Reaction to Obama’s Second Inauguration

January 21, 2013Danny Vinik 1 Comment

Just a quick post on my thoughts on President Obama’s second inaugural address.

Like many liberals, I enjoyed the President’s speech a lot. I loved hearing Obama explicitly say he wants to take on climate change. I loved the explicit comment on LGBT couples and equal rights. I loved the focus on economic inequality and the need to promote free, fair markets.

President Obama is sworn in as President of the United States.

In the end though, the speech did not say much new and it doesn’t change the congressional obstruction the President faces. Republicans aren’t going to agree to cap-and-trade because Obama mentioned climate change in his inaugural address (see his 2009 inaugural address). So, the only thing I’m left with in the end is that the speech doesn’t matter.

How many of the President’s speeches have truly mattered? The bully pulpit is a lot less powerful than people think, especially when you’re facing an opponent (the Tea Party) who won’t be swayed by changes in public opinion. The more Obama promotes ideas the Tea Party doesn’t agree with (even if the public supports those ideas), the more Tea Party Congressmen will attempt to block all legislation. The only thing that works against such an opponent is leverage, as seen in the final fiscal cliff deal and the House Republican’s new willingness to pass a three-month debt ceiling increase.

On the opposite side, liberals were certainly happy with the ideas and values the President outlined. Hearing those ideas in such an important, public address reignites hope they will become the major accomplishments of Obama’s second term. But the political realities are the same and no speech is going to change anything. If anything, it’s only going to anger Republicans more and increase their obstructionism. Thinking of this speech as a major turning point in Obama’s time in office or the moment where Republicans will finally come around to working with the President is naive. Obstructionism will reign once again. In just a few short months, Democrats and Republicans will be bickering over a new continuing resolution to fund the government and we will risk a government shutdown. That was true yesterday and it’s true today. It’s true tomorrow as well and no speech is going to change that. (Image via)

Why I’m Skeptical About #MintTheCoin

January 10, 2013Danny Vinik Leave a comment

The big conversation topic over the past week has been about whether or not President Obama should instruct the Treasury to mint a trillion dollar platinum coin, deposit it in the Treasury’s bank account at the Fed and thus avoid a nasty debt ceiling fight with Republicans. Steve Randy Waldman has more technical details on it. It’s an incredibly interesting idea and at first, I was on board, but over the past few days, my mind has changed.

I still believe its legal and would not have any economic impact outside of avoiding a default. It wouldn’t cause massive inflation. And of course the coin doesn’t need to be actually made out of a trillion dollars worth of platinum.

But, I’m skeptical about it for two reasons:

1. Right now, we have two parties in this country: one crazy (Republicans) and one sane (Democrats). Think about what would happen if we actually minted the coin:

Republicans would probably file a lawsuit against the President, claiming its illegal. And then they would spend the next four years making the President’s life as hard as possible. Forget about new gun regulation. Forget about immigration reform. Congress is inept right now, but it can get a lot worse. Mitch McConnell can bring the Senate to a stop. John Boehner can spend the next two years only passing bills to repeal Obamacare. It wouldn’t surprise me at all if House Republicans tried to impeach the President for such a move. The government would grind to a halt. And, we also need to pass a new Continuing Resolution for the federal budget in March so that our government is actually funded. How do you think that would go if Obama mints the coin?

2. It also sends out an image to the rest of the world that America’s government is fundamentally broken. I know – our image is already in the garbage since we’re debating whether we should pay our own debts. Bear with me for a second.

Congress may be incompetent, but the President actually did accomplish a lot in his first term: the ACA, Dodd-Frank Act, ending the war in Iraq, etc. House Republicans can spend all the time they want opposing everything Obama proposes but it doesn’t mean nothing happens. Bills still do pass (even if it’s at the slowest rate ever) and laws are signed. Believe it or not, Congress can actually do a lot less. Other countries, international companies and foreign investors know this. They may also hit the panic button if we mint the coin. Who wants to invest in a country where they need to mint a trillion dollar coin to not default? Who would have any faith that that country could accomplish anything? I’m not sure if the international world would finally lose faith in America, but it’s a risk that I’m unwilling to take.

However, there is a big caveat here. If the option is between going over the debt ceiling and defaulting or minting the coin, I’m on #MintTheCoin’s side. Defaulting is still worse than McConnell and Boehner shutting Congress down. It’s still worse than the international world losing all faith in America’s political institutions.

But right now, there’s a third option: negotiations.

I know the President has said he won’t negotiate over the debt ceiling, but he doesn’t have a choice here. The negotiations aren’t going to be fun. Republicans have the leverage and are going to use it. Some are crazy enough that they actually want us to default. However, Republican leadership understands how horrible that would be. They know they can’t let it happen. They also know that their image is a disaster and the public will largely blame them if we default. They have a number of incentives to negotiate and work towards a deal.

It’s a terrible, horrible standard to set, but we don’t have a choice. Get ready for an ugly couple of months.

Incoming Congressman Ted Yoho Wants Us to Default

January 3, 2013Danny Vinik 13 Comments

I’m a bit behind so I’ll have my reaction to the fiscal cliff deal up in a bit (meh). But first, here’s a little tid-bit from The Atlantic‘s most recent issue. It’s from a short piece by Ben Terris about new House Republican Ted Yoho (R-Fl.), who defeated 12-term incumbent Cliff Stearns in the primary and won the general election easily:

When I called Stearns’s office in Washington last October, he’d had two months to mull the enduring political allure of outsiders. In a terse statement, he warned of a “very steep learning curve to serve in Congress effectively,” and recommended that Yoho lean on Republican leadership as he adjusts to legislative life. Yoho has other ideas. “With all the problems we are having, I won’t be afraid to tell leadership, ‘You need to explain to me why I should follow you anywhere,’ ” he told me, adding that, unlike two-thirds of last year’s freshmen, he would never have voted to raise the debt ceiling. “I think I scare them to death.”

Emphasis mine. That’s yet another House Republican who wants to default on our debts. Yoho officially takes office today with another debt ceiling fight coming up soon. President Obama says he won’t negotiate over the debt ceiling, but I still don’t see how that’s possible.

If Obama sticks to his word, House Republicans will simply let us default. In that respect, Yoho’s right: he scares me to death.