San Francisco is building a subway and it’s expensive:

the latest prediction is $1.6 billion, or nearly $100 million for each tenth of a mile…The subway misses connections with 25 of the 30 light-rail and bus lines that it crosses, and there’s no direct connection to the 104-mile Bay Area Rapid Transit line or to the ferry.

Commuters will have to travel eight stories underground to catch the train and walk nearly a quarter of a mile to connect to the Market Street light-rail lines — after riding the subway for only a half mile….taking the bus would be five to 10 minutes faster along every segment. The city’s metro system, which is already running $150 million operating deficits, isn’t likely to have the money to keep the subway running in any case…

Transportation Secretary Ray LaHood modified the grant criteria by adding environmental and communal benefits and minimizing cost-effectiveness. The change effectively means that any project can get federal funding as long as its sponsors claim they’re moving cars off the road. “Measuring only cost and how fast a project can move the most people the greatest distance simply misses the boat…people tell me they want better transportation in their communities. They want the opportunity to leave their cars behind…And to enjoy clean, green neighborhoods”

This is an excellent project. Not only is it just as slow as the train from Iowa City to Chicago, but it’s a lot more expensive. Our government is super-great!

Bloomberg:

The Obama administration outlined plans today to revamp government regulations that it said would save businesses about $10 billion over five years. The changes affect rules enforced by more than two dozen federal departments

That works out to each federal department saving businesses $83 million a year, if indeed the savings ever materialized. By contrast, the government borrows $188 million every hour of every day.

In much the same way as his colleague Richard Cohen, EJ Dionne spells out how easy it is for the government-centric culture of Washington to choose economic failure:

proposals to continue the payroll tax cut, extend unemployment insurance and enact patent reform are good, but not enough. The federal government needs to come to the aid of state and local governments again; the budget cuts they are being forced to make are precisely what the economy does not need now. We must find ways of boosting spending as quickly as possible on roads, bridges, transit and other building projects, including a new program to rehabilitate the nation’s dilapidated schools. And the administration needs to do far more to resolve the mortgage mess…

We need additional tax rates for the truly rich. A carbon tax, partly offset by tax cuts or rebates for middle income and poorer taxpayers, could provide additional revenue. And we need to do still more to contain health care costs without hurting those who can’t afford insurance, and without voucherizing Medicare. But our problems are not all made-in-America. This is a global problem requiring a global solution.

And a different perspective:

the White House reports that Obama is working on a new strategy for job creation that will be unveiled after he returns from vacation. The task of coming up with a jobs plan that works shouldn’t be all that terribly difficult. All Mr. Obama has to do is reverse what he’s done and change what he thinks.

First, by the government’s own numbers, small businesses have created 64 percent of the net new jobs in the U.S. economy over the past 15 years. In fact, that understates the role of small business, since the vast majority of America’s medium-sized and large businesses began as small businesses. The Heinz corporation began when 16-year-old Henry Heinz grated piles of horseradish at home, using his mother’s recipe, and sold the bottled product door-to-door in Sharpsburg out of a wheelbarrow.

Yet since Obama took office, employment at federal regulatory agencies has jumped 13 percent while private-sector jobs shrank by 5.6 percent. Second, 39 percent of small-business owners said in a Chamber of Commerce survey in July that ObamaCare was either their greatest or second-greatest obstacle to new hiring…

the Obama administration imposed new regulatory rules that will cost the private sector $40 billion. In July alone, reports Sen. John Barrasso, R-Wyo., federal regulators imposed a total of 379 new rules that will add some $9.5 billion in new costs.

The solutions are so simple, but the kibitzers can’t see them, since they can’t imagine a world in which their ideas would be: (a) largely irrelevant; or (b) obstacles to solving the problem.

This was advice from a senior government official about what to do: if you hear that the government plans “putting something in place that’s going to make it harder for you to farm, contact USDA. Talk to them directly. Find out what it is that you’re concerned about. My suspicion is a lot of times they’re going to be able to answer your questions and it will turn out that some of your fears are unfounded.” A reporter took the advice:

Wednesday, 2:40 p.m. ET: After calling the USDA’s main line, I am told to call the Illinois Department of Agriculture. Here, I am patched through to a man who is identified as being in charge of “support services.” I leave a message.

3:53 p.m.: The man calls me back and recommends in a voicemail message that I call the Illinois Farm Bureau — a non-governmental organization.

4:02 p.m.: A woman at the Illinois Farm Bureau connects me to someone in the organization’s government affairs department. That person tells me they “don’t quite know who to refer you to.”

4:06 p.m.: I call the Illinois Department of Agriculture again, letting the person I spoke with earlier know that calling the Illinois Farm Bureau had not been fruitful. He says “those are the kinds of groups that are kind of on top of this or kind of follow things like this. We deal with pesticide here in our bureau.”

“You only deal with pesticides?” I ask.

“We deal with other things … but we mainly deal with pesticides here,” he says, and gives me the phone number for the office of the department’s director, where he says there are “policy people” as well as the director’s staff.

4:10 p.m.: Someone at the director’s office transfers me to the agriculture products inspection department, where a woman says their branch deals with things like animal feed, seed and fertilizer.

“I’m going to transfer you to one of the guys at environmental programs.”

4:15 p.m.: I reach the answering machine at the environmental programs department, and leave a message.

4:57 p.m.: A man from the environmental programs department gets back to me: “I hate to be the regular state worker that’s always accused of passing the buck, but noise and dust regulation would be under our environmental protection agency, rather than the Agriculture Department,” he says, adding that he has forwarded my name and number to the agriculture adviser at IEPA.

On Thursday morning, POLITICO started the hunt for an answer again, this time calling the USDA’s local office in Henry County, Ill., where the town hall took place.

9:42 a.m.: Asked if someone at the office might be able to provide me with the information I requested, the woman on the phone responds, “Not right now. We may have to actually look that up — did you Google this or anything?”

When I say that I’m a reporter and would like to discuss my experience with someone who handles media relations there, I am referred to the USDA’s state office in Champaign. I leave a message there.

10:40 a.m.: A spokeswoman for the Illinois Natural Resources Conservation Service calls me, to whom I explain my multiple attempts on Wednesday and Thursday to retrieve the information I was looking for.

“What I can tell you is our particular agency does not deal with regulations,” she tells me. “We deal with volunteers who voluntarily want to do things. I think the reason you got that response from the Cambridge office is because in regard to noise and dust regulation, we don’t have anything to do with that.”

She adds that the EPA would be more capable of answering questions regarding regulations.

Finally, I call the USDA’s main media relations department, based here in Washington, where I explain to a spokesperson about my failed attempts to obtain an answer to the Illinois farmer’s question. This was their response, via email:

“Secretary Vilsack continues to work closely with members of the Cabinet to help them engage with the agricultural community to ensure that we are separating fact from fiction on regulations because the administration is committed to providing greater certainty for farmers and ranchers. Because the question that was posed did not fall within USDA jurisdiction, it does not provide a fair representation of USDA’s robust efforts to get the right information to our producers throughout the country.”

Finally, this: “The response — eventually — from a USDA representative was that “the question that was posed did not fall within USDA jurisdiction,” but rather the Environmental Protection Agency.” So the reporter followed up:

Thursday, 3:37 p.m.: I call the EPA’s main number, where the operator connects me to someone else. When I explain that I would like to find out information about regulations concerning noise, dust and water runoff regulations and their possible effects on Illinois farmers, I am told that Illinois falls under “Region 5” and given their number.

3:41 p.m.: At the regional office, I am transferred to somebody that deals with “clean air.”

“Have you gone through our website by any chance?” the person asks. “Our online information is very useful. Just in general practice, it’s good.”

I said I was hoping to get some information over the phone and am given contact numbers for two people: one that handles “compliance enforcement” and someone else that works with “water compliance.” I call both numbers and leave a message.

3:50 p.m.: Then I call back the regional office, explaining that both people were not at their desks.

“Normally Friday is not a good time — a lot of people don’t work on Friday,” the same person from earlier says. I mention that today is Thursday, to which they respond: “A lot of people take Friday off, but some people take Wednesday or Thursday off, too. And I know it’s the end of the summer, but people grab the opportunity to take a vacation before school.”

The person gives me two more people’s contact information: one who is an “environmental engineer” there, and another one who is at the “air and radiation division.” Both of them are also not at their desks, and I leave messages.

4:46 p.m.: I hear back from the “environmental engineer,” who tells me I should speak to the person at the air and radiation division, with whom I left a message earlier.

5:27 p.m.: The person from the air division calls back, who explains he wouldn’t be the best person to talk to about water and noise regulations, and because noise regulations are not federally enforceable, the Illinois EPA would be the place to call.

As for dust regulations, he says he would just need to know what kind of dust the farmer was talking about. “Without knowing what kind of source he’s talking about, it’d be pretty hard to generalize what requirements there are,” he says, adding that he would be happy to speak to the farmer from the town hall.

5:38 p.m.: At the end of the day, I ask EPA spokesman Brendan Gilfillan for a comment on our experience with calling the EPA to follow up on USDA’s response to Thursday’s story. This was his response via email:

“Below is an update on farm dust — while we do have statutory authority on noise pollution, I’m not aware of any pending rules or standards on that. “Farm dust: This is a myth the Administrator has debunked personally on several occasions. While EPA is mandated by the CAA to review air quality standards for pollutants like farm dust every five years, and that review is currently ongoing, we have no plans to put stricter standards in place. That review, at Administrator’s direction, has involved extensive outreach to farmers and ranchers”

Of course this might be a truthful response. But consider that it came after the first embarrassing story, and that it was a spokesman’s belated response to a reporter whom he knew was going to write another story embarrassing to the administration and to the government generally. Please remind us why it’s a good idea to give any more power or tax dollars to these buffoons.

There apparently really are two Americas. Charles Blow in the NYT watched a GOP presedential debate the other day and was disturbed to see Tea Party Know-Nothings and monkeys (which at least is an improvment over what his NYT colleagues call them):

every time Representative Michele Bachmann uttered the phrase “as president of the United States” during Thursday’s Republican presidential debate I blacked out a little bit…

one thing that I didn’t miss was the moment when all the candidates raised their hands, confirming that they felt so strongly about not raising taxes that they would all walk away from a hypothetical deficit-reduction deal that was as extreme as 10 parts spending cuts to one part tax increases. That moment should tell every voter in America everything about this current crop of Know-Nothings — no person who would take such a stance is fit to be president of the United States or any developed country…What we are witnessing is an extension and acceleration of the G.O.P.’s obscene genuflection to Tea Party tenets: give no ground; take no prisoners; accept no deal.

Luckily for the rest of us, a rash of recent polling suggests that more Americans, at least for the moment, seem to be coming around to seeing the Tea Party for what it is — not mechanics come to fix the machine, but the proverbial monkeys willing to throw a wrench into it.

One of those polls was a New York Times/CBS News poll released last week. It found that the percent of people with an unfavorable view of the Tea Party increased by more than a third

Meanwhile in the other America, Norman Podhoretz surveys the recent criticism of the administration from the pundits of the Left and finds it wanting. WSJ:

the question on every lip is — as the title of a much quoted article in the New York Times by Drew Westen of Emory University puts it — “What Happened to Obama?” Attacking from the left, Mr. Westin charges that President Obama has been conciliatory when he should have been aggressively pounding away at all the evildoers on the right.

Of course, unlike Mr. Westen, we villainous conservatives do not see Mr. Obama as conciliatory or as “a president who either does not know what he believes or is willing to take whatever position he thinks will lead to his re-election.” On the contrary, we see him as a president who knows all too well what he believes. Furthermore, what Mr. Westen regards as an opportunistic appeal to the center we interpret as a tactic calculated to obfuscate his unshakable strategic objective, which is to turn this country into a European-style social democracy while diminishing the leading role it has played in the world since the end of World War II.

The Democrats have persistently denied that these are Mr. Obama’s goals, but they have only been able to do so by ignoring or dismissing what Mr. Obama himself, in a rare moment of candor, promised at the tail end of his run for the presidency: “We are five days away from fundamentally transforming the United States of America.”

This statement, coming on top of his association with radicals like Bill Ayers, Jeremiah Wright and Rashid Khalidi, definitively revealed to all who were not wilfully blinding themselves that Mr. Obama was a genuine product of the political culture that had its birth among a marginal group of leftists in the early 1960s and that by the end of the decade had spread metastatically to the universities, the mainstream media, the mainline churches, and the entertainment industry. Like their communist ancestors of the 1930s, the leftist radicals of the ’60s were convinced that the United States was so rotten that only a revolution could save it.

But whereas the communists had in their delusional vision of the Soviet Union a model of the kind of society that would replace the one they were bent on destroying, the new leftists only knew what they were against: America, or Amerika as they spelled it to suggest its kinship to Nazi Germany. Thanks, however, to the unmasking of the Soviet Union as a totalitarian nightmare, they did not know what they were for. Yet once they had pulled off the incredible feat of taking over the Democratic Party behind the presidential candidacy of George McGovern in 1972, they dropped the vain hope of a revolution, and in the social-democratic system most fully developed in Sweden they found an alternative to American capitalism that had a realistic possibility of being achieved through gradual political reform.

Despite Mr. McGovern’s defeat by Richard Nixon in a landslide, the leftists remained a powerful force within the Democratic Party, but for the next three decades the electoral exigencies within which they had chosen to operate prevented them from getting their own man nominated. Thus, not one of the six Democratic presidential candidates who followed Mr. McGovern came out of the party’s left wing, and when Jimmy Carter and Bill Clinton (the only two of the six who won) tried each in his own way to govern in its spirit, their policies were rejected by the American immune system. It was only with the advent of Barack Obama that the leftists at long last succeeded in nominating one of their own.

To be sure, no white candidate who had close associations with an outspoken hater of America like Jeremiah Wright and an unrepentant terrorist like Bill Ayers would have lasted a single day. But because Mr. Obama was black, and therefore entitled in the eyes of liberaldom to have hung out with protesters against various American injustices, even if they were a bit extreme, he was given a pass. And in any case, what did such ancient history matter when he was also articulate and elegant and (as he himself had said) “non-threatening,” all of which gave him a fighting chance to become the first black president and thereby to lay the curse of racism to rest?

And so it came about that a faithful scion of the political culture of the ’60s left is now sitting in the White House and doing everything in his power to effect the fundamental transformation of America to which that culture was dedicated and to which he has pledged his own personal allegiance…he imagines that he is helping America to repent of its many sins and to become a different and better country.

So that’s how the left sees the right and how the right sees the left, and we’ll just have to see which side is bigger in 2012. (The greatest irony for the left is they could achieve greater electoral success and more spending if they could get the economy moving again by the fall of next year, but that would entail going against a number of their core beliefs as enshrined during the last two and a half years.)

We were not even going to bother with what the NYT news story on its poll says — what’s the point? But it now has been cited as evidence by a NYT columnist, so here goes:

A record 82 percent of Americans now disapprove of the way Congress is handling its job…The Tea Party is now viewed unfavorably by 40 percent of the public…In mid-April 29 percent of those polled viewed the movement unfavorably…43 percent of Americans now think the Tea Party has too much influence on the Republican Party

As usual, the real story involves sample bias. This NYT poll was of 960 adults, not voters, which automatically adds a leftward bias to the poll results. R/D/I was 24/32/39, at odds with reality, which is that D/R voters are about 35/35. (Why would this poll become a “news” story at all? We all know the answer to that, stories like this seem to be written before the poll.)

A twist: here’s the real news from the poll, news that never made it into the news story. Fully 86% of respondents rated the economy as “fairly bad” or “very bad.” The Times tried hard to make its story about the unpopularity of the Tea Party, but when 86% of any group agrees on anything, it’s news. It’s hard to spin numbers like that. Best not to mention them at all.

Valerie Jarrett gave an interview on the debt-ceiling deal:

this deal is good for America. Let’s keep in mind that if we had not reached an agreement as we did late last night, the US economy domestically and globally could have faltered severely. If we had defaulted for the first time in our history — the consequences would have had a catastrophic impact on the global economy. Our credit worthiness as a nation would have been downgraded; interest rates would have shot up, our bond holder interest rates would have gone up, the deficit would have increased, and more. So we averted disaster and that is very important.

To the second part of your question, the President had two conditions going in for him to sign off on a deal:

1.) He was looking for long-term certainty, in that he did not want to go through this again in 6 months. He was able to negotiate this successfully; we now have a 2.1 trillion-dollar debt ceiling authority given to the President through 2013. This was critical because the President was concerned that the ongoing stalemate with Congress was having a chilling impact on business growth and job creation. Creating jobs and getting the economy back on track is his #1 priority.

2.) The President was unwilling to bring down the deficit on the backs of seniors, the poor, the working middle class, and disabled persons in our nation. The trigger — specifically excludes Medicaid, S chip, food stamps, Social Security, Medicare, EITC, and other critical programs from cuts. The President wanted to do what was best for the country as a whole. Is this deal “ideal”? No. However, although the President promoted a grand bargain (which would have been more balanced with cuts and revenue generation) — he agreed to a more modest deal with fewer cuts and no revenues in order to keep the nation from defaulting on our obligations. This is now a two-step process. The first step is a down payment on bringing down the deficit and the next step, is for us to address as a nation the larger issue of tax reform, making government more efficient, and securing revenue generation in a fair and balanced way.

As to the Bush Tax Cuts, they expire at the end of next year. There will be savings there as well, and the President can veto tax cuts for the very wealthy (those making in excess of $250,000 per year), if need be. To be clear, the President does not believe that the current tax cuts are fair. So he is focused on those at the top — and asking them to pay their fair share. His goal is to better broaden the tax base, while protecting the fundamental pillars of who we are as a society. We are a country that helps the elderly, disabled, poor, disenfranchised, etc. When the Bush tax cuts expire — we will have an opportunity to reset the discussion around equity balance and shared sacrifice in America…

President Obama understands that the African-American community has been disproportionately and severely hurt by the recession (which dates back to 2007 before President Obama took office in 2009). This has been a long and difficult journey for the African-American community. The President has several ways in which he is trying to address this challenge and bring relief immediately.

First, is education, which is a big priority for this Administration. Secretary of Education Arne Duncan deserves a lot of credit for the work he is doing with “Race for the Top” and with community colleges. So many people in the African-American community rely on community college for their advanced educational needs. We are working to strengthen those programs so that we can prepare people for the jobs of tomorrow. As I mentioned earlier, Pell Grants were maximized and preserved in this debt deal, as well as HBCU funding was set at 850 million over 10 years. These programs are critical for minority communities to be able to afford to attend college.

Secondly, by specifically having social safety net triggers built into this new legislation we were able to protect the vital services that Black and brown people (as well as all people) depend upon in our nation. In short, the President kept more damage from occurring in these communities by securing the social safety net in this new bill.

Thirdly, and this is important because people need and want to work in hard-hit urban communities. The President has been working on urban initiatives and an urban agenda that will create new 21st century innovative jobs. For example, we just granted 6 cities in America a total of $6.2 million dollars in partnership with the EPA to create green jobs in those cities and clean up site contamination for the benefit of the citizens of those cities. The President is very cognizant of how challenging life has been for the African-American community and he sees our cities as the nation’s economic engine. The EPA project we just discussed is just one of the initiatives we have in place.

As we work with communities across America we look at all the factors that help to strengthen that community. That ranges from housing, to health and human services resources, and new cutting-edge ways to jump start businesses and jobs from the ground up. The Federal Government under President Obama is working to re-orient the way it works with our urban centers. The President’s goal is to tailor programs to meet those communities needs; not the other way around. The President agrees that education, strong families, and job creation are all a part of the way in which we leverage our intellectual, financial, and human assets to create jobs and keep them in America’s cities. This agenda will be a great source of help and relief to distressed communities of color.

No teleprompter. Impressive. She sounds very organized, even presidential. Hmmm.

We have said that the last two years have been time wasted when the nation should have been getting its fiscal and financial house in order. That’s true, but in another sense the last 2 1/2 years have been like the final part of a fireworks display when all sorts of rockets are set off at once in a giant blazing farewell.

Such a display! Instead of getting the nation’s balance sheet in order, the government added trillions upon trillions of new and unnecessary debt. Instead of respecting the will of the majority, the government pushed through vast and controversial new entitlements on a party-line basis, an unprecedented approach to such major legislation in recent times. Instead of creating an atmosphere fostering job creation, the government added new healthcare costs, new regulations, and manifold new uncertainties for business. Instead of pointing out the ridiculousness of these foolhardy decisions, most of the media establishment cheered wildly — precisely the opposite of their function in a free society. The cheering that began in 2008 seems pretty much over. (Indeed, the establishment media sound rather pathetic now with all their humbug and invective.)

With the caveat that uncertainties can sometimes spiral out of control, we are firmly not in the Department of Doom. Indeed, rather the opposite. There’s plenty of work to be done to get the financial house of the US in order, and to foster job creation at home. But as we have said many times over, this is not that hard either to conceptualize or to execute. Of course those who want to get these things done will continue to face intense opposition from forces in government, the media, and even big business. But so many of the opposition’s rockets have already been fired, and for the moment at least, they have little of consequence to offer as an alternative.

Glenn Reynolds comes out in favor of tax increases, specifically urging the repeal of a tax break from the fifties:

One of the things that’s been floating around the Web over the past week is a video clip from 1953. It’s a short film produced by the motion picture industry, seeking the end of a 20 percent excise tax on movie theaters’ gross revenues that had been imposed at the end of World War II as a deficit-cutting measure…In the film, figures ranging from industry big shots to humble ticket collectors talk about how the tax is hurting their industry and killing jobs…

I would be agitating to repeal the “Eisenhower tax cut” on the movie industry and restore the excise tax. I think I would also look at imposing similar taxes on sales of DVDs, pay-per-view movies, CDs, downloadable music, and related products. I’d also look at the tax and accounting treatment of these industries to see if they were taking advantage of any special “loopholes” that could be closed as a means of reducing “tax expenditures.”…

I note that FCC Commissioner Meredith Attwell Baker, who approved the Comcast merger, left the commission to take a lucrative job at Comcast…Because much of their value to their employers comes from their prior government service, I think that the taxpayers deserve a share of the return, say in the form of a 50 percent surtax on any earnings by political appointees in excess of their prior government salaries

Gee, maybe the media would form their own tea party. But what then would they say about themselves?

The downgrade of Treasury debt by S&P crystallizes many of the strange happenings of the last two and a half years into a single event. Way back in 2009, over 70% of Americans already were “mad as hell” both about the wasteful spending in Washington and the media’s complicity in, and cover-up of, this scandal.

A majority of Americans knew that the $800 billion “stimulus” was a bad joke. They knew that giving insurance to 30 million additional people couldn’t possibly result in the promised lower costs. And they were disgusted with an establishment media machine that aggressively marketed the lies and defamed the majority that were on the other side of the debate.

Back in 2009 we explained that the deficits planned by this government were simply unfinanceable. There wouldn’t be enough foreign demand for Treasury debt at acceptable interest rates, and that taxing the rich at 100% wouldn’t do the trick. Moody’s had already warned the US about losing its AAA rating (and has kept doing so), and by the fall of 2009, The Economist was on board as well. Yet in 2010 the NYT was urging increased spending and opining that “the downgrade will never happen.”

In the fall of 2010 the electorate shouted Stop! at the top of their lungs, but even quite a few GOP senators refused to listen. Meanwhile, the media reacted predictably, accusing the majority of bad motivations on a wide variety of issues.

Suddenly it’s 2011. The government’s reckless spending has become a front page issue. The administration’s representatives in the media turn up the rhetoric even more on those who insist on tough debate and firm lines in the sand on spending. It’s a genuine and deep conflict of visions of the proper role of government; nothing could be more appropriate to have a fight about, but the name-calling only escalated.

And now there’s the downgrade. The “more spending” crowd has nowhere to go. Well, there are tax hikes of course, but that’s rhetoric more than reality. Spending is at least 80% or 90% of the problem even in a world with some tax hikes. But if that’s what the media has to work with, we’ll expect to see more about corporate jet owners and billionaires in the days to come.

Right now, we’re reflecting on the utter strangeness of the last two and a half years. The government should have been occupying itself with clearing the way for job growth and better finances, as we’ve outlined in detail many times in this space. Instead, the government piled on more and more regulations and added trillions of dollars of superfluous and counterproductive spending.

In a sense, time is the only commodity we possess on this planet, and we’ve just wasted a precious two and a half years of it on utter nonsense and worse. Disgraceful.

Maureen Dowd in the NYT:

Tea Party budget-slashers…were like cannibals, eating their own party and leaders alive. They were like vampires, draining the country’s reputation, credit rating and compassion. They were like zombies, relentlessly and mindlessly coming back again and again to assault their unnerved victims…They were like the metallic beasts in “Alien” flashing mouths of teeth inside other mouths of teeth, bursting out of Boehner’s stomach every time he came to a bouquet of microphones. (Conjuring that last image on Monday, Vladimir Putin described America as “a parasite.”)

Better than those ubiquitous religious metaphors, we suppose.

Politico:

Joe Biden joined House Democrats in lashing tea party Republicans Monday, accusing them of having “acted like terrorists” in the fight over raising the nation’s debt limit. Biden was agreeing with a line of argument made by Rep. Mike Doyle (D-Pa.) at a two-hour, closed-door Democratic Caucus meeting. “We have negotiated with terrorists,” an angry Doyle said, according to sources in the room. “This small group of terrorists have made it impossible to spend any money.” Biden, driven by his Democratic allies’ misgivings about the debt-limit deal, responded: “They have acted like terrorists”

We’re only in the bottom of the first inning on cutting spending, and already this is the constant talking point. What will they be calling the Tea Party people by the time of the seventh inning stretch?

We noted below that Rick Santelli and Glenn Reynolds are apparently American Taliban. Probably we have to add Salman Khan of the amazing Khan Academy to the list. Just watch as he explains that the obligations of the federal government are unsustainable. Why, that’s just like setting off bombs in Afghanistan, isn’t it?

Mark Steyn:

It’s not a dollar-for-dollar match if Obama gets an extra trillion bucks in his pocket now in return for 900-and-whatever billion stretched out over ten years. That formula’s a crock…both U.S. political parties are playing croquet on the lawn in August 1914 — and the ratings agencies are stringing along with them. Whatever the comparisons of debt-to-GDP ratios between Greece, Ireland, and the U.S., the actual hard dollar amount involved here is of an entirely different order. The Boehner plan tells us that real fiscal discipline is impossible within the U.S. political system.

It’s only a question of when, not if, a line must be drawn in the sand. You can say maybe today’s not the day, and there are arguments for that. But borrowing $1 trillion today, and saving $0 today but $1 trillion in the “out years” is obviously unsustainable.

The irony is that if the current government pursued job creating policies rather than job destroying policies, the day of reckoning could be moved further out in time. But they haven’t the sense to even do that.

Bloomberg on S&P:

In April, S&P said there was a one-in-three chance it would downgrade the government within two years; in October, it said lawmakers had as many as five years to address long-term deficits. In its July report, the company said, “We believe that an inability to reach an agreement now could indicate that an agreement will not be reached for several more years.”…

“For us, the issue is not the debt limit — it’s the underlying fiscal dynamics,” said Beers, who has been rating governments for the company for 20 years. “It’s not obvious to us that this political divide that is proving so difficult to bridge is going to be any more bridgeable three months from now or six months from now or a year from now.”

This never was difficult to forecast. It was obvious two years ago, and things have only gotten worse since. It’s nice to see the credit agencies, which are paid to see these things, finally catching up.

The often excitable Ambrose Evans-Pritchard is calm. Telegraph:

the White House can challenge the constitutionality of the debt ceiling in Congress. The 14th Amendment of the Constitution states that the “validity of the public debt of the United States shall not be questioned”. Such recourse would kick it up to the Supreme Court, which would take its own sweet time…

Or, the US Treasury could eliminate the Fed’s entire holding of Treasury bonds at a stroke, gaining an extra two years. This would be a simple accounting transaction…The Treasury also has the authority to issue infinite amounts of platinum coins at any denomination it chooses (ie, like fiat paper currency, far above the metallic value): a chest of $1bn coins…

You get the drift: nothing will in fact change when the deadline expires on August 2.

Yet some people are all atwitter. That makes no sense, particularly since there has never been any question about the government’s ability to pay the interest on its debts. The real issue is the level of debt, and now is as good a time as any to play hardball — if we have even one political party in this country that is even vaguely serious.

Dana Milbank:

The new party of Reagan…Democrats are happy to take Reagan back…Nobody knows what Reagan, who died in 2004, would make of the current fight over the debt limit. But 100 years after Reagan’s birth, it’s clear that the Tea Party Republicans have little regard for the policies of the president they claim to venerate.

More of the same here. One wonders if they actually believe any of this, or they’re just following a focus group tested set of talking points.

There is a precedent for dealing with governments’ financial crises. It is the New York City financial crisis of 1975, which we remember well as a taxpayer in the City. NYC tried all the tricks they could think of, including RAN’s, TAN’s, and BAN’s, but eventually the game was up. A paper by Roger Dunstan of the California Research Bureau sums things up (note how small the numbers are — California alone is running a deficit more than ten times that of NYC in the bad times, and the US deficit is maybe 60x that of California):

New York City and its subdivisions had $14 billion of debt outstanding of which almost $6 billion was short-term. The city admitted to an operating deficit of at least $600 million, although honest accounting techniques put it at more like $2.2 billion…New York ran up these deficits even though a state law required political subdivisions to run balanced budgets. Despite the requirement, the city used obsolete and confusing budgeting and accounting systems that included such financial gimmicks as:

• Overly optimistic forecasts of revenues
• Heavy use of revenue anticipation notes, including notes for revenues that did not materialize
• Underfunding of pensions
• Use of funds raised for capital expenditures for operating costs
• Appropriation of illusory fund balances, meaning that special fund revenues were overestimated and used to balance the budget…

By April 1975, the city was out of money. Just to meet its normal obligations, including payroll, the city scrambled and got a three day loan from the banks and pension funds. The main underwriters, Merrill Lynch and the six largest New York Banks, resisted underwriting any more securities issues. Planned bond sales had been canceled and their was no prospect of the city being able to enter the markets…

the underwriters agreed to underwrite more securities provided that the city adopted sound accounting principles, admitted that it had large operating deficits, and ended its budget ploys, including the practice of phony forecasts of revenues. The mayor rejected these conditions and started a campaign to reassure the public and investors that New York City was sound. As a result, the stalemate continued and New York was unable to borrow…

Although there were some efforts to cut costs, including layoffs, these actions were very minor but were still accompanied by significant labor unrest. The city continued to change plans and borrowing needs on a frequent basis, further eroding the market’s already limited confidence in the city’s ability to handle their own financial affairs. The admitted deficit continued to grow, hitting $750 million.

The Municipal Assistance Corporation was not Greeted Warmly by Investors. The underwriters were only able to sell its securities at a significant loss. The MAC was authorized to sell $3 billion of securities but could only peddle $2 billion and only at a high interest rate. The notes yielded 11 percent interest at a time when an index of high-grade municipals was at an interest rate of 6.89 percent.

The MAC demanded that the city institute a wage freeze, lay off employees, increase subway fares, and begin charging tuition at city universities. Despite a summer of labor unrest, these measures stuck and MAC was able to refinance some city debt, but the market was still resistant…

In an effort to bring some order to the budgeting and management of New York City, the Emergency Financial Control Board (EFCB) was created in September during a special legislative session. The creation of the EFCB was analogous to putting the city into receivership. The EFCB had authority over the finances of the city. They could control the city’s bank accounts, issue orders to city officials, remove them from office, and press charges against city officials. The Governor made the majority of appointments to the Board. The state law creating the EFCB required the city to balance its budget within three years, change its accounting, and submit a three-year financial plan. The Board had the power to review and reject the city’s financial plan, operating and capital budgets, contracts negotiated with the public employees unions, and all municipal borrowing…

The continuing difficulties of the city to borrow led the federal government to agree to assist the city in November of 1975. Federal legislation extending up to $2.3 billion of short-term loans to the city was passed. The House of Representatives passed the aid package by a 10 vote margin.

Note on NYC: The EFCB and the MAC, headed by Felix Rohatyn, were serious about getting NYC’s fiscal house in order. City pension funds were even forced to buy up to 40% of MAC debt. Nonetheless, a partial federal bailout was needed, but it barely cleared the overwhelmingly Democratic (291-144) House of Representatives. Question: why can’t a House with almost 100 fewer Democrats (193-242) stick to its guns on a plan to do to the US what happened to NYC in 1975?

Final point: “In 1787, public debt reached 80 percent of GDP and debt servicing accounted for 42 percent of state revenue. The taxpayers at the time — the bourgeoisie — took fright. What happened next is schoolbook history: finance minister Jacques Necker attempted a last-ditch effort to cut budgets and stabilize the deficit, Louis XVI summoned the Estates-General, and the French Revolution erupted.” US debt is now approaching 100% of GDP.

Everyone is familiar with the amusing, scary and incomprehensible debt clock by now. As of this writing, the total US debt is $14.5 trillion or so. We’ve just noticed that the Washington Post is now running a debt clock as well. This one doesn’t bother with the actual debt numbers. It’s more of a Doomsday Clock, ticking down the moments until Debt Ceiling Catastrophe. If it reaches zero, we’ll be sure to report back to you on the end of the world. Until then, have a nice day!

Dana Milbank:

“The worst scenario is you’re a madman and you can’t convince the other person of that, because then you crash.” This possibility cannot be dismissed. So far, the Default Caucus is disregarding the advice of the Wall Street Journal editorial board, warnings from Standard & Poors, the record of Ronald Reagan and even the permission of Grover Norquist, the conservative loyalty enforcer

Yeah, it’s crazy to insist that No must mean No when we have a public-spirited government that wanted to spend $8.5MM on a border crossing used by 5 cars a day. Crazy!! (HT: MS)