Why the Debt Ceiling Debate Is Like the NFL Lockout
The two national stalemates will (hopefully) be over by the first week of August
The NFL preseason is supposed to begin a month from yesterday. In a lockout-free universe, St. Louis would play Chicago on Aug. 7 in the annual Hall of Fame Game, a week before league-wide exhibition begins in earnest, as ESPN's mobile app reminds me whenever I check box scores. Every time I see that empty score for a game that probably won't happen, I shake my head.
The preseason isn't the same as the regular season (there are no real playoff- or division-related consequences) but preseason games are NFL games nonetheless, and, as such, they're worth money. TV contracts, advertising, brand exposure, per-game salaries for players -- whenever two NFL teams face off in a televised event, there are serious dollars involved for all affiliated parties. It's amazing to me that a labor dispute will prevent this game from being played.
Five days before the Hall of Fame Game doesn't happen, the U.S. either will or will not have defaulted on its sovereign debt: The Treasury has set Aug. 2 as a final deadline for Congress and the president to settle their differences and raise the statutory federal debt limit, before the country defaults and U.S. credit is downgraded.
Just like the players and owners, congressional Republicans and President Obama have been negotiating without result.
Both sides recognize a deal should be done, and eventually will be done. Yet, somehow, they haven't been able to reach one. There's been posturing on both sides. House Majority Leader Eric Cantor walked out of talks led by Vice President Biden. The players' union disbanded. On Saturday night, House Speaker John Boehner said he wants to pursue a smaller deal, closer to what Biden's working group discussed. Obama, according to his Treasury secretary, now wants more cuts than Republicans do. But when it hits the fan in early August, no one expects the U.S. to default on its debt, and no one thinks the NFL will cease to operate as a sports league, or even bring in replacement players. As serious as all this negotiating is, it is also the very definition of charade.
I'm not necessarily confident that these billion and trillion-dollar stalemates can really inform our opinions of each other, or that there is intrinsic value in sports-life, sports-politics, or sports-deficit parallels, but there's something about watching these things play out that makes people cringe in the same way.
We know they'll make a deal eventually. Why can't they make a deal now? The waiting is the hardest part.
Some broad-stroke similarities:
Millionaires and billionaires
Ever heard the NFL lockout described as a fight between millionaires and billionaires? You probably have, because, literally, it is (except that not all players have it so great), and sports commentators and columnists appropriately like to point that out when talking about fan reactions to the possibility that such impossibly rich people will deprive them of Sundays and Monday nights full of beer, wings, and the gruesome crunch-sounds picked up by FOX's on-field mics.
The same is true of the legislators negotiating over the debt ceiling, and how much money to cut from the federal budget. In 2009, the last year for which personal financial disclosures have been publicized, the richest member of Congress, California Republican Darrell Issa, listed his maximum net worth as $451.1 million. Treasury Secretary Timothy Geithner is worth up to $6.05 million. And these guys might cut Social Security benefits? In the words of Keyshawn Johnson, come on, man!
The NFL is worth an insane amount of money. Five teams -- the Redskins, Patriots, Cowboys, Texans, and Eagles -- are worth over $1 billion each. In 2008, the NFL took in $8.8 billion in revenue. It makes more money than any other sports league: Major League Baseball grew its revenue to $7 billion in 2010, while the NBA took in just $3.8 billion that year. And multiple industries, including sporting equipment, advertisers who target the NFL's demographic, and local bars and restaurants all depend on the NFL. For every game that isn't played, ripple effects will be felt by Nike, FOX, ESPN, and any restaurant that serves nachos and owns a TV.
The U.S. economy is the world's largest, with a GDP of $14.6 trillion. (It's the second largest, if you count the European Union -- but that's like counting baseball, hockey, golf, table tennis, and pro lacrosse all together.) China, the MLB of world economies*, ranks second with a $10 trillion GDP. Countless other countries depend on the U.S. consumer economy, and on the rating of its debt. Financial types warn that, if Greece defaults on its debt, a ripple effect could be felt by other countries and private investment groups. If the U.S. defaults, the ripples would be much bigger.
Market Monopolies and Captive Consumers
It's not as if football fans and U.S. citizens have anywhere else to go. The NFL, almost literally the only game in town, has throughout its history enjoyed a monopoly on football in America. Last year, the Supreme Court ruled that its merchandising practices violated anti-trust laws. In 1990, the USFL successfully sued the NFL for monopolizing football on TV.
U.S. citizens aren't going anywhere. You can move to Canada, but Canada owns $152.2 billion in U.S. debt. All you can do is wait around for the inevitable agreement, hoping it comes sooner rather than later.
Taking care of seniors
Obama and Republicans are striving for between $2 trillion and $4 trillion in spending cuts, and that may involve cuts to Social Security. One model under consideration, proposed by Obama's fiscal commission, involves raising the retirement age incrementally over the next several years.
Similarly, retired NFL players are now worried their league-subsidized retirement benefits could be harmed by the lockout and are suing the NFL.
The cost of waiting
While Aug. 2 is a major flashpoint for U.S. debt default, there's a cost to all the political dithering going on. Markets can get spooked. As The Atlantic's Joshua Green explained, interest rates could spike if a deal isn't cut soon.
The NFL and its locked-out players, meanwhile, will stand to lose a lot of money if the season is truncated. League sources have estimated that the NFL will lose $1 billion if the preseason is canceled. Players lose, too, as lost preseason revenue would mean smaller game checks during the season.
Fans and taxpayers lose
When NFL games are canceled because of a labor dispute, the fans lose. That gets said so often because it's true. Sure, there will be winners and losers between the owners and the players. But, really, America wants to watch football -- and that's pretty much it. The details don't really matter.
With Washington yet again bringing budget and tax talks down to the wire -- after a late-hour deal to extend the Bush tax cuts and an even later-hour deal to keep the government funded -- it's an emotional rollercoaster for the politically cognizant public, one through which people must suffer with gritted teeth.
There's one important difference here, and it's that things aren't as bad for the NFL. Billions of dollars are there to be made. No significant, troubling reductions in football loom beyond the start of the next season.
For the American publics, there are negative consequences at play. Seniors' benefits could get reduced. Money will have to be stripped from various federal accounts. Everyone's going to have to take a hit.
As a football fan, I can't decide which of these deadlocks are more ugly or troubling. I don't want the U.S. to default on its debt. But I very much want to see how Sam Bradford has picked up the new Rams offense in his months without organized team practices, and whether the Cowboys will discover a new way to be overhyped even after a down season.
I know that both will work themselves out, eventually.
Image credit: Jason Reed/Reuters