The WSJ Editorial Page Embarrasses Itself Again

It amazes me that newspapers like the Wall Street Journal remain wedded to the Peter Principle, insisting upon promoting the weakest of thinkers to manage their editorial pages. It's not that the board is full of complete idiots -- they're smart enough to recognize that when you write an editorial this stupid you publish it as an unsigned editorial so your name is only indirectly associated with your assertions. But still, they wrote it and they published it.

Readers may recall the original Buffett Rule that President Obama offered as part of his re-election campaign that essentially posited a minimum tax rate for the rich of about 30%. Mr. Buffett heartily endorsed the idea and Mr. Obama hauled out St. Warren as a soak-the-rich cudgel to beat up Mitt Romney in countless speeches.

So it was fascinating to hear Mr. Buffett explain that his real tax rule is to pay as little as possible, both personally and at the corporate level. "I will not pay a dime more of individual taxes than I owe, and I won't pay a dime more of corporate taxes than we owe.

If it needs to be explained, there is nothing wrong and nothing hypocritical about following current tax law, even as you advocate changes that would increase your tax burden. This type of silly accusation is made with some regularity, and in a variety of contexts, but never by a strong thinker.

Jennifer Rubin's 'Best' Isn't Good Enough

In what some might see as an attempt to defy a popular definition of insanity, I saw a link to Jennifer Rubin's comment, "How to Win the Debt Ceiling Fight" and decided to see if she actually had something useful to say.

Republicans are struggling to devise a formula that simultaneously holds the president’s feet to the fire and yet escapes the charge that the GOP is playing Russian roulette with the country’s credit rating. As a practical matter I simply don’t think Republicans have the fortitude to hit the debt ceiling. To avoid the inevitable march-up-the-hill-down-the-hill routine there are two strategies (probably more) readily available.

That is to say, without actually explaining what a victory would look like, Rubin perceives two potential "winning strategies" for the Republicans. The first?

First, following the lead of Sen. Pat Toomey (R-Pa.) in 2011, Republicans could pass legislation explicitly prohibiting default on our obligations and spelling out a sequence for paying our bills so that we don’t default on bond holders, stop Social Security checks or stiff the troops. However, this still might require shutting down other parts of the government, which the GOP has shown no stomach to do.

Should somebody point out to Ms. Rubin that if she admits, at the outset, that the Republicans have "no stomach" to implement her first idea, there's no point in pretending it's serious? Note, Rubin's objection is that the Republicans have no follow-through. She ignores the logistical issues: if she knows of a way the House of Representatives can "pass legislation" that becomes law despite being rejected by the Senate and President, I would love to hear about it....

At the heart of Leahy's proposal is, I suspect, a recognition of how much power Congress delegates to the President when it forces a government shut-down. The idea would presumably be to structure the shut-down to damage Democratic interests while protecting Republican interests over a period of months while the government is unable to pay its bills. The problem thus goes well beyond "stomach", and into the territory of naked partisanship. The Republican Party would have to show its hand - to let the public know exactly what the price would be for its brinksmanship, and how much worse things would get over the ensuing weeks and months until default became inevitable. And... then what?

When the blackmail is explicit, the President will be able to point directly at the blackmail - "They say that if I don't agree to budget cuts that they won't identify, they're going to keep me from paying your Social Security retirement benefits>". What would be the Republican response to that? Would they develop the "stomach" to identify the cuts that they want? Rubin doesn't think so. So the President's response can be, "You control the purse strings - pass a bill enumerating the cuts you want in order to get us out of this catastrophe you've created," and the Republicans have to choose between looking like (malicious) fools, identifying the cuts, or folding. Even Rubin can see the folly of that approach.

What's Rubin's other idea?

The other approach, the smartest I have seen so far, comes from Keith Hennessey, who explains that Republican leaders begin by “assuring [the president] that we will not allow the government to default on its obligations. The debt limit will be increased. The questions we must resolve are first, whether we will simultaneously cut government spending and second, who will cast the votes for the debt increase.” The Democrats then have a choice: either agree to significant entitlement reform in conjunction with a debt increase to get Obama through at least 2014 or the House Republicans will ”deliver 50 Republican votes for a three-month clean extension.

Basically, the Republicans will say, "We're up against the debt ceiling and we want you to make cuts." The President will reply, "What cuts would you like to make?" The Republicans will once again come up with nothing (as Rubin says, "no stomach"). The President will reply, "If you don't want to cut the budget, then you are going to need to approve the spending you've already authorized." The Republicans will then pass a debt ceiling increase approving that spending.

That is the smartest Republican strategy Rubin has seen? She provide's Hennessey's rationale,

[T]his strategy would tell the President, “Hey, if you want your terrible policy, you’re going to have to deliver House Democratic votes for it. Good luck with that.” Either the President accepts and Republicans pound on the “Democratic debt limit increase” message every three months, or he agrees to cut spending. Either way, default risk is eliminated. Republicans will look responsible because they will be acting responsibly, and the markets couldn’t care less about which Members take political heat for casting these unpopular votes.

So every three months the Republicans will say, "Cut spending or we'll raise the debt ceiling," the President will reply, "If you're going to raise the debt ceiling anyway... but, okay, I'll humor you, what cuts do you want me to consider?" The Republicans will reply, as usual, with "We got nothing." Then the public will get mad at the Democrats because the debt ceiling goes up? And it's "lather, rinse, repeat every three months for the next four years"?

Wow.

Not content to simply look foolish, Rubin has to embellish Hennessey's proposal with some terrible advice for her party:

I would add that under no circumstances should the negotiations (if the president chooses to entertain real entitlement reform) be in secret and/or between Republican leaders and the president. It’s time for regular business, with all lawmakers forced to cast votes. Shifting the focus away from the White House is hugely important in avoiding a (losing ) PR battle with the president and might actually deliver results.

Except this Republican grandstanding only works when they pretend it's the Republican Congress against an all-powerful President. If you reduce the role of the President, you make it obvious that Congress controls the proverbial purse strings - that the debt ceiling sideshow is irrelevant, and that the fundamental problem is that the Republicans in Congress keep authorizing the spending that necessitates government debt. You allow the President to point to the public, bipartisan negotiations and say, "When they come up with solutions, I'll be happy to review their budget reform bill, but for now they are running up the bills and it's my job to pay them." And then, per Rubin's proposal, the Republicans will raise the debt ceiling without condition. It's as if she wants her party to appear toothless.

A final word of advice: The Republicans should turn the president’s favorite class warfare game against him. He is the one defending Warren Buffett’s right to receive Social Security and free ride on Medicare; Republicans want to force rich people to pay more and get less so middle- and lower-income people have their benefits. Republicans may shy away from such arguments but unless the GOP captures the “fairness” argument and becomes the champion of the little guy, it will keep losing support and forever be outfoxed by the White House.

I am not sure that Rubin is going to convince more than a tiny handful of dimwitted people that somebody who pays FICA at the maximum rate for most of his career, and continues to do so well past retirement age, is getting a "free ride". If it needs to be explained, if you pay for insurance you are entitled to receive the coverage that you have paid for, even if you're rich - and Buffett, at age 82, is still paying into the system. Further, despite Rubin's eagerness to engage in what her party decries as "class warfare", even if you disqualify the top 1% from eligibility for Social Security and Medicare you will not materially affect the balance sheet.

Rubin apparently hopes that this form of Republican class warfare will confuse people. "We could cut Medicare spending by 1% if the richest 1% of the population were declared ineligible for Medicare. We, the Republican Party, don't think that's fair and to show that we stand for 'the little guy' we propose cutting everybody's Social Security and Medicare benefits."

Rubin's good at pouring out the snake oil, but if she wants people to actually buy it the trick is to confuse people into thinking they're getting something other than snake oil.

Paul Ryan, Mediocrity and Politics

Let's say you're a mediocre Member of Congress. You've served for ten or more years, your seat is safe, and by virtue of your tenure you have some decent committee assignments - but you have no legislative accomplishments, no national name recognition, no real agenda, no fire in your belly. Half the people in your district can't recall that you represent them, and many of those who do see you as having essentially bought your way into Congress based upon an inherited name and inherited money. You've been a reliable vote for whatever the presidents of your party wanted, but being a "yes man" can only carry you so far. Do you ride out the rest of your career in relative obscurity? Or do you look at some of the nut jobs who have managed to hitch their dimly lit stars to various reactionary movements and causes and say, "I can do that, too."

Now let's imagine that one of the positions you've gained is that of Chairman of the House Committee on the Budget. You are approached by the leaders of your party with a budget plan that is quite radical. They tell you, "Put your name on this plan, push it forward, and we'll stand squarely behind you. We'll line up commentators and columnists who speak of you in glowing terms." You might ask, "What's in it for me" - but you already know what's in it for you: the potential to be nationally known and recognized, the potential to escape your mediocrity. You might ask, "What's the downside", but you know that as well: really, nothing. The worst that happens is that your plan is rejected, the party says, "That was his idea, not ours," and you are left with some favors you can call in. Perhaps you can use those favors to attach your name to a significant bill, and at least seem less mediocre. You're not signing onto anything so radical that you're putting your seat in danger. Really, you can't lose.

There's nothing new in such a story. Change a detail here or there and you can find examples from pretty much any era, pretty much any country, pretty much any form of government. But in the modern era of 24-hour news coverage (take an hour's worth of news and stretch it to the point of breaking, add mediocre commentary and what passes for analysis, and call it a 24-hour news network), it's perhaps easier than ever to parlay a contrived alliance into at least short-term political fortune - as demonstrated by the mediocre candidates who were taken seriously during the Republican primary season, and the eagerness of the media to continue to cover a "race" that has for all practical purposes been over for quite some time.

Paul Ryan seems to be pretty much a classic example of this phenomenon. The problem from a policy standpoint is that the elevation of partisan mediocrity clouds the issues and harms the public debate. Actually, that's only a problem for the other side - that's your goal. When your party and the pundits and news commentators aligned with your party consistently misrepresent your plan as being some sort of stroke of genius, and the larger media goes along for the ride (or prefers to cover the horse race instead of the facts) the facts become irrelevant to the public debate.

Enter Mr. Ryan, an ordinary G.O.P. extremist, but a mild-mannered one. The “centrists” needed to pretend that there are reasonable Republicans, so they nominated him for the role, crediting him with virtues he has never shown any sign of possessing. Indeed, back in 2010 Mr. Ryan, who has never once produced a credible deficit-reduction plan, received an award for fiscal responsibility from a committee representing several prominent centrist organizations.

So you can see the problem these commentators face. To admit that the president’s critique is right would be to admit that they were snookered by Mr. Ryan, who is the same as he ever was. More than that, it would call into question their whole centrist shtick — for the moral of my story is that Mr. Ryan isn’t the only emperor who turns out, on closer examination, to be naked.

Fascinating, isn't it, how the spin applied to "your plan" can turn you from an example of Congressional mediocrity into somebody ballyhooed as fiscally responsible, an idea man, one of the most influential politicians in the nation (begging the question of exactly who it is that you are influencing).

There's another aspect to politics that has, over time, come to complicate the lives of politicians: A long history in which you lie to voters about your beliefs, lie to the media, and even maintain a consistent voting record consistent with your public image, while you work behind closed doors with other politicians (many of whom are as publicly dishonest as you are) to broker a deal based. You and politicians like you create a toxic public atmosphere around certain issues, but make sure that there are enough votes to pass a compromise bill. You may even prefer to make more concessions to the other side as a matter of sound public policy, but first and foremost your job as a Member of Congress is to get reelected, so if there are enough votes to pass the bill you helped craft you may even publicly denounce it and vote against it. If your vote is needed, you'll give a duplicitous speech about how the merits of the bill and needs of the country forced you to support a bad bill, and how you hope that parts can be repealed or will be overturned by the courts.

Think back to Evan Bayh, lamenting the "good old days" when Senators would socialize together, putting aside their partisan differences at night. That's easier when everybody understands that the public performance is largely an act, that at the end of the day everybody wants to get reelected - and to do that you need to pander to special interest groups and donors. The problem is that changes in the media, along with the rise of unofficial information channels (websites, blogs, Youtube), both help true ideologues rise to power and make it more difficult for politicians to ever deviate from their party's claimed orthodoxy, and easier for people to find and emphasize points of past deviation (even if, at the time, you were being a good foot soldier for your party). The parties continue to hold sufficient influence over the media and political commentators, perhaps especially the beltway types who love to think of themselves as powerful and well-connected, wise and influential.

If you're a media darling, though, with no real accomplishment, it's pretty easy for your party's leaders to shift the spotlight elsewhere. Had the spin of Ryan and his plan not worked, he would be long forgotten. Just another mediocre Member of Congress who voted for (can you believe it) Medicare Part D and TARP? His budget? Now spun as a stunt that his party never supported, just one guy trying to cover up his own voting history. How could somebody like that possibly be taken seriously as a fiscal conservative with that record, right? For all the talk about Ryan's influence it seems largely to be an illusion - it's not clear that he has actually influenced anything.

This much is clear:

• The budget with Ryan's name attached won't ever become law, and even if it did his party would soon run, screaming, from the implications of everything but the tax cuts for the rich.

• The only budget you can take seriously is the present budget, because in a year or two you're going to have a new Congress with a new agenda - and you can't bind them.

Warren Buffett offers a genuine solution to budget deficits - not necessarily wise on policy, but one that would unquestionably be effective:

If Congress wanted to balance the budget, Congress would balance the budget. The rest is a show.

A Bit Pricey For a Buffet Lunch

Oops - I guess that's Buffett.

Still, as investments go, I would probably instead pick up a few (and yes, for the uninitiated, even at half a million dollars I do mean a few) shares of Berkshire Hathaway.