Posted by: theoptimisticconservative | April 9, 2011

A Strategic Assessment of the Recent Budget Skirmish

Bruce McQuain and others have made good points about the outcome of the budget battle – which actually ended up being a maneuver game, with a little fire traded but no real battle in the end.

Here’s my take, for what it’s worth.

First, the outcome of the last 24 hours is most important for what it’s not: a full-frontal cave-in by Republicans to business as usual.  The numbers are less significant than the political postures in this regard.  In the end, the Democrats were prepared to offer more cuts rather than go to a shutdown.

That means they were not as confident as their earlier rhetoric suggested that a shutdown would produce a political result in their favor.  I suspect the Wisconsin supreme court election had something to do with that.

The point that the cuts are small – smaller than the additions to the deficit over just the last week – is well taken.  But anyone who thought the whole war was going to be won on this battle misperceived the event.  It was never going to be.  This was not the battlefield on which the multitrillion dollar deficit was going to be slain.  Moreover, heaping efforts like defunding Planned Parenthood or the EPA on this particular confrontation was a flawed tactic.  Riders of that kind are a perquisite of established political power relationships and procedural convention.  When you don’t have that behind your effort – and the Republicans in Congress don’t – you need to fight only for what you must.

In the case of the punching bag that is the 2011 budget, avoiding a reversion to business as usual is the minimum the Congressional GOP had to achieve.  It did that.  There is an important sense in which this outcome has bought time:  it almost certainly forestalls the decision of global finance planners to catastrophically disfavor the US economy and US securities.

That is a real possibility, if Republicans are decisively unable to halt the hurtling progress of our federal government toward fiscal insanity.  The incremental success achieved by the GOP on Friday means that any assessment in that regard can – in fact should – be postponed.  It’s an uneasy position for everyone, but it’s also better than any alternative.  In terms of transparency, fairness, and public integrity, the United States and our fiscal management are still the best the world has got.  Investment gurus love to maneuver against the dollar, but there is literally nothing that can do what it has done for the last 60 years.

That reality is based on the characteristics of American society and our political institutions, even more fundamentally than on our economy.  Currency, fiscal accounting, and debt are all man-made constructs, not principles of the universe that operate, constant and indifferent, outside our conscious decisions.  The mechanism that would render it impossible for us to manage our way out of our fiscal crisis is a loss of confidence in our character by the rest of the world.  Other peoples stand to lose so much in their own right, if our character is judged to have imploded and our faith and credit to have become unreliable, that they are strongly motivated to postpone making that judgment.

The budget compromise on Friday gave them a reason to continue postponing it.  There is another freighted confrontation coming up on 16 May, when money will run out if the debt ceiling is not raised.  It’s important for Republicans to keep the trend going in the direction they’ve now established, however incremental the progress may be.

Trying to win the whole game on every play is a faulty approach, and one that has to be avoided.  Republicans can force issues only in the House this year.  It isn’t possible to override a presidential veto.  Those are the constraints.

In a sense, the voting result in Wisconsin may turn out to have been the most important event of the last week.  The Republicans in Washington avoided what would have been a very damaging – perhaps irreparable – loss, but the supreme court election in Wisconsin appears to be a positive victory (assuming Prosser’s win holds up).

America’s fiscal soundness can’t be repaired without a significant political shift away from the principles of progressivism and collectivism that have become entrenched at each level of government.  We are attempting to turn the ship of state in a positive direction without descending into chaos or succumbing to weakness and corruption: an effort there are few if any historical models for.  But there is no fate dictating that we can’t be the nation that achieves this.  We have not even begun to tap the idled resources that can be brought to bear, to restore our character, our economy, and our fiscal integrity.

J.E. Dyer blogs at Hot Air’s Green Room and Commentary’s “contentions.”  She writes a weekly column for Patheos.



  1. Dear Woman,
    Isn’t this a rather tedious way of concluding that we should “wait and see” what follows in act’s two and three? I hope your input to ADM Locklear was more concise and to the point.
    But, then again, you are Irish.
    I’m still pissed that J gave you the cabana key back.

    • Uh, no. It’s an informative way of pointing out that others will be willing to wait and see, and that’s likely to save our bacon this summer. 🙂

      P.S. Don’t know from no stinking cabana key…

  2. Well, yes, you can’t hit a five-run homerun. The Tea Party Republicans may have overpromised both in terms of arithmetical budget reductions and in terms of which sacred liberal programs could be cut — like subsidies for Planned Parenthood.

    The problem with the Republicans (to continue my baseball analogy) is that historically they can’t put together more than one or two good innings.

    • I believe Barack Obama has, in fact, hit a five-run homer. He has also scored an 8-point touchdown and nailed a 4-point 3-pointer. If I’m not mistaken, moreover, he has “reset” the number of victories required for a PGA grand-slam, and led a soccer team to victory, not in the World Cup but in the Milky Way Galaxy Cup.

      • Did you forget his Nobel Peace Prize and how he picked the Final Four? (Wait, one of those is not correct.)

  3. “Investment gurus love to maneuver against the dollar, but there is literally nothing that can do what it has done for the last 60 years.”

    J.E., I can’t figure out what this sentence means. Did you mistype something or is my brain simply failing to comprehend (which is not at all out of the question!)?

    • The sentence is correct. She is referring to the role the dollar plays as the world’s reserve currency.

      • Jeff Steele — welcome, and my apologies that it took so long for your comment to be “approved.” That’s a one-time thing that keeps down the spam. Any comments from you will post automatically from now on, so don’t be a stranger.

        RE — I’m sure your brain is fine. I was indeed referring to the dollar’s role as the world’s reserve currency. We tend to forget that the most fundamental reason the dollar has been resorted to in this manner is not that people love its style, or even that our economy is big and powerful. The dollar has been the global reserve currency because of what American government is: compared to all other governments, transparent, accountable, and impartial as regards the management of currency.

        China cannot possibly serve in the same role, because China’s government is secretive, deceptive, unaccountable, and wholly dedicated to favoritism and exploitation in its foreign monetary dealings. Under her existing government, China can only impose an order that radically favors some and disfavors others. Currency management would become a government of men — of favoritism — not of laws.

        While the US gives the world an alternative model, the Chinese government’s worst tendencies are held somewhat in check. China has to play by the rules WE have observed and enforced, in order to profit from the US-oriented trade-and-currency order.

        But if the US dollar “collapses” — if the world loses confidence in it — no one else can step in and replicate what the US and our dollar have done. It’s not that we will lose the lead role, it’s that the whole system will fall apart. Anyone who thinks China will step in and “act like the US” in that case is in for a really ugly wake-up call. There is no quiescent status quo like the one we have now, without US leadership.

        As an aside, today’s goldbugs who think holding gold is going to save them if the US dollar collapses will learn the hard way that without the faith and credit of the United States, their gold is only worth what other armed and predatory nations say it is — and the cost of redeeming it may well be too high to pay.

        The good news is that I think most people, including the leaders of most nations in the G20, don’t want to see a collapse of order. I’m hopeful that the current crop of Republicans can keep us headed in the right direction, during this interim in which the world would rather wait for us to get ourselves in order than loose the dogs of war.

        • There were currencies with world-wide credibility before there was ever an American dollar. In fact, Spanish money was the de facto currency for much of the American colonial period. If the US dollar falls out of favor another form of money will take its place because trade will go on regardless of the form of the medium of exchange. And the greatest threat to the dollar is no action by any foreign power but the policies of our own government. Manipulation of fiat currencies to finance otherwise impossible government schemes is exactly why precious metals and other real assets, real estate excepted, are increasing in value.

          • You’re basically making my point for me, adam. The world looked very different when Spanish currency was the “global” currency. The standard for a “global currency” was much lower when Spanish currency met it. Currency’s function in daily life was not nearly what it is today, nor was the “global economy,” such as it was, organized in the pervasively accessible variety of opportunities it offers today. Investment and finance across borders are as important as trade, per se, in evaluating how a currency is performing.

            An honestly administered fiat currency is the only kind that can take the place of the dollar and lubricate the global economy we have today. It’s the “honestly administered” part that no one else will replicate, even to the flawed degree managed by the US.

            “…the greatest threat to the dollar is no action by any foreign power but the policies of our own government.” I agree.

            • Fiat currencies aren’t necessary for trade, locally or globally. The only real reason for fiat currencies is the enablement of government spending. Printing money was the solution to funding the various wars in US history, government investment in infrastructure and social programs. That’s why we’ve seen an incredible inflation since the last decades of the 19th century.

              Judy Shelton gives more insight into the situation in her great book, “Money Meltdown”.

          • My apologies for confusing you with adam, cm! Not that it’s not a compliment to both of you…

  4. Per J’s baseball analogy. The Republican Party’s problems are systemic. They have problems pitching, shaky sticks, and the fans are ready to scream for a new pitcher after the first called ball….

    You know the old rule, you are in trouble when you go to the bullpen in the 3rd inning, not only will you probably lose the game anyway, but you stand the chance of hammering the pitcher into a slump.

    This agreement is not a big victory, but neither was El Guettar. What that battle did prove is that Patton had turned II Corps around and put it back on its feet after Kasserine…

    This was positive as to the tone and the intent. The results are a fiscal nullity.. but as was pointed out by some other commentator on some other site.. when talking about multiple trillions, the difference between 100 billion and 39 billion is pretty insignificant. Perspective in all things I suppose.

    Yeah and I am tiring of the TEA Party demand for every play to be a long bomb… Deep throws have their place… but if you throw them all the time the defense is going to get the idea and beat you over the head with your lack of tactical imagination.

    There will be another battle… the debt ceiling is coming up… then the real budget for next year…

    Another analogy but I was a Magnum PI fan… and the first show was pretty good… as Magnum is trying to pick the lock on the Ferrari with good ole Zeus and Apollo in hot pursuit… he tells himself over and over… “Don’t look at the dogs… work the lock… Don’t look at the dogs… work the lock…”

    We need to keep working the lock. We know what the dogs look like.


    • “Yeah and I am tiring of the TEA Party demand for every play to be a long bomb… Deep throws have their place… but if you throw them all the time the defense is going to get the idea and beat you over the head with your lack of tactical imagination.”

      Perhaps. But it also creates some political space for the likes of Boehner to cut a more favorable deal with the Dems. Richard Nixon said the same thing to the more conservative William F Buckley (and thanked him for it).

    • Your metaphors are outstanding. A true witches brew.

  5. Right, the real good news is Wisconsin. I thought for sure the corrupt machine in Milwaukee would carry the day. A lot of hopeful people just took the time to show up. Does this bode well for ’12? Only if we keep the pressure up, with everybody everywhere doing what it takes to take back our country, even if only means you take the time to stand in line and show up to vote.

    Better yet, give to The Club for Growth (time and money) and give your time and money to all the groups and individuals you like so the next election will mark a sea change.

  6. Thanks for the clarification J.E. and Jeff.

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