A Proposed Colloquy

“Mr. President, Speaker Boehner says that he will not agree to raise the debt ceiling unless there are trillions of dollars in spending cuts.  How do you respond?”

“Well, Jake, since the Speaker has refused to make the very wealthiest pay their fair share, and has taken Defense spending off the table, the only way to get trillions of dollars in spending cuts is to dismantle Medicare and Social Security.  So essentially, he’s saying that the Republican Party will cause a collapse of the US economy unless it gets to dismantle Medicare and Social Security.  I won’t let them do either one, and I think that the American public agrees with me.”

Author: Jonathan Zasloff

Jonathan Zasloff teaches Torts, Land Use, Environmental Law, Comparative Urban Planning Law, Legal History, and Public Policy Clinic - Land Use, the Environment and Local Government. He grew up and still lives in the San Fernando Valley, about which he remains immensely proud (to the mystification of his friends and colleagues). After graduating from Yale Law School, and while clerking for a federal appeals court judge in Boston, he decided to return to Los Angeles shortly after the January 1994 Northridge earthquake, reasoning that he would gladly risk tremors in order to avoid the average New England wind chill temperature of negative 55 degrees. Professor Zasloff has a keen interest in world politics; he holds a PhD in the history of American foreign policy from Harvard and an M.Phil. in International Relations from Cambridge University. Much of his recent work concerns the influence of lawyers and legalism in US external relations, and has published articles on these subjects in the New York University Law Review and the Yale Law Journal. More generally, his recent interests focus on the response of public institutions to social problems, and the role of ideology in framing policy responses. Professor Zasloff has long been active in state and local politics and policy. He recently co-authored an article discussing the relationship of Proposition 13 (California's landmark tax limitation initiative) and school finance reform, and served for several years as a senior policy advisor to the Speaker of California Assembly. His practice background reflects these interests: for two years, he represented welfare recipients attempting to obtain child care benefits and microbusinesses in low income areas. He then practiced for two more years at one of Los Angeles' leading public interest environmental and land use firms, challenging poorly planned development and working to expand the network of the city's urban park system. He currently serves as a member of the boards of the Santa Monica Mountains Conservancy (a state agency charged with purchasing and protecting open space), the Los Angeles Center for Law and Justice (the leading legal service firm for low-income clients in east Los Angeles), and Friends of Israel's Environment. Professor Zasloff's other major activity consists in explaining the Triangle Offense to his very patient wife, Kathy.

29 thoughts on “A Proposed Colloquy”

  1. (Zasloff channels the President): “…the Speaker has refused to make the very wealthiest pay their fair share, and has taken Defense spending off the table, the only way to get trillions of dollars in spending cuts is to dismantle Medicare and Social Security. So essentially, he’s saying that the Republican Party will cause a collapse of the US economy unless it gets to dismantle Medicare and Social Security.
    Why expect “a collapse of the US economy” if the Federal government leaves medical insurance, pensions, and charity to non-State actors? The United States had a Department of the Army and a Department of the Navy since the adoption of the Constitution. Throughout the 1800s the US absorbed millions of immigrants and gave them a standard of living higher than their homelands. Social Security only dates to the 1930s and Medicare and Medicaid are more recent. Chile privatized their old age pension program, and the standard of living in Chile has not “collapsed”. So why expect a “collapse of the US economy” with a smooth transition to an unsubsidized competitive market in social services?

  2. Malcolm, the collapse will come when your friends in Congress cause the United States to default on its debt as a way of holding the country hostage to their (and your) economic theories.

  3. If you don’t want a default, cut spending. Outside of that, a default is inevitable. Either open repudiation of legislated dollar-denominated commitments like Social Security and contractural dollar-denominated commitments like pensions for government employees or a disguised default through inflation and a reduction of non-dollar-denominated services: “guaranteed medical care” will mean bandaids and aspirin and “retirement home” will mean draughty, unswept, understaffed barracks.

  4. Zasloff, I sure hope you’re right about this scenario.

    I’d rather though that the president simply say that dismantling the safety net is wrong, regardless of whether or not it’s popular.

    But in terms of the “I won’t let them do either one,” well, technically, how would he stop them? Would the Dems be able to get a raised debt limit through the House without any Republicans? (Sorry, it’s late at night and I don’t feel like doing the math. Plus I know you already know the answer…)

  5. Shorter Malcolm: the Gilded Age was terrific! Let’s go back there!

    PS when you confuse social insurance and ‘charity’ you rather give the game away.

  6. Malcolm: “If you don’t want a default, cut spending. Outside of that, a default is inevitable.” The British government (run at the time by people with similar views to yours on the proper scope of State action, viz. total indifference to the welfare of working people) had a debt-to-GDP ratio of 295% in 1815, and never defaulted. The ratio of tax to GDP in Sweden is 48%, against 28% in the USA (OECD data for 2007). The universe of sustainable futures is very large. Default would be entirely a political choice by the current GOP.

  7. (Warren): “Shorter Malcolm: the Gilded Age was terrific! Let’s go back there!
    I thought we agreed months ago that this “shorter” business expresses a deliberate wild mischaracterization.

    (Warren): “…when you confuse social insurance and ‘charity’ you rather give the game away.
    State-mandated resource transfers from individuals to individuals or organizations are either predation (e.g., ag subsidies, pork projects) or charity. The “public goods” argument for charity makes sense until you add three considerations: (1) oversight of State functions is a public good that the State itself cannot provide, (2) moral hazard, (3) deadweight loss due to taxation. The State has no resources to dispense except for those it takes from the non-State economy. Taking resources from wealthy citizens and returning them to those same wealthy citizens makes no sense, so obviously income transfer programs aresold as charity.

  8. (James): “…by people with similar views to yours on the proper scope of State action, viz. total indifference to the welfare of working people…
    Now you pretend to read minds? I recommend Charles Murray’s __Losing Ground__.

  9. Malcolm, Boehner is on record saying that the debt ceiling should be raised. McConnell also believes the debt ceiling should be raised. So does the Democratic leadership. So instead of a straight vote on something that all the leadership of both parties think should happen, Boehner is trying to tie it to something the Democratic leadership doesn’t want. There’s literally no reason for the Democrats to cave into this extortion.

  10. My guess, given the GOP rabies caucus (and that’s an insult to mad dogs everywhere), is that Boehner is trying to set up a classic “compromise”. He’s going to need several dozen democratic votes to get through the House, and by threatening to chop the baby’s head off and burn its entrails, he’s hoping to be seen as eminently reasonable when he agrees to only cut off its hands.

    And then of course, whatever favored programs get cut, the GOP will run ads savaging the democrats for agreeing to it.

  11. For anyone who thinks they suspect or wonder whether certain ideologies have a standard modus operandi in their rhetoric, we have a very good short course right here in this thread. Study it and see if you can identify the techniques employed. Now, I’m not saying the M.O. is conscious or purposeful, I’m just saying that in this thread is a very clear and brief example of how they do it. Advanced techniques usually involve umbrage, heightened emotion in a narrow range, more dissembling, more distraction.

  12. (I)nstead of a straight vote on something that all the leadership of both parties think should happen…
    Boehner and McConnell occupied leadership positions in Congress during the Bush presidency. No surprise that they agree more with the Democratic leadership than with the Tea Party caucus Republicans. That does not make their position sane.
    (James): “The British government…had a debt-to-GDP ratio of 295% in 1815, and never defaulted.
    Thanks for a material response. I’ll check. I expect that inflation disguised default and default mattered less with government debt a smaller fraction of total GDP. The smaller the enterprise, the less bankruptcy matters to society as a whole.

  13. Malcolm: There is no such thing as “inflation disguised default.” You are making up fictions.

  14. (Sean): “Malcolm: There is no such thing as “inflation disguised default.” You are making up fictions.
    Huh?
    Dollar-denomainated promises convey control over resources. A 20 year loan at 3% interest accepted in anticipation of, say, 1% annual inflation confers control over fewer real resources than anticipated after 20 years of 10% annual inflation.

  15. Malcolm is unsurprisingly unaware that the Treasury sells inflation-protected bonds to those who prefer that approach (not many). Nor has he seemingly noticed that inflation is not terribly high. The fact that the US is still paying rather low interest on its bonds has escaped his attention, despite this being a good measure of what the market expects inflation to become.

    In short, he is about as connected to reality as is Niall Ferguson. But he probably doesn’t have the great accent or the PBS specials.

  16. (Warren): “Malcolm is unsurprisingly unaware that…
    …Warren pretends to read minds. No. That’s obvious.
    (Warren): “…the Treasury sells inflation-protected bonds to those who prefer that approach (not many).
    Fact.
    (Warren): “Nor has he seemingly noticed that…
    Warren pretends to read minds. No. That’s obvious.
    (Warren): “…inflation is not terribly high.
    There’s your answer; the Department of the Treasury defines the rate of inflation. I’ll sell you a new Mercedes Benz for $2,000 if I get to define “new Mercedes Benz” after you give me the money.

  17. OK. Malcolm believes that “the Department of the Treasury defines the rate of inflation”. Since you’re accusing me of mind-reading , let’s be very careful here, and not put words in your mouth, Malcolm. So, please, explain; do you really think that the Department of the Treasury can just make up the rate? Do you think the rate of inflation in the real world is significantly greater than the reported rate? Doesn’t it trouble you that the market is willing to buy treasury bonds that aren’t inflation-protected (even though they have the option of buying inflation-protected bonds) and at low interest rates – suggesting that either the market is just donating money to the US or they don’t expect inflation to rise greatly?

  18. The State has no resources to dispense except for those it takes from the non-State economy.

    Show me a functional economy that exists without a state, Malcolm. By your logic (combined with the actual facts on the ground) the vast majority of private wealth properly belongs to the state, because it would not exist without the state.

  19. Warren Terra: thanks for the link to that other blog, it looks like fun!

    But don’t worry, RBC – I will never leave you.

  20. (Malcolm): “The State has no resources to dispense except for those it takes from the non-State economy.
    (football): “Show me a functional economy that exists without a state, Malcolm.
    The government of a locality is the largest dealer in interpersonal violence in that locality. You want an example of humans without locality (seafarers who never land, perhaps) or a locality in which members of tribes of approximately equal strength (i.e., no dominant violence distributor) interact across tribal lines while a truce maintains. This may have existed, but I know of no examples. I recommend Jack Hirschliefer, “Anarchy and its Breakdown”, __Journal of Political Economy__.
    (football): “By your logic (combined with the actual facts on the ground) the vast majority of private wealth properly belongs to the state, because it would not exist without the state.
    “Belongs” has a moral connotation that does not work for me here. Morality is a result of biological and cultural evolution. As James Wimberley observed in his post on The Wall Street Favela, different legal protections of title to resources will have different material consequences.

  21. (Malcolm): “the Department of the Treasury defines the rate of inflation.
    (Warren): “…do you really think that the Department of the Treasury can just make up the rate?
    Pretty much. Treasury officials get to pick the commodities that comprise the market basket of commodities whose prices over time determine the official rate of inflation. The melt value of a silver dime is now over $2.00.
    (Warren): “…Do you think the rate of inflation in the real world is significantly greater than the reported rate?
    Yes. Try buy 20 lbs. of rice. Try buy a tank of gas. Compare to prices before TARP.
    (Warren): “…Doesn’t it trouble you that the market is willing to buy treasury bonds that aren’t inflation-protected (even though they have the option of buying inflation-protected bonds) and at low interest rates – suggesting that either the market is just donating money to the US or they don’t expect inflation to rise greatly?
    Somewhat. However, the figures are cooked by the purchase of Treasury bonds by other US government agencies.

  22. (football): “Show me a functional economy that exists without a state, Malcolm.”
    (Malcolm): “…You want an example of…a locality in which members of tribes of approximately equal strength (i.e., no dominant violence distributor) interact across tribal lines while a truce maintains. This may have existed, but I know of no examples.
    Got one: Earth, between 1945 and 1991. International trade occurred without an enforcement mechanism stronger than trust and shunning of defectors.

  23. Malcolm,

    Treasury officials get to pick the commodities that comprise the market basket of commodities whose prices over time determine the official rate of inflation.

    This is possibly nominally true – but unless they have been fiddling the number by changing which commodities they include, it’s not relevant. Do you say they’ve changed the list of included commodities at all, let alone in a deceptive manner?

    The melt value of a silver dime is now over $2.00.
    ….
    Yes. Try buy 20 lbs. of rice. Try buy a tank of gas. Compare to prices before TARP.

    You know, it’s unseemly to imply that the treasury is cherrypicking price-stable commodities and then pick your own especially volatile commodities. Silver and gold are way up, and oil is up significantly on a few years ago. But the former are predictable (though perhaps not to this degree) in the face of a near-collapse of the financial sector, and the latter has been predicted for as long as I can recall. Rice, I dunno. I don’t buy it often enough to pay close attention. Of the things I do buy, the best sales prices I can find haven’t changed in years.

    Somewhat. However, the figures are cooked by the purchase of Treasury bonds by other US government agencies.

    This is nonsense on stilts. Yes, the Social Security Trust Fund buys a lot of Treasury Bonds. At the market price. To be sure, if even more bonds were being sold to other buyers, we would have to sweeten the deal in order to find enough demand, and that would mean higher interest rates. But that is a counterfactual. It’s not what’s happening. And for better or for worse, and despite the purported reasons for the payroll tax hike of the 1980s, excess payroll tax revenue is now routinely counted against the deficit when the deficit is reported in the media, even though that money is being borrowed by the Treasury from the Social Security Administration, in the form of bond sales.

    Basically, you’ve accused the Treasury of concocting a low inflation rate through the arbitrary selection of commodity prices to consider. You didn’t prove this, and you cherrypicked your own arbitrary list of commodities. And youve got no answer for why it is that, if inflation threatens to erode the value of US bonds, the supposedly savvy professional investors, people who are paid quite handsomely to be better informed on these matters than the both of us put together, are neither flocking to inflation-protected bonds nor demanding higher interest on normal bonds.

    You have, in short, got nothing.

  24. (Warren): “Basically, you’ve accused the Treasury of concocting a low inflation rate through the arbitrary selection of commodity prices to consider.
    Yes.
    (Warren): “You didn’t prove this…
    I’d have to have bugs in the conference rooms at the Treasury Department to prove it. Some definitions change automatically. For example, “housing” means a higher ratio of apartments to houses than it once did.
    (Warren): “…and you cherrypicked your own arbitrary list of commodities.It’s a deception…
    Warren is mindreading again. “Cherrypicking” is a deliberate selection of unrepresentative data. To make that accusaation is to call someone “liar”. Did Warren blow the charm school tuition on hookers and smack? After I get some paperwork done in town and uproot a few seedlings from beneath a royal palm, I’ll visit the library and get mineral and food commodity prices from ten years ago, and official Treasury inflation figures for every year between 2001 and 2010. Fair? If I find real inflation above the Treasury figures, I get to call Warren ___, and ___, and hypocrite (see comment five).
    (Warren): “…And youve got no answer for why it is that, if inflation threatens to erode the value of US bonds, the supposedly savvy professional investors, people who are paid quite handsomely to be better informed on these matters than the both of us put together, are neither flocking to inflation-protected bonds nor demanding higher interest on normal bonds.
    Most of those “investors” aren’t. They’re salaried money managers. Often they are bound by law to purchase AAA-rated securities (e.g., US Treasury bonds). Neither are the bond-rating agencies “investors”.

  25. (Kleiman): “Malcolm, the collapse will come when your friends in Congress cause the United States to default on its debt as a way of holding the country hostage to their (and your) economic theories.
    The GAO just shot that harebrained theory in the rump.

  26. Warren, why do you bother providing a field on which Malcolm may ride his hobby-horse? Anybody who seriously recommends a loathsome hack like Murray is either himself a loathsome hack, or else not terribly bright. Malcolm doesn’t strike me as a loathsome hack.

    I might be wrong about that, but whichever the explanation, there simply is little point in engaging with him. He’s free (because the proprietor of this site permits it) to stand on a soap-box in the corner, shouting out his obsessive religious beliefs. That doesn’t mean we have to listen; and if we do, he is less likely to go away.

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