I’ll post as I can today but I’m a bit tied up with various obligations.

Obviously, the GDP numbers are disappointing but not particularly surprising to me. Using my tried and true measure of economic activity, the mall parking lot-o-meter, not to mention quizzing practically everybody I run into on how their business is, it’s pretty clear that things are slow.

If we think back to those halcyon days of late 2008 and early 2009, it’s pretty clear that the estimates that of economic activity and growth that President Obama’s economic advisors were using were gobstoppingly wrong. What that implied or implies can be debated but what I don’t think can be debated is that they were wrong.

We’ve got to move on from here and one step in the right direction would be abandoning the “don’t let a good crisis go to waste” mentality which, if the interviews on the television news are any gauge, still prevails in Washington.

I think we’ve also got to dump the Wall Street-centric strategy that has been deployed to date. But I guess that’s a subject for another post.

While I’m on the subject of deficits, do you get the impression that the members of Congress don’t know the difference between billions and trillions? It certainly looks that way to me. They’re acting as though $850 billion over ten years (the amount deficit reduction estimated by the CBO) or even $1.2 trillion (the amount that Speaker Boehner was claiming) was a big deal. According to at at least one estimate it will take $650 billion of deficit reduction (some combination of increased revenue and reduced spending) per year just to stabilize the situation. That’s $6.5 trillion over ten years, an enormous amount over the sums that are being discussed.

We are going to be spending more on Social Security and Medicare for the foreseeable future. That is no surprise. We’ve known that for the last 40 years we just haven’t known quite how much more we’d be spending. Regardless of any discussion of trust funds, Treasury will need more cash to pay those expenses and that means more borrowing, higher taxes, or both. If we elect more borrowing, which is the pattern right now, it means that our cash requirements in future years will be that much higher.

Growth isn’t going to save us. The IPAB won’t save us. It’s already emasculated and if it shows any sign of actually achieving the objective of spending reduction it will be cut off at the knees.

If deficit reduction were easy and painless, we’d have already done it. We are just about on the floor, debt service-wise. It will only get more expensive from here. That may be in ten years or it may be next year. Next stop: primary default.

Bruce Krasting is sure that the Smart Money on Wall Street is convinced that the debt ceiling will be raised. How smart is the “Smart Money”? I realize they’re playing with real money but sometimes I think they treat it as though it were Monopoly money.

Since the President’s speech last Friday it looks to me as though all of the players are still hurtling towards the precipice. The President is still insisting on a Grand Bargain and pushing off another political posturing festival on the debt until after the 2012 elections. This is being touted as adult but I sure don’t see it that way. Perhaps it’s small of me but I see raising the debt ceiling as more important than ensuring the President’s reelection and even infants can tell smaller things from larger things.

Adult would be abolishing the debt ceiling. A little less adult would be just raising the debt ceiling, period. Raising the debt ceiling as long as it doesn’t hold the prospect of hurting you politically, not so much.

Congressional Republicans seem to be taking the position of no taxes, no way, no how. And you can’t touch defense or homeland security. I disagree but that’s a debate worth having. I don’t think it’s a debate that’s worth having now. It’s something they might have thought about before appropriating the money that has created the need to increase the debt ceiling. Just raise the debt ceiling, already, and use the breathing space to debate reducing the deficit.

Congressional Democrats seem to be taking the position that entitlements are sacrosanct. There, too, I disagree but, again, that’s a debate worth having. It’s just not worth having now. If anybody can figure out how we can continue to let Medicare spending increase at the rate of 9% per year while the rest of the economy is flat on its back, I’m all ears. Just raise the debt ceiling, already, and use the breathing space to debate reducing the deficit.

There are no adults here.

As I was tootling around today between customers I happened to drive through Wheeling for the first time in a while and I saw something that made me smile. Four restaurants, one after another, bing-bing-bing-bing.

The first was Bob Chinn’s Crab House, a fair-to-middling fine dining seafood restaurant. Right next to Chinn’s was a brand spanking new Superdawg. The original Superdawg is just a couple of miles from where I live in Chicago. It’s a very 1950s vintage hot dog stand with curb service. The new store is several times bigger than the original place but it’s clearly the same old Superdawg, right down to Morrie and Florrie on the roof.

Next to Superdawg was Le Francais, a classical French restaurant at one time touted as the best French restaurant outside of France. I’d heard it was closed but it was hard to tell as I wheeled by.

Right next to that was Hackney’s, a small local chain that’s been a Chicago landmark for the last 75 years. It’s basically a gussied-up hamburger stand. A sit-down restaurant with a narrower menu than a family restaurant and not quite good enough to be called “fine dining”.

That’s Chicago for you.

The Watcher’s Council has announced its winners for last week. First place in the Council category was Simply Jews’s The Labor of Hate.

First place in the non-Council category was The American Interest/Via Meadia with The Hate That Dares Not Speak Its Name. Walter Russell Mead on anti-semitism.

You can see the full results here.

Here are the results for the previous week. First place in the Council category was New Zeal’s Judith LeBlanc: Top US “Peace” Activist and Communist Leader.

First place in the non-Council category was New Ledger with Gawker’s John Cook Attempts to Out CIA Agent Who Helped Kill Bin Laden.

You can see the full results here.

I’ve just published a foreign policy-related post at Outside the Beltway:

The Oslo Killer’s Manifesto

In this post I link to an analysis of the Oslo killer’s manifesto.

There’s a post over at The Oil Drum that highlights the importance of producing more energy and its limits:

Growth has become such a mainstay of our existence that we take its continuation as a given. Growth brings many positive benefits, such as cars, television, air travel, and iGadgets. Quality of life improves, health care improves, and, aside from a proliferation of passwords to remember, life tends to become more convenient over time. Growth also brings with it a promise of the future, giving reason to invest in future development in anticipation of a return on the investment. Growth is then the basis for interest rates, loans, and the finance industry.

Because growth has been with us for “countless” generations—meaning that everyone we ever met or our grandparents ever met has experienced it—growth is central to our narrative of who we are and what we do. We therefore have a difficult time imagining a different trajectory.

This post provides a striking example of the impossibility of continued growth at current rates—even within familiar timescales. For a matter of convenience, we lower the energy growth rate from 2.9% to 2.3% per year so that we see a factor of ten increase every 100 years. We start the clock today, with a global rate of energy use of 12 terawatts (meaning that the average world citizen has a 2,000 W share of the total pie). We will begin with semi-practical assessments, and then in stages let our imaginations run wild—even then finding that we hit limits sooner than we might think. I will admit from the start that the assumptions underlying this analysis are deeply flawed. But that becomes the whole point, in the end.

I seriously doubt that we can accmplish the kind of growth we’ll need in power generation by trying to hold it constant or even reduce it while utilizing the energy we do produce more efficiently, however vital that is. We’ll need to conserve, increase efficiency, and produce more energy from a wide variety of sources, including oil and natural gas as well as solar, wind, and other renewable sources. Not just pick one option but “all of the above”.

Note, too, the relationship between the 2.9% energy growth and the 2.9% GDP growth that the U. S. has experienced throughout its history. Perhaps it’s just a coincidence but even if it is I think the prospects for its indefinite continuation are no better.

There’s a lot of complaining about the weather going around these days, leading me to wonder what they’re kvetching about? Here in Chicago this year we’ve had one day in which the temperature hit 100°F. That’s the first day it’s been that hot since 2005 and that, in turn, was the first time we’d seen temperatures that hot since 1999.

In 1988 we had seven days in which the thermometer soared to 100 or above.

The highest temperature ever recorded in Chicago was 105°F in 1934. The second highest was 104 in 1995.

Here’s a rundown of the hottest days in Chicago history.

What’s the collective noun for pundits? If President Obama, Congressional Republicans, or Congressional Democrats are looking for advice on the debt ceiling there certainly no lack of it, all pulling in different directions. A cacophony of pundits.

George Will thinks that the McConnell plan, which hangs the increase in the debt ceiling around the president’s neck, is to be preferred:

The Goldwater impulse took 16 years to reach fruition in the election of Ronald Reagan. The Tea Party can succeed in 16 months by helping elect a president who will not veto necessary reforms. To achieve that, however, Tea Partyers must not help the incumbent achieve his objectives in the debt-ceiling dispute.

One of those is to strike a splashy bargain involving big — but hypothetical and nonbinding — numbers. This would enable President Obama to run away from his record and run as a debt-reducing centrist. Another Obama objective is tax increases that shatter Republican unity and dampen the Tea Party’s election-turning intensity. Because he probably can achieve neither, he might want market chaos in coming days so Republicans henceforth can be cast as complicit in the wretched recovery that is his administration’s ugly signature.

Mitch McConnell’s proposal would require Obama to make three requests for additional debt-ceiling increases. Each time he would be required to recommend commensurate spending reductions. Concerning them, Congress would, of course, retain its constitutional power to do what it wishes.

Obama could muster sufficient Democratic votes (one-third plus one, in one house) to sustain his veto of Congress’s disapproval of his requests. But this would not enhance presidential power. Rather, McConnell’s proposal would put a harness on the president, tightly confining him within a one-time process.

Peggy Noonan likes the “Gang of Six’s” plan:

It’s good, it represents progress, build from it. That would be a helpful approach to the Gang of Six proposal on the debt. Don’t deep-six it because it’s flawed. Flawless isn’t going to happen. There will be a big election in 2012. A lot can be settled then, and after.

The Gang of Six—three Democrats and three Republicans in the Senate—this week put forward a plan aimed at reducing the national debt by almost $4 trillion over the next 10 years. It includes $500 billion in immediate cuts, and repeals a costly provision of ObamaCare. The plan would lower the top individual tax rate to 29%, push corporate tax rates down to 29% from 35%, and abolish the Alternative Minimum tax. On long-term spending the plan includes a legislative supermajority and sequester feature. In the words of a senator involved in the bargaining, “For the first time, we have some real teeth” in spending controls.

This is all pretty good. It moves the ball forward in the right ways.

Charles Krauthammer rejects any “grand solution”, which is apparently the direction that President Obama and House Speaker Boehner are headed in:

In my view, the Half-Trillion [ed. a relatively small increase in the debt ceiling] is best: It is clean, straightforward, yields real cuts, averts the current crisis and provides until year-end to negotiate a bigger deal. At the same time, it punctures President Obama’s thus far politically successful strategy of proposing nothing in public, nothing in writing, nothing with numbers, while leaking through a pliant press supposed offers of surpassing scope and reasonableness.

As part of this pose, Obama had threatened to veto any short-term debt-ceiling hike. Which has become Obama’s most vulnerable point. Is the catastrophe of default preferable to a deal that gives us, say, five months to negotiate something more significant — because it doesn’t get Obama through Election Day?

Eugene Robinson can’t accept anything that reduces entitlement spending:

Do we want a government that ensures medical care for senior citizens and the poor? According to a recent Post poll, 72 percent of Americans oppose cutting spending on Medicaid as a way to reduce the debt; 54 percent oppose raising the eligibility age for Medicare from 65 to 67.

Do we want a government that provides retirees with an adequate baseline income? Fifty-three percent of Americans oppose changes to Social Security that would reduce the rate at which benefits rise over time, according to the Post poll. These entitlements are sacred cows not just for Democrats but Republicans as well. Across both parties, Americans would rather see increased taxes on the well-to-do.

Far-right conservatives who harbor a radically different vision — of a much smaller government without the wherewithal to provide this kind of safety net — now control the House of Representatives and the Republican Party. In the debt-ceiling debate, they have rejected long-term solutions that have conceded most of what they demand. They want it all.

Progressives who say no — who acknowledge that we must reduce the debt but in ways that do not kill economic growth or gut entitlements — are being partisan for the best possible reason: Much is subject to compromise, but not our future as a great nation.

And, needless to say, Paul Krugman strenuously rejects any plan that reduces spending:

In the United States, right-wing fanatics in Congress may block a necessary rise in the debt ceiling, potentially wreaking havoc in world financial markets. Meanwhile, if the plan just agreed to by European heads of state fails to calm markets, we could see falling dominoes all across southern Europe — which would also wreak havoc in world financial markets.

We can only hope that the politicians huddled in Washington and Brussels succeed in averting these threats. But here’s the thing: Even if we manage to avoid immediate catastrophe, the deals being struck on both sides of the Atlantic are almost guaranteed to make the broader economic slump worse.

In fact, policy makers seem determined to perpetuate what I’ve taken to calling the Lesser Depression, the prolonged era of high unemployment that began with the Great Recession of 2007-2009 and continues to this day, more than two years after the recession supposedly ended.

Let’s talk for a moment about why our economies are (still) so depressed.

The great housing bubble of the last decade, which was both an American and a European phenomenon, was accompanied by a huge rise in household debt. When the bubble burst, home construction plunged, and so did consumer spending as debt-burdened families cut back.

Everything might still have been O.K. if other major economic players had stepped up their spending, filling the gap left by the housing plunge and the consumer pullback. But nobody did. In particular, cash-rich corporations see no reason to invest that cash in the face of weak consumer demand.

I had thought that the debt ceiling debate was solely a matter of political posturing and that after enough pious speeches had been given and enoujgh points scored that debt ceiling would have been raised without further ado, just in the nick of time. Now I’m not so sure.

Can President Obama secure his grand plan? Can John Boehner get enough votes in the House for any increase in the debt ceiling at all? What will pass in the Senate? The situation has been likened to The Perils of Pauline. I’m beginning to think it’s more like Rebel Without a Cause.

Update

For a wryer take on the debt ceiling debate see the collection of political cartoons at U. S. News