The debt ceiling crisis
Today will be a big day for the spin machines and the corporate media, trying to tell us all this "deal" is a great achievement......well it isn't. It's a disaster on multiple levels and you need to know the real story the talking heads won't tell you.
For Democrats, why vote [D]? You're getting Republican Lite....
For reasonable, sane Republicans, the Tea Party loonies rule is confirmed - here comes President Bachmann.....
For the middle and working class, more pain. Cuts to every social program....
For the economy and jobs, years and years of stagnation to come....
Three stories
Paul Krugman explains it clearly why this "deal" is Washington BS at it's worst......
Then Michael Tomasky explains the political disaster for the Democrats that will happen if this deal goes through.....
And then a lot of the cuts will directly impact the states, explained by the Washington Post.........
Read these stories, and either weep or pour yourself a stiff drink.....they're happily smashing the middle class.....
OP-ED COLUMNIST
The President Surrenders
By PAUL KRUGMAN
Published: July 31, 2011
A deal to raise the federal debt ceiling is in the works. If it goes through, many commentators will declare that disaster was avoided. But they will be wrong.
Fred R. Conrad/The New York Times
Paul Krugman
Related
Obama and Leaders Reach Debt Deal (August 1, 2011)
Times Topic: Federal Debt Ceiling
Related in Opinion
Op-Ed Contributors: Our Unbalanced Democracy(August 1, 2011)
Editorial: To Escape Chaos, a Terrible Deal (August 1, 2011)
Ross Douthat: The Diminished President (August 1, 2011)
Readers’ Comments
Readers shared their thoughts on this article.
For the deal itself, given the available information, is a disaster, and not just for President Obama and his party. It will damage an already depressed economy; it will probably make America’s long-run deficit problem worse, not better; and most important, by demonstrating that raw extortion works and carries no political cost, it will take America a long way down the road to banana-republic status.
Start with the economics. We currently have a deeply depressed economy. We will almost certainly continue to have a depressed economy all through next year. And we will probably have a depressed economy through 2013 as well, if not beyond.
The worst thing you can do in these circumstances is slash government spending, since that will depress the economy even further. Pay no attention to those who invoke the confidence fairy, claiming that tough action on the budget will reassure businesses and consumers, leading them to spend more. It doesn’t work that way, a fact confirmed by many studies of the historical record.
Indeed, slashing spending while the economy is depressed won’t even help the budget situation much, and might well make it worse. On one side, interest rates on federal borrowing are currently very low, so spending cuts now will do little to reduce future interest costs. On the other side, making the economy weaker now will also hurt its long-run prospects, which will in turn reduce future revenue. So those demanding spending cuts now are like medieval doctors who treated the sick by bleeding them, and thereby made them even sicker.
And then there are the reported terms of the deal, which amount to an abject surrender on the part of the president. First, there will be big spending cuts, with no increase in revenue. Then a panel will make recommendations for further deficit reduction — and if these recommendations aren’t accepted, there will be more spending cuts.
Republicans will supposedly have an incentive to make concessions the next time around, because defense spending will be among the areas cut. But the G.O.P. has just demonstrated its willingness to risk financial collapse unless it gets everything its most extreme members want. Why expect it to be more reasonable in the next round?
In fact, Republicans will surely be emboldened by the way Mr. Obama keeps folding in the face of their threats. He surrendered last December, extending all the Bush tax cuts; he surrendered in the spring when they threatened to shut down the government; and he has now surrendered on a grand scale to raw extortion over the debt ceiling. Maybe it’s just me, but I see a pattern here.
Did the president have any alternative this time around? Yes.
First of all, he could and should have demanded an increase in the debt ceiling back in December. When asked why he didn’t, he replied that he was sure that Republicans would act responsibly. Great call.
And even now, the Obama administration could have resorted to legal maneuvering to sidestep the debt ceiling, using any of several options. In ordinary circumstances, this might have been an extreme step. But faced with the reality of what is happening, namely raw extortion on the part of a party that, after all, only controls one house of Congress, it would have been totally justifiable.
At the very least, Mr. Obama could have used the possibility of a legal end run to strengthen his bargaining position. Instead, however, he ruled all such options out from the beginning.
But wouldn’t taking a tough stance have worried markets? Probably not. In fact, if I were an investor I would be reassured, not dismayed, by a demonstration that the president is willing and able to stand up to blackmail on the part of right-wing extremists. Instead, he has chosen to demonstrate the opposite.
Make no mistake about it, what we’re witnessing here is a catastrophe on multiple levels.
It is, of course, a political catastrophe for Democrats, who just a few weeks ago seemed to have Republicans on the run over their plan to dismantle Medicare; now Mr. Obama has thrown all that away. And the damage isn’t over: there will be more choke points where Republicans can threaten to create a crisis unless the president surrenders, and they can now act with the confident expectation that he will.
In the long run, however, Democrats won’t be the only losers. What Republicans have just gotten away with calls our whole system of government into question. After all, how can American democracy work if whichever party is most prepared to be ruthless, to threaten the nation’s economic security, gets to dictate policy? And the answer is, maybe it can’t.
For a look at the political ramifications of "the deal", here is Michael Tomasky.......read his four points.....
Obama Gives It All Away
It’s hard to overstate the extent of the president’s capitulation to the right. Conservatism will be the driving force in U.S. politics for years to come, argues Michael Tomasky.
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Back when George W. Bush and Karl Rove were wrecking the country, my liberal friends and I had many a hearty laugh about Rove’s boast that he was realigning American politics. Yep, we thought, but toward the left! Those hopes seemed vindicated when Barack Obama won the presidency. But just as Bush and Rove helped revive liberalism, it now seems plausible that Obama is ushering in a conservative era. The former did it through rank incompetence, while the latter is simply handing the Republicans the keys to the house and saying “take what you want.”
If the Obama/McConnell deal goes through—and it’s still sort of iffy, at least with respect to the House, where Tea Party dead-enders may find common cause with disgusted liberals to doom it—conservative governance will have made several extremely consequential strides, in both the short and long term. Here are four.
And it's not just Federal spending - a lot of the cuts will directly impact state services to our kids, the elderly, poor, sick and the neediest people....
For Florida, how do you think our Governor will make up any deficiency in education funding? For Medicaid?
Yup, slash more services......make the working poor pay.....
But what’s been largely ignored is how the very solution to the debt-ceiling crisis could also squeeze state and local governments that are already strapped for cash.
Among the biggest items on the chopping block in Congress are education and Medicaid spending — federal dollars that make up the largest parts of most states’ budgets. Nearly every state government has already set its budget for the next year — some for the next two years — under the assumption that federal spending would remain more or less consistent. If such money is abruptly pulled, states won’t suddenly be able to change their spending obligations or raise taxes.
“They’re going to have to eat that in some way, and many will pass [the cuts] onto local governments,” said Frank Shaforth, director of the Center for State and Local Government Leadership at George Mason University.
Amid the recession and dropping revenues, there’s already been an uptick of bankruptcy filings by cities, towns and rural districts across the country over the past two months and there could be more if Washington follows through on its promise to slash spending as soon as possible.
“The cities and counties that already in bad shape — they’re the first ones to go,” White said.
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