I wrote this and posted it on my personal blog at the time of the Christmas 2012 Shutdown. Unfortunately, it seems just as relevant today. I am particularly struck by the reference to the Dow performance.
Merry Christmas to all those who celebrate it.
[Date: many years in the future]
Many memories have faded now. But the clearest memories I have are of the events one Christmas that nobody quite agrees about. All of us who were there know that something happened, but when we try to describe it, the facts and details slide through our minds and become insubstantial, inchoate. Like things you see from the corner of your eye; when you turn, they aren’t there at all. But let me try.
It was many years ago, at a time of extraordinary bitterness and partisanship. You may think today’s politicians are divided, but our President goes on vacation with the family of the Speaker, a representative of a party that her party has no alliances with. That would never have happened in the days of which I speak.
In those days, there were a series of battles between Congress and the Administration on fiscal matters. Over several years and a couple of sessions of Congress, the two (or many) sides would propose solutions to reduce the nation’s deficit, always totally unacceptable to the other side. Equally unacceptable counter-proposals were proffered, and the arguments would continue until the markets became nervous and some inadequate compromise was reached. At some point the compromise started to take the form of Government in effect taking a gun, pointing it at its own head and saying “don’t make me pull this trigger.” It was stupid enough the first time it happened, when it was dubbed the “Fiscal Cliff,” but that was followed by the “Fiscal Chasm” and then the “This-Time-We-Really-Mean-It Fiscal Abyss.”
My story relates to the Fiscal Abyss. The end result of the Chasm talks was that if no agreement had been reached on tax reform by the target date, government would effectively stand down. Apart from those deemed essential and most of the uniformed services, government employees would be furloughed and most government services would cease. And the target date was midnight on Christmas Eve. It was believed that this was such a Draconian solution that it would focus everyone’s minds, and that the target date was an incentive to get people to work things out and enjoy the holidays. Unfortunately, they forgot who they were dealing with, which was themselves.
Despite that, some progress was made. By the end of the summer, a tax reform bill was roughed out. Pretty much everyone hated something in it, and pretty much everyone loved something in it, but the one thing everyone loved was the fact that 1040s got much shorter. The problem was, the tax reform bill was only part of the package that had to be sorted out by Christmas Eve. The Chasm resolution was that both budget and Tax Reform Act had to be adopted at the same time as the debt ceiling was raised, so there was no wriggling out later. And the budget was proving troublesome. As fall turned into winter, the Tax Reform Act passed both House and Senate, but budget discussions were getting nowhere.
By Christmas Eve, things were pretty desperate. Various government departments readied the furlough plans that they hoped never to have to use. Families bought fewer presents, thinking that they might not be able to pay off the credit cards, and what presents they did buy tended towards the practical, like socks and Hamburger Helper. Parents tried to get tiny tots with their eyes all aglow excited about the prospect of underwear from Santa. “Black Friday” took on a new meaning that year. The recovering economy headed south and when markets closed early on Christmas Eve, the Dow was down 11.9% for the year. Yields on the 10-year T-bond reached 5%.
No-one had left town. Congress had to stay till the last minute, in case a compromise was reached and they needed to vote on raising the debt ceiling. Senior officials in the government departments had to oversee the closing down of their operations and the transition to emergency status. I was at that time Deputy Assistant Secretary of the Treasury for Financial Affairs (Acting) and pretty much everyone at Treasury had been confined to their offices for weeks at that point, working round the clock.
In the late afternoon of Christmas Eve, the Secretary of the Treasury headed to meet with the Speaker of the House and the Majority Leader. The meeting was billed as a last-ditch effort to reach agreement on the Abyss, but we all knew that it was pure political Kabuki as usual. There was no hope of reaching a solution, but no-one wanted to look like they weren’t trying.
The Secretary of the Treasury must always be properly staffed. He can’t just turn up on his own to an important meeting with Congress. But all the senior Treasury staff were involved in emergency planning that afternoon, and I was already over on the Hill trying to work out the possibility of getting some revenues from a Financial Transaction Tax, so my boss, the Honorable Isaac Moran, Assistant Secretary of the Treasury for Financial Affairs, asked me to meet the Secretary at the entrance to the Longworth House Office Building and attend him to the meeting.
He was running late, of course, so I chatted to the security officers there. The holders of true power in Washington? Security staff. Whether it’s the FBI Police or the US Capitol Police or the actual police Police, they are the people who can make or break your day. They are capable of being total dicks to people who get dickish to them, but they can also save your life. They are the people who may let you slip by them when you’ve left your ID on your desk, ignore the fact that the knife you are bringing in to slice up birthday cake might be regarded in some circles as a weapon, and look the other way when you need to smuggle a cat into one of the independent agencies, which happens more frequently than you’d think.
“You know the thing that annoys me most?” asked Warren, one of the officers, tall, athletic, tending to a slight paunch. “It’s that our damn budget is tied up with the federal money. There’s a whole bunch of things that aren’t any business of the Feds. Stuff DC needs that no-one else in the country has to get approval from Washington to spend on.” This was, of course, in the days before DC statehood. It turned out that in his spare time, Warren ran a basketball program for orphans. Orphans? There are still orphans? “Well, they ain’t exactly Little Orphan Annie type of orphans. They’re big and some of them are kind of mean. But they need help just as much. These are kids with bad home situations, you know? They come to us after school and we play a little ball and let them do their homework and talk a bit. We call it the Four O’Clock Club. But the finance for it has to be approved by the House.“ He looked around for a moment. He was, after all, in the LongworthOffice Building. “It just isn’t right,” he said, in a lower tone. “I know there’s a problem with the whole budget. But this isn’t even federal money. It just needs to get approved by the Feds.”
At that point, the Secretary arrived. The Secretary of those days was a pompous, formal man, still resentful of the fact that running a nation was nothing remotely like running a large oil company, and feeling that if somehow he could find and fire the right people in the entrenched bureaucracy, he could make the trains run on time. We walked to the Speaker’s office, and found him ensconced in his personal conference room with the Deputy Whip, a weasel-faced woman known to want the Speaker’s job someday, so long as that day was soon. They were drinking Old Roadkill, one of the best-known products from the Speaker’s district. The Secretary and the Speaker, despite being from different parties, had no personal animosity. They knew how the game was played. The Congressfolk stood for the Secretary and ushered him to a chair. The Speaker poured him a glass of Old Roadkill without asking. He waved the bottle vaguely in my direction, neither expecting nor getting any reaction. I took a seat on the edge of the conference room.
“Well, unless you got some news for me (the Secretary raised his empty palms) ain’t nothing getting done tonight,” said the Speaker. “Just way too many open issues still.” His Southern accent always got stronger under the influence of stress and Old Roadkill. “You’d need to be ol’ Santy Claus hisself to sort out all this . . .”
His mouth remained open but words stopped coming out.
The Speaker, the Secretary of the Treasury and the Deputy Majority Whip were staring at the chair at the end of the conference table. In it was sitting a bearded man of astonishing, exuberant embonpoint, dressed in a suit of red velvet with white fur trim.
“I was wondering when you’d work that out,” said Santa Claus.
The Speaker managed to close his mouth only to open it again. “How did you get in here?” he asked.
“Of all the things you could ask, that’s the one you choose?” asked Santa. “An officer called Warren let me though. He seemed to think you people could use some help. And you certainly could. For centuries I’ve run the biggest logistics operation in the universe. Demographics, estimates, assessments, transportation, inventory control, delivery, you name it. There’s nothing in your budget that I can’t fix. I just need a bit of time and a bit of cooperation.”
“But . . .” started the Deputy Whip, staring at the ornate clock on the credenza. Santa followed her gaze. “It’s OK, honey, I have good time management skills. Quantum mechanics helps, otherwise I couldn’t be here and in Cairo right now. Oh, I’m sorry, pumpkin,“ as she stared blankly, “are you from the party that doesn’t believe in science or the party that’s too dumb to understand it?” The Deputy Whip had never in her life been called pumpkin, and it wasn’t clear whether it was that, or the sudden appearance of Father Christmas in the Longworth Building that was throwing her off. She rose from her seat, sat down again, opened her mouth, closed it.
“OK,” said Santa. “We’ll need the latest version of the budget.” He tapped on the table and a huge, bulky laptop appeared. He tapped again, and an abacus appeared beside it. “Easier for quantum work,” said Santa. “Ben,” addressing the Secretary, “Can you get the fat guy from the OMB over here, now?”
“Perhaps Mister Secretary’s staffer could contact Jack Harris at the OMB,” said the Deputy Whip, looking at me.
“Ben can make his own damn calls,” said Santa. “I’ve known him all his life, and he’s a lazy SOB. Been on the wrong List most of his life, this one. I know if you’ve been bad or good, you know.”
Benjamin N. West, III, the 77th Secretary of the Treasury of the United States of America, turned a deep and unappetizing crimson.
“Oh, for goodness’ sake, not that,” said Santa. “That’s perfectly normal.”
“OK,” said Santa. “We’ll need the skinny guy from the CBO too. We’ll be scoring this sucker. You get him here.” He turned to the Speaker. “I’ll have a glass of Old Roadkill, too, and one of those Havana cigars in your desk.”
“They’re not from Hav. . . “ started the Speaker, but a raised white eyebrow silenced him. Santa stood, threw off his jacket and rolled up his sleeves. With bourbon in one hand and cigar in the other, he started pecking one-fingered at the laptop. Within minutes, Jack Harris, OMB Director, arrived in the Speaker’s office. He took one look at the figure sitting at the conference table and would have walked straight out of the room had not the Speaker blocked his exit.
“Yes, it’s me. I’m real. Christmas 1980. You wanted a dog. You got a chemistry set. And wasn’t that the right decision?” Santa beckoned to Jack to sit beside him. “Sit. I want to walk through some of these projections.”
While Jack was on the phone to his staff back on the other side of town, Mitch from the Congressional Budget Office arrived. He showed absolutely no surprise at finding Jolly Saint Nick stripped down in the conference room of the Speaker of the House and working on Medicaid projections. When you’ve worked at the CBO as long as Mitch had, working with imaginary figures is kind of par for the course.
For the next few hours, Santa smacked the beads on the abacus, entered numbers on his laptop, and called “his people” back at HQ for things like demographic growth projections for Texas and weather predictions for the Midwest for the next ten years. “They’re mostly quants from CalTech and MIT,” he said. “If it helps, you can think of them as elves.” He summoned people from all parts of the Administration and all parts of the Hill. And they came when summoned. Goodness knows who they thought they were going to encounter, but Santa was able to convince them all of his credentials by reference either to gifts requested on some previous Christmas or to childhood misdemeanors.
On several occasions he snapped and yelled at people if their numbers weren’t solid. The Speaker tried to intervene at one point. “Look here, Santa, you can’t be treating people this way,” he said, as Santa ripped one particularly lame explanation of CPI adjustments to shreds. Santa turned on him. “Oh, you were expecting the jolly old elf,” he said, sarcastically. “You know who gets to see the jolly old elf? Good boys and girls, that’s who! Now do you think there is the remotest argument in Hell that any of you wasters, you people who have pushed the world economy to the brink three times, are good boys and girls? There isn’t enough coal in the Appalachians for you people. Now sit down and shut it.”
It seemed that time was passing very slowly, but it was passing. Several times I saw Santa look at the ornate clock. He seemed to be relieved when he entered a final number into his laptop and said “OK. Now it’s time to get folks to agree to some spending cuts. Some pet projects here that need to be killed.” He handed the Deputy Whip a list of names. “Where’s your counterpart? Here’s his list. Get these people in here.”
He then threw everybody out of the room, so we never did hear the arguments he made about the programs he was cutting as each of the people on his list came into the conference room. Nor did we how he persuaded all the Congressfolks to accept those arguments. But you have to assume that when there are two parties to a negotiation, and one of those parties knows whether the other party has been bad or good since the day of birth, you’re dealing with a pretty severe case of information asymmetry. No Congressperson was in that room for more than a minute.
It was eleven pm when Santa summoned the OMB and CBO guys back into the conference room. “Just check these one more time,” he said, turning the laptop to face them. After a couple of minutes, they nodded.
“Time to vote,” said Santa. Everyone headed towards the corridor. The Majority and Minority Whips, who were both with us at that point, exchanged glances. Santa rolled his eyes. “It’s done, you bozos. All the paperwork is on every desk, in both Houses. All you have to do is get your guys to vote. Do. You. Think. You. Can. Do. That?” They nodded. Suddenly all the clocks on the Hill lit up with the combination of lights that signal an imminent vote.
In the movie version of this tale, Santa would have addressed a joint session. Or at least taken the floor of the House. He would have talked of the eternal meaning of love, and how so long as just one person took the time to care about the orphans of the Four O’Clock Club, the true meaning of Christmas would prevail. He didn’t. He stood at the entrance of the House floor (others said they saw him in the Senate) and said to the Members, “for once in your pathetic , everloving, mothermunching lives, will you all just do your duty and get this done?” Never had a vote happened so fast in either house. And everyone there voted “aye”.
But time was running out. Washington appeared to have a clock with a very large bell, and it was beginning to strike midnight. How had none of us ever heard that bell before? Of course, all the Abyss paperwork had to be signed before midnight. By the President. At the other end of Pennsylvania Avenue, sixteen blocks away.
“I got this,” said Santa. He grabbed the paperwork. He grabbed the Speaker. And as I heard it from Warren, who was on duty at that exit, he sprinted from the Capitol onto the West Lawn, where twelve very large reindeer were happily destroying the lower branches of the Capitol Christmas Tree. Yanking an evergreen bough from the lead reindeer’s mouth, and smacking the caribou upside the head with it, he leapt into the sleigh that the animals were harnessed to. And it took off. Into the Washington sky. Even after the events of that evening, the people watching weren’t entirely ready for that.
The people who watch the skies from the roof of the White House have roughly nineteen seconds to react to any threat that veers off course from National Airport. It’s even less when the potential threat comes from the Hill (although really, where do you expect the threat to come from?). These days, thanks to the FOIA request filed by Wonkette, we know the nature of the weapons that sit atop the White House. We have to assume similar weapons were deployed in the old days too. The Duty Officer that night later stated that probably two seconds elapsed between the word “INCOMING” and the targeting of the airborne threat. He knew that because somewhere above Washington, a clock (one he’d never heard before) was striking midnight. Two seconds after that, he heard “NORAD SAYS STAND DOWN. IT’S SANTA.” And then he heard hooves smashing swingsets and tearing up lawns and saw a red and white blur head towards the Rose Garden. And at some point he heard HO HO HO echoing over Pennsylvania Avenue, but things were getting pretty confused by then.
The photos of that night show the President looking cool but vaguely puzzled, the Speaker with his toupee askew and mouth open, and the Senate Leader staring at something blurry and possibly red and white. The President only used one ceremonial pen to sign the tax reform legislation, as he signed exactly on the twelfth stroke of the clock, but he still handed out a couple dozen pens as usual.
Back on the West Lawn, we were hardly aware of Santa’s having left before he and his menagerie were back, divots flying. “Now I have to get back to work. Anyone want a ride home?” And when one of the most recently-elected House Members said “But I live in North Dakota,” Santa didn’t sigh or roll his eyes, but kindly said “I’m going there anyway.”
I wish I could say that everyone got on after that. We didn’t. But things did improve a bit. We tried a bit harder. We never again drove the economy to the cliff, and we were never again downgraded by rating agencies. None of the programs that Santa wrote out of the budget that year turned out to be the least bit useful or missed. And the Four O’Clock Club? Approved as part of the DC budget that year, and one of its most famous alumni is our current President. Santa winked at Warren as he left that night. He knew.
Merry Christmas to all who have done their jobs this year.