A bad day for America

Posted by AzBlueMeanie:

All the headlines today say that there is a deal on the federal debt ceiling and deficit reduction negotiations. Crisis averted. Silly media villagers.

Get past the misleading headlines and what we really have is an agreement to an "outline" between the president and congressional leaders of both parties. That outline will be presented to the party caucuses this morning. The Tea Party Caucus will vote against it because they will not vote for any federal debt ceiling increase despite what the Constitution demands; and the Progressive Caucus will vote against it because the "outline" opens the door to tinkering with social security and Medicare by this batshit crazy insane Congress and there are no tax increases on corporations and the über-rich — two things on which the American people side with Progressives in poll after poll.

To quote a Yogi-ism by the great sage Yogi Berra, "It ain't over 'til it's over." Congress has yet to approve anything. The final outcome is still uncertain.

The Washington Post today has a chart breaking down what it believes is in the "outline" agreed to by the president and congressional leaders. Who got what?:

A look at what the Democrats and Republicans wanted and what they got in the deal.

Editorial opinion and the commentariat are in rare agreement today that this is a "bad deal" that will further weaken the economy and increase unemployment. It is precisely the opposite of what is prescribed for a weak economy. This increases the odds of a double-dip recession.

There is also rare agreement that the Tea-Publican economic terrorists have been rewarded for taking America hostage and are being paid their ransom demands in order to save the life of the hostage. This is gangster government, and it will only embolden further hostage taking by Tea-Publican economic terrorists in the future. When are Americans (the hostages) going to rise up and finally say "Enough is enough!" This is no way to run a country.

The New York Times opines today, To Escape Chaos, a Terrible Debt Deal:

There is little to like about the tentative agreement between Congressional leaders and the White House except that it happened at all. The deal would avert a catastrophic government default, immediately and probably through the end of 2012. The rest of it is a nearly complete capitulation to the hostage-taking demands of Republican extremists. It will hurt programs for the middle class and poor, and hinder an economic recovery.

* * *

[D]emocrats have held out for a few basic principles. There must be new tax revenues in the mix so that the wealthy bear a share of the burden and Medicare cannot be affected.

Those principles were discarded to get a deal that cuts about $2.5 trillion from the deficit over a decade. The first $900 billion to a trillion will come directly from domestic discretionary programs (about a third of it from the Pentagon) and will include no new revenues. The next $1.5 trillion will be determined by a “supercommittee” of 12 lawmakers that could recommend revenues, but is unlikely to do so since half its members will be Republicans.

If the committee is deadlocked, or its recommendations are rejected by either house of Congress, then a dreaded guillotine of cuts would come down: $1.2 trillion in across-the-board spending reductions that would begin to go into effect by early 2013.

* * *

Democrats won a provision drawn from automatic-cut mechanisms in previous decades that exempts low-income entitlement programs. There is no requirement that a balanced-budget amendment pass Congress. There will be no second hostage-taking on the debt ceiling in a few months, as Speaker John Boehner and his band of radicals originally demanded. Democratic negotiators decided that the automatic cut system, as bad as it is, was less of a threat to the economy than another default crisis, and many are counting on future Congresses to undo its arbitrary butchering.

Sadly, in a political environment laced with lunacy, that calculation is probably correct. . .

* * *

President Obama could have been more adamant in dealing with Republicans, perhaps threatening to use constitutional powers to ignore the debt ceiling if Congress abrogated its responsibility to raise it. But this episode demonstrates the effectiveness of extortion. Reasonable people are forced to give in to those willing to endanger the national interest.

The Washington Post opines today, Back from the debt-ceiling brink:

THIS CIRCUS has lasted way too long — and, as of this writing, the high-wire act continues. On Sunday evening, congressional and White House negotiators closed in on a deal to raise the debt ceiling and prevent the government from having to default on its obligations. At 8:40, President Obama emerged to announce that the process had been “messy” but that disaster had been averted. The first stage would involve spending cuts just over $900 billion in return for an equivalent increase in the debt ceiling. The second step would call for a super-committee of Congress to come up with an additional $1.2 trillion to $1.5 trillion in savings by November.

The sticking point involved the precise content of the enforcement mechanism to be employed if that committee fails to reach agreement. The “trigger” would involve only automatic cuts in spending, not automatic tax increases, as Democrats wanted — and, indeed, what any sensible deal would entail. But what programs would be exempted from cuts, and the mix of the cuts between domestic and security spending, was the subject of vigorous behind-the-scenes debate.

Meantime, the White House appeared to have achieved its goal of securing enough of an increase in the debt ceiling to get it past the 2012 election, separating the second bump-up of the debt limit from the reporting and adoption of the super-committee’s recommendations.

Even before the terms were revealed, some House Republicans were expressing concern about the potential impact of automatic cuts in defense spending if the trigger is pulled — and, of course, a hard-core group of others has vowed to entertain no increase in the debt ceiling whatsoever. For its part, the progressive caucus in the House revolted against the prospect of deep cuts in entitlement spending and no clear pathway to new revenue.

What to make of all this, other than to wonder, as Mr. Obama put it Friday, whether the United States has “a AAA political system to match our AAA credit rating?” On the plus side of the deal is the bottom line of relief — assuming the arrangement gets past the House — of the immediate crisis averted. When the hostage is released, everyone breathes a sigh of relief, no matter what it took to secure his safety.

* * *

This may be the only feasible solution at this late hour. It is not a solution of which anyone involved in this heart-stopping performance ought to be proud.

New York Times columnist and Nobel Prize winning economist Paul Krugman gets it exactly right on the economic impact and political consequences. The President Surrenders on Debt Ceiling:

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.

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.

* * *

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.

Our government is being held hostage. So I will ask again, when are Americans (the hostages) going to rise up and finally say "Enough is enough!" This is no way to run a country.

UPDATE: From David Frum, on CNN.com:

I see some things I don't believe in:

Forcing the United States to the verge of default.

Shrugging off the needs and concerns of millions of unemployed.

Protecting every single loophole, giveaway and boondoggle in the tax code as a matter of fundamental conservative principle.

Massive government budget cuts in the midst of the worst recession since World War II.

I am not alone.

Only about one-third of Republicans agree that cutting government spending should be the country's top priority. Only about one-quarter of Republicans insist the budget be balanced without any tax increases.

Yet that one-third and that one-quarter have come to dominate my party. That one-third and that one-quarter forced a debt standoff that could have ended in default and a second Great Recession. That one-third and that one-quarter have effectively written the "no new taxes pledge" into national law.