So you have this neighbor who has been making your life hell. First he tied you up with a spurious lawsuit; you’re both suffering from huge legal bills. Then he threatened bodily harm to your family. Now, however, he says he’s willing to compromise: He’ll call off the lawsuit, which is to his advantage as well as yours. But in return you must give him your car. Oh, and he’ll stop threatening your family — but only for a week, after which the threats will resume.
Not much of an offer, is it? But here’s the kicker: Your neighbor’s relatives, who have been egging him on, are furious that he didn’t also demand that you kill your dog.
And now you understand the current state of budget negotiations.
That is the beginning of
The Dixiecrat Solution, Krugman's Monday
New York Times column.
The current US political crisis has serious world-wide financial implications, as those meeting in DC for the IMF and the World Bank made clear.
Krugman takes us back to the New Deal, when the Democrats had nominal control of the Congress, but still had to deal with their Dixiecrats, a situation I might note that Lyndon Johnson also had to face. As Krugman points out, it was a combination of Dixiecrats and Republicans who managed to kill health care when it could have been done more than 60 years ago. He argues that provides a model for what he calls a reverse Dixiecrat solution, between Democrats and moderate Republicans - of course that will only work if a clean bill is brought to the floor of the House, and right now even the Senate Republicans are holding firm - which may of course actually lead to a nuclear option, a solution bruited about by as conservative a Democratic Senator as you can find, Joe Manchin of West Virginia.
We may well see markets plunge this morning and over the next few days, perhaps beginning with a sell-off as early as today, as you can read here. There may be other financial issues that will compound the problem.
Big business is likely to want a resolution - after all, many executives get the major part of their compensation through stock options, which are not worth much in plunging markets. And of course more than a few are rewarded based on the quarterly performance of the stock of the corporations they run.
Which is why Krugman's last paragraph may be pertinent:
The question for the next few days is whether plunging markets and urgent appeals from big business will stiffen the non-extremists’ spines. For as far as I can tell, the reverse-Dixiecrat solution is the only way out of this mess.