1. While reading and thinking about imaginary kings (the title of a book by Hekster and Fowler about royal images in the ancient Near East, Greece and Rome), I had these few reactions to the recent droolings by our US political apparitchiks. My first movement was of great anger at an impotent and supercilious White House or Obama. I take the recent discussions, decisions, and their effects on Wall Street to be a further phase or pause in the inexorable weakening of the nation-state. The arrangement voted on by the house and the senate this past week decides or pretends to decide that
1. we allow ourselves to create enough money for a while so we don’t have the debt ceiling framed as a defining topic before the 2012 presidential elections; a side aspect is that the country can continue to borrow at low interest rates. These have been kept artificially low until now, but the enabling forces seem to be dispersing. Among these enabling aspects, I see the deeply unjust and unbalanced notion of the dollar as single reserve currency, our military support of it by dint of huge investments and presence that no one dares confront, the logic of foreign investing looking for “safe” placements, etc…
2. there will be cuts in budget expenses, meaning entitlements and military outlays, including a 4% cut in medicare and ca. 300 billion in military expenses, but no cut in Social Security (or in federal pensions). These cuts promise to be impossible to enact in practice. For instance, I can’t believe that doctors, hospitals, and pharmaceutical companies, which are supposed to bear the brunt of this 4% cut, are going to sit quiet. They and others (insurance companies) seem to have gotten their way in 2009 in the debate on reforming our health agencies. As for the 300b reduction in the military, what part of the pork barrel would that be?
3. there will be no change in tax structure, i.e. no touching the enormous tax decreases temporarily enacted by Bush II. No “revenue enhancement.” That is a massive capitulation on the part of the government (or is it? good friends might persuade themselves that some retreats are good policy). This is not a victory of rational thinking, but chaos.
4. since the problem is not taken care of for the long term (in which we are all dead), yet another congress super commission is being created. Its task is to meet urgently and discuss how and where to find at least 1,200 billion dollars more “savings”, up to 1,500b, with its homework due by November of this year. By further “entitlement” cuts and “revenue enhancement”? If no agreement is found by this December, there will be “automatic” cuts of at least 1,200 billion in federal expenses.

2. So Obama and the whole executive caved in, following a long-established Democratic pattern. There was the national health fiasco, but this was only one of many decisions going the way of financial institutions’ interests. As it turns out, not their best interests, qua institutions. All of these concessions make me question why I should vote for Obama in 2012. How different has he been from Republicans and most Democrats on the following three issues: 1) decreased or regressive taxation since at least the seventies, 2) need to rethink defense and war (with extremely costly wars in the past decade generating negative foreign policy results—no more walking softly and carrying a big stick, doesn’t work anymore), and 3) massive bailouts of dysfunctional banking and insurance system since 2008? Where has he been on these issues which are also main causes for the ballooning deficit. I say “also” because the increased cost of social expenditures does have to be considered, though only as part of the larger political structure, certainly not alone and even worse as the main problem, as the whole political class does now. For what purpose should one re-elect this President? To focus on more cuts to so-called “entitlements?” With much credit to his name as a bona fide “Democrat” who is young, intelligent, compassionate, emblematic of this complex, multi-ethnic nation, wouldn’t he be in a singularly powerful position to deliver such cuts? Do I believe that for a period of a year and a half or so after November 2012, he would and could somewhat correct the course? To see what he hasn’t done so far (or very late and half-heartedly regarding our military adventures in Irak and Afghanistan), and now to see him accepting to have a budget commission augurs badly of the future. The possibilities were there, as can be seen in the right calls the White House finally began to make in regard to the “Arab spring”. But now? And yet, I see Obama like another self too: vulnerable, searching, bewildered, perhaps frightened, surely mindful of the immense power of his office. No matter, here are a few more questions:
1. What is the main reason that Republicans and especially its numerous extreme right-wingers want to balance the budget? It seems obvious that it is to shrink certain functions of government instead of seeking an equilibrium in which the government would have more latitude in its capacity to help and sustain hard-pressed people. They want to avoid all discussion of what might be the proper level of public funds commitment in a modern economy. If the state is unable to invest into social structures and support, while private capital is waiting on the sidelines, where are we going?
2. Government shrinking is also destabilizing. It was done by Bush II in the grand desultory manner, both in tax issues and foreign policy. This destabilizing and weakening is bound to increase the government’s already patent inability to control the negative effects of financial speculation. The absence of regulation and control in turn will lead to more financial weakening of the state and the increase of its borrowing costs. This weakening increases risks which trigger higher costs, further impacting manœuverability, and especially the ability to rescue the financial structures at the next “event,” since this intervention has already been factored in (or at least I think so).
3. Effects on foreign policy? I would think a retreat in major theaters is in order, including Afghanistan and Iraq (and already happening). Without obvious gains by the major other players: China, India, Brazil, or Europe. Footnote: Iran should gain from the retreat, but the US are lucky that the “Arab spring” is happening just now and complicates Teheran’s moves. The retreat would include the impossibility to maintain means of military influence at their present level (Navy, space research). More importantly, even if other powers don’t move for a while, it has serious negative effects. It becomes especially impossible, or seriously difficult, to bring world actors together and cooperate on anything. In this regard, the feeling the US are diminished or at risk financially and militarily is waiting to play itself out. The interest of major emergent economies and states, as is that of the US, is to protect themselves and not cooperate on financial or military issues (not to mention climate, land and sea resources, energy, etc.). I take it that the main reason is that the level of their debt in regard to GDP is much lower than that of the US (about to rise to something between 75 and 100% of GDP) or Europe (higher ratios). The other reason being their own sizable chunks of US/Europe debt.
4. If we are contemplating an “inexorable” weakening of nation-states, including the US, so what? Isn’t that what liberation movements of all kinds have meant since the 20th c.? Freedom from our common enemy, the nation-state? Without it, will we see new forms of social regrouping around “national issues?” For instance, what happens if the cost of borrowing sees a dramatic, uncontrollable increase?