Is everybody happy now? Relieved anyway, because we dodged a bullet, forged a compromise and snatched victory from the jaws of default? Does it make any difference:
- that this was an utterly illusory “crisis” that “we” inflicted on ourselves, or
- that it’ll cost the neediest among us a lot, and the most fortunate nothing, again, or
- that the wrong guy gets the blame for it, or
- that it only treats part of the problem, or
- that it’s the wrong part, or
- that it continues the trend of burying the electorate in a confusing blizzard of zeros, relating to both dollars and the time over which they accumulate?
The debt ceiling limit law was enacted in 1917, when Congress exercised only loose oversight on government spending. It has been unnecessary since at least the 1970s, and you’d never heard of it before now because it has been used seventy (count ’em) times previously without incident. Nobody ever conceived of using this routine act to hold the world economy hostage – until now. [Web Link www.newyorker.com/talk/financial]
The compromise reached during this make-believe hostage crisis apparently focuses early spending cuts on federal agencies serving the poorest Americans; Defense is untouched, unless the next generation of Congressional wranglers can’t agree on more cuts before Christmas. I write ‘apparently’ because it’s quite difficult to tell – even the [Web Link NY Times] threw up its hands and just printed the 74-page bill.
Mr. Obama gets most of the blame for the sorry state of the national debt, when the lion’s share of the problem was created by his predecessor: via tax cuts ($1.8T), coincident with two (count ‘em!) unfunded wars ($1.5T), TARP and a Wall Street bail-out ($1T). Obama’s stimulus and tax cut (together, $1.1T) are kind of chintzy, by comparison. [Web Link Web Link].
The ransom, err, compromise deals only with the spending side of the national accounts. As everybody with a check book knows, there are two components to balancing a budget: spending less And making more – here, in the form of higher taxes. A simple revision of the Bush tax cuts would make a huge dent in the problem. The job-killer counter- argument is cynical nonsense. The Bush cuts have done nothing for American jobs precisely because their benefits flow elsewhere in the now wide-open global economy.
This country’s economy is struggling mightily to emerge from the Great Recession. It has a jobs and housing crisis, not a debt crisis -- it has a debt problem. The current economic scuffling is caused by too little demand overall, especially from the deeply troubled middle class. Reducing the spending that flows from both the feds directly, and via the states, will further exacerbate the lagging demand problem. Anybody for a double-dip in the red-ink pool?
Sometime in the last decade, politicians decided that they could maximize the perception of a desired policy by accounting for it over multiple years or budget cycles, thus yielding bigger numbers. The result has been a thoroughly numbed and befuddled public that cannot comprehend or compare actual, relevant impacts without a Cal Tech post-doc. I suspect that the coincidence of that phenomenon with the downfall of solid, investigative journalism is no accident. It is a thoroughly frustrating trend that generates fear without understanding.
They say a good compromise is one where nobody ends up happy. This latest "bargain" demonstrates that the same thing can be said of a lousy one.