I and
            Krugman all agree it takes government deficit spending to get us
            out of a crash. Where we differ is that I look at the USA and
            its history and see that “deficit spending” created the Erie Canal,
            the transcontinental railroad, the Hoover Dam, the Golden Gate bridge,
            and the interstate highway system. You seem to think the economy
            would have turned out the same way if that “deficit spending” had
            been blown on a Twinkie-eating binge.

            And while economists are indeed impressed by the efficiency of
            free markets, others such as Akerlof (a.k.a. Mr Yellen) are
            interested in the conditions under which markets fail.

            Do you really believe that we can get an optimal allocation of
            resources to bridges and schools by relying on free markets
            rather than government planning ? And do you further believe
            that the optimum level of investment in bridges and schools
            changes depending on “the deficit” ?

          26. So I’m fairly unimpressed by the argument that economists love free markets and that planning is bad. The right answer in each sector is different: and economists know that as much as anyone, e.g. from discussion of natural monopolies, asymmetric information.

            I not sure what you’re saying. Are you doubting that a market-based economy is superior to a planned one, or that this is indeed the consensus among economists? I mean, I’m substantiating my claims by quoting the world’s most influential left-wing economist.

            As I mentioned before, Krugman is wavering here, but this is where he believes the data we posses so far takes us. Krugman has always considered himself a “free-market Keynesian”, “basically, a believer in Samuelson’s synthesis.” What is Samuelson’s synthesis?

            “…the idea that we can use monetary and fiscal policy to make the world safe for laissez-faire everywhere else…In the Samuelsonian synthesis, one must count on the government to ensure more or less full employment; only once that can be taken as given do the usual virtues of free markets come to the fore.”

            – Paul Krugman

            As you know from previous quotes, “monetary and fiscal policy” refers to the short-run (with laissez-faire referring to the long-run, of course). If you read the column, you will see that he’s less certain of this position than he used to be…but the reasons are political in nature (he doesn’t believe politicians are willing to commit to a fiscal stimulus, and this endangers the whole system) not economic.

            http://krugman.blogs.nytimes.com/2013/08/12/synthesis-lost/?_r=0

          27. We live in a mixed economy, not a pure free-market economy. And I’m not seeing
            Krugman, nor any economists beyond a few libertarian wingnuts, arguing that
            the military and the police and the roads should be ruled by market forces.
            On the contrary, I seem to remember Krugman writing quite a few columns during the
            healthcare debates arguing in favor of extending Medicare, and comparing the US
            system unfavorably with single-payer systems like Canada and fully-nationalized
            systems like those of the UK and France. Free markets are good under some conditions,
            not so good under other conditions (natural monopolies, asymmetric information,
            externalities, public goods).

            As for the question of government investment, it’s really two separate questions:
            what investments should be made, and should they be financed by current tax revenue,
            or by borrowing ? And the orthodox market-based answer is that if you can borrow
            cheaply now and pay it back in a wealthier future, then that’s just great.
            The point where a high debt/GDP ratio becomes problematic is precisely when
            lenders start to mistrust your ability to repay the full real value, and demand
            higher interest rates as a risk premium (Krugman’s “bond vigilantes”). As those
            interest rates get higher, it becomes harder to justify borrowing to make investments.

            Free markets are indeed good in many ways, and economists sure do like to go on
            about them. But if you think that’s the whole deal, then you’re like someone
            so impressed by the speed and comfort and efficiency of ships that you think
            you don’t need water any more.

          28. BTW, Krugman’s not so sure these days:

            http://www.correlationmatrix.ca/2013/08/losing-his-religion-krugman-and.html

            “But the experience of the past 6 years, since the financial crisis began, has blown apart
            not just Friedman’s position but much of Samuelson’s as well.”

            “What’s more, you have to ask why, if markets are imperfect enough to generate the
            massive waste we’ve seen since 2008, we should believe that they get everything else right.
            I’ve always considered myself a free-market Keynesian — basically, a believer in
            Samuelson’s synthesis. But I’m far less sure of that position than I used to be.”
            (Krugman 2013)

          29. BTW, Krugman’s not so sure these days:

            Errr….you do realize that you’re linking me up to a column that links to a Krugman column that I just linked you to, while mentioning his recent doubts (twice).

          30. We live in a mixed economy, not a pure free-market economy.

            Well every economy is mixed…even a socialist ones have market aspects, so that doesn’t tell us much. I’m just using the terms “free-market” and “laissez-faire” the way Krugman and Kuehn use them. I didn’t invent the language.

            Though, to be fair, I understand some economists (like Joseph Stiglitz) reserve those terms for more RWing economists, like the Chicago School. But even then, you’re not describing their School.

            And I’m not seeing Krugman, nor any economists beyond a few libertarian wingnuts, arguing tha the military and the police and the roads should be ruled by market forces.

            Ok, I entered this thread defending Senator Obama. But you appear to be taking on Ayn Rand.

          31. Well, we can summarize the great truths that economics has to offer:

            – free markets are totally awesome!

            – except for natural monopolies, which have to be regulated

            – and markets with asymmetric information, which are many of them

            – and activities with negative externalities

            – and for protection against long-tail risks like war/fire/epidemic/hurricane

            – except during a depression, when they need stimulus to get going again
            (but nobody can ever agree about when those conditions exist, nor about
            how much stimulus is needed)

            On the original issue of deficit spending:

            – deficit spending is bad!

            – except when stimulus is needed (and we’re still arguing about the correct
            timing and size of stimulus for what happened in the 1930’s, but I’m
            sure we’ll settle that catch up to the 1970’s soon)

            – and when it isn’t *really* deficit spending because it doesn’t increase
            debt/GDP (but we won’t know what GDP is until after we’ve done the spending,
            and the spending will itself affect GDP in some way that we’re arguing about)

            – and when it allows you to build something really useful like the
            interstate highway system (but we don’t agree on what counts as “really useful”)

            Oops! Sorry, while we were arguing, the economy crashed again. Didn’t see that
            one coming. But what’s a few trillion dollars of lost output between friends ?

          32. History of US government spending:

            http://www.usgovernmentspending.com/us_20th_century_chart.html

            So on the question of the “mixed economy”, pretty much the entirety
            of the current vicious US politics is about whether we be aiming for
            total government spending to be 35-40% of GDP as it was in the 1990s,
            or below 30% of GDP as it was in the 50s and 60s.

            In European social democracies (France, Sweden, Denmark), it’s around
            52%. In socialist Cuba, it’s 78%. So all of these are “mixed economies”,
            in some sense. But the differences between 30% and 40% and 50% are
            really huge (and 80% is something else altogether).

            And given Krugman’s published views on various issues (e.g. healthcare, Social Security),
            I’d bet, despite his willingness to toss off a qualified endorsement of
            “laissez faire”, that he’d want at least 35%, as under Clinton, and
            possibly even beyond 40% as it probably would be if we had a Medicare-for-all
            healthcare system (e.g. Canada is over 39%).

            So I think the way you’re interpreting his comments is quite weird.

            Personally, I’m probably to the left of Krugman, and would also favor
            government provision of universal high-quality pre-K and childcare,
            as in Scandinavian countries; nationalization of natural monopolies
            in electricity, water supply, sewerage; and heavy investment in
            railways. But I’d also cut the military, so maybe I’d come out at 45%.

          33. So I think the way you’re interpreting his comments is quite weird.

            When Krugman says “Free Market” etc I’m interpreting him to mean more or less what we have here. The idea that the US represents such a system is far from “quite weird” imo, but quite conventional. And I know that’s what he means because he has written extensively on the subject.

            You in contrast prefer this: “We live in a mixed economy, not a pure free-market economy”. So when a Keynesian says this:

            “All economists are impressed with and convinced by the efficiency and desirability of free markets. The field is practically unanimous on this point…”

            …there’s a huge disconnect. Since a “pure free market” does not exist on any large scale, there is no way to square the statement above with your definition. In your scheme. Kuehn appears to be saying that all economists including Krugman are Ayn Rand devotees.

            And that’s probably the disconnect we are having. I came here to defend Senator Obama’s position. You replied by attacking Ayn Rand’s.

          34. Well, now you’re conflating two different meanings of “free market” –
            first the theoretical construct of a free market, which, subject to certain
            conditions, all economists agree on as a Good Thing; and second, the
            current structure of the US economy. Which practically no-one agrees
            about, since half the economists want to reduce regulation and government
            intervention, and the other half (including Krugman) want to increase
            regulation and government activity.

            As for the idea that there’s no such thing as a pure free market, I would
            say that the USA before 1930 had government spending as a very much smaller
            share of GDP (and of course, no Medicare, no Social Security, only a small
            army, and not much regulation). That was much more “free market” than the
            more recent economy. And there seem to be a bunch of right-wing economists
            who think we should go back in that direction. Krugman, and other liberals,
            tend to think that the Clinton era was a pretty good model – though some
            would like to go further towards a European social-democracy model, with
            single-payer or nationalized healthcare, universal childcare and pre-K,
            more generous pensions etc. So there are rather significant differences
            along this spectrum, and when Krugman talks of himself, somewhat flippantly,
            as being “free market” and “laissez faire”, you have to note that what he
            really wants is an economy that in good times is maybe 65% private, and 35%
            government-run (and planned); and in bad times maybe 55% private and 45%
            government-run.

            So I think you’re somewhat overestimating Krugman’s fondness for “free markets”

          35. Well, now you’re conflating two different meanings of “free market” -first the theoretical construct of a free market, which, subject to certain conditions, all economists agree on as a Good Thing; and second, the current structure of the US economy. Which practically no-one agrees about, since half the economists want to reduce regulation and government intervention, and the other half (including Krugman) want to increase regulation and government activity.

            The fact that economists differ on specific policies in regards to the US, doesn’t change the fact that they consider the US to be an example of a free-market economy, and that such an economy is superior to a centrally controlled one.

            “…nowadays we take the triumph of capitalism as something preordained by the superiority of our economic system. After all, it now seems obvious to everyone except North Korea and Cuba that a market economy is vastly more productive than one controlled from the center

            -Paul Krugman

            http://www.pkarchive.org/theory/Russia.html

            Here Krugman describes differences so fundamental that one side cannot be considered pro-market. You are trying to position the differences between Keynes / Krugman and his RWing critics as similar. Krugman has written extensively on this: They are not. They are differences between two schools who share a common framework.

          36. Yes, the USA works better than Cuba. No-one was arguing anything different, least of all me.

            I happened to point that Krugman’s policy preferences, as copiously described in his writing,
            include support for existing government programs such as Medicare, Medicaid, Social Security,
            and IIRC support for an even more extensive government role in the (large, and ever-expanding)
            healthcare sector (IIRC he supported a Medicare-for-all public option, and expected that
            the scale and bargaining power of such an approach would have eventually led to something
            pretty much like a single-payer system).

            Crunching the numbers, this implies that he believes we should have about 35-40% of the economy
            run by government planning (like the 39% in Canada) in good times; and since we reached about 42%
            during the recent stimulus, and he wrote many columns arguing that it was insufficient, probably
            something in excess of 45% when a large stimulus is needed.

            So you have to ask yourself a couple of questions. What is it about those particular sectors
            that would make Krugman think it’s a good idea to have them under government control ?
            And if someone thinks 35% of the economy should be government-planned, is “laissez-faire”
            really an accurate description of their approach (even if they use it themselves) ?

            [As an aside, I’ll note that AFAIK Krugman is also in favor of strong anti-trust enforcement
            and environmental regulation and/or a carbon tax, so he’s not really “laissez-faire” about
            even the 65% of GDP that would be notionally private]

            Of course you’re right that he thinks free markets are better than communism; in which view
            he’s completely in line with Keynes himself, whose goal was to find ways for government policy-makers
            to fix the known flaws of the capitalist system and thus prevent what Marx saw as its inevitable
            collapse. But while it was natural to emphasize the free-market part of the Keynesian approach
            when its greatest rivals were the Marxist/Socialist approaches on its left, these days in the
            USA I think you really have to take a nuanced view and look closely at the reasons why it
            might be appropriate and necessary to keep over 35% of GDP under government control. Lumping
            Krugman and other neo-Keynesians in with the more aggressively “free-market” and “laissez-faire”
            economists of the Chicago School is just not very useful. Keynesians love free markets, but with
            a full awareness of their flaws, and an understanding that planned solutions simply work better
            for many important sectors, for a variety of (sometimes subtle) reasons.

            [As another aside, I would note that isn’t really clear to me that the theoretical asset-
            allocation benefits of a “free market” really apply to the way long-term investment decisions
            get taken inside a large conglomerate. If 5 divisions of GE each want to build a factory, then
            how do they decide which ones to build ? Not by competition in the market, but by passing
            proposals up a bureaucratic hierarchy to top management, where someone picks and chooses the
            winners. Is that any different from the planning process in government ? Why should it be
            any more efficient ? And that analysis applies even more to “private-sector” decision-making
            in economies like South Korea and Japan, which are dominated by large conglomerates with close
            ties to government.]

        2. Also, the Krugman/Wells textbook is all over the internet if you want to verify my quote. Do an advanced google search in .pdf files only.

          1. Anyway, here’s a list of things that, even in the USA, we seem to
            think should be provided by investment by (some level of) government,
            based on bureaucratic planning rather than free markets:

            – schools
            – roads
            – bridges
            – dams and levees
            – police
            – armed forces (bout $800B/year)
            – coastguard
            – justice system
            – CIA/NSA
            – minimal pension
            – water supply and sewage treatment
            – garbage collection/disposal

            That’s a pretty big chunk of economic activity already.
            In other developed countries, there’s quite a bit more,
            and, to be honest, comparisons suggest that these work out
            better under government than as a patchwork of private
            providers under government regulation:

            – healthcare
            – early childhood education
            – power grid
            – electricity generation

            Taken together, these are a really big chunk of economic
            activity – usually 40% or more of GDP. And apart from some
            on the libertarian fringe, no-one’s proposing changing this.

            So I’m fairly unimpressed by the argument that economists love
            free markets and that planning is bad. The right answer in
            each sector is different: and economists know that as much as anyone,
            e.g. from discussion of natural monopolies, asymmetric information.

    2. I think Obama’s vote was foolish posturing.

      But at least it was not made in the context of an imminent default. How he would have voted in circumstances similar to those we face today is unknown. So it doesn’t quite match.

      To draw a further distinction, at least there was a vote. Boehner’s refusal to allow votes because he lives in terror of the Tea Party is “morally reprehensible, pragmatically harmful, disastrous as a precedent and politically stupid,” in a way that far exceeds the foolishness of Obama’s vote.

    3. Firing a gun in the air is irresponsible in the exact same way and to the exact same degree as firing it at someone’s head.

  3. Very nice, but before I leap up in praise of McArdle’s good sense I’d like to know a bit more about her views of responsibility in the matter. Lot of those on her side of the aisle think default would be stupid and disastrous. But they are trying to put the blame on Obama.

    1. In addition, if it really does bring financial chaos (with economic chaos only subsequent) it’s going to put a serious dent into the hildings of lots of very rich people. And that will interfere with, as Mark Kleiman puts is, the libertarian project to worsen the income distribution.

    2. Aaaaand here’s McArdle:

      Democrats seem equally bewildered to find that no, Republicans actually care enough about Obamacare to make a hard stand against it. That’s not how the script works. In the script, President Martin Sheen … pardon me, President Barack Obama … gives a stirring speech, and shamed moderates cross the floor to get started on the hard work of making the Affordable Care Act even more awesome than it already is, while the rest of the Republican legislators have to join the witness protection program to protect themselves from an angry mob of voters.

      Well, actually, no. Democrats, for all their faults, are not delusional. A few Democrats are probably surprised by Republican’s insistence on sabotaging the government and the economy, but that’s mostly because they buy into narratives about how Republicans care about deficits and the efficient operation of the economy – narratives promoted by McArdle.

  4. Mark: “Megan and I disagree on a wide range of topics, and I think she’s fooling herself about the extent to which the libertarian project boils down to a commitment to worsen the income distribution, but when push comes to shove she’s reality-based.”

    Or rather, once she looks at the clif, the speed, the abilitty to brake and the insanity of the drivers, she realizes that these guys aren’t playong games.

    Far too late, of course.

  5. Talk about the “soft bigotry of low expectations.” We’re supposed to congratulate GOP tools now for their generosity in admitting that defaulting on the debt would be bad for the nation’s reputation and economy?

    OK, fine, McArdle is not as far gone as, say, Ted Cruz or the teapers in the House. Somebody give her a medal.

    1. Good point. I guess right-wingers get patted on the had for not being 100% f-ed up, while hippies get punched.

    2. Right, a pox on McArdle and David Brooks and all those others who’ll point out
      that the current behvior of Republicans is deplorable, but won’t actually take
      the next step of voting for the less-insane party. Bruce Bartlett showed how
      it should be done, but astonishingly few others have followed his lead.
      It seems these superficially intelligent and knowledgeable commentators
      are basically tribal, and are never going to switch tribes no matter how
      crazy it gets.

      1. Yes. At some point so-called “sensible” Republicans have to step up and recognize that their party is controlled by lunatics, and that continuing to support the party simply enables the lunatics. They are as responsible as the Tea Partiers for the consequences.

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