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Congress

The Wisdom of the Deficit Owl.


What fiscal crisis? The great unasked question in this summer of sound-and-fury is ‘why?’ The United States has many problems at the moment: a high-and-stubborn unemployment rate, a foreclosure catastrophe, a slowing economy that has not recovered and will not recover…and the ongoing challenges of infrastructure, energy and climate change. Fiscal crisis? The entire thing is a figment, made up of wise-men’s warnings repeated endlessly.

James K. Galbraith, who warned of the deficit witchhunt a year ago, weighs in on the debt ceiling endgame currently playing out in Washington, as well as Obama’s role in it:

[W]hat do we have, from a President who claims to be a member of the Democratic Party? First, there is the claim that we face a fiscal crisis, which is a big untruth. Second, a concession in principle that we should deal with that crisis by enacting massive cuts in public services on one hand and in vital social insurance programs on the other. This is an arbitrary cruelty. Third, a refusal to stand on the strong ground of the Constitution, against those whose open and declared purpose is tear that document and the public credit to shreds.

Yep, that’s about it. When it became clear that Obama had fully inhaled voodoo economics and was once again going to give away the store in these needless negotiations, I said on Twitter: ““I’ll take [Boehner/Cantor/Lannisters/Littlefinger] at his word!” I just realized: Obama negotiates like Ned Stark. Now, winter is coming.

But, really, that gives this president too much credit. He’s not a nobly deluded sap. He’s getting exactly what he wants: a Third Way-approved Grand Bargain that takes money out of a sputtering economy and needlessly slashes our social insurance system, all in response to a problem that is basically imaginary.

But, of course, the chatterers and the Serious People™ will applaud this bargain as being wise, centrist, and independent no matter what damage it causes — hey, only Nixon can go to China! And all the while the economy and labor market will continue to tank. What a fucking fiasco. [Rorschcat via here.]

Discussion

3 Responses to “The Wisdom of the Deficit Owl.”

  1. Lawrence O’Donell sees Obama’s role as political brilliance. According to him, Obama has played the split within the GOP perfectly. He ran a bluff with his talk of spending cuts expecting that the Teaple would do just what they did. Now with the McConnell proposal he has what was needed. An increase in the debt ceiling not tied to anything substantial.

    Posted by Paul Murphy | July 13, 2011, 6:02 pm
  2. 11-Dimensional Chess! But there’s one problem with O’Donnell’s theory — Obama doesn’t seem to want the McConnell deal. Rather, judging from the Cantor-Obama spat, he seems actively ticked that it’s been put on the table — He wants the Grand Bargain.

    See this (my emphases): “‘This is not a preferred option,’ White House Press Secretary Jay Carney said of McConnell’s proposal in his daily briefing.

    McConnell’s proposal for avoiding debt default — to transfer full power to raise the debt ceiling to the White House for the remainder of Obama’s current term, cutting Congress out of the process — does nothing to address deficit reduction, Carney said. And Obama is set on making sizable cuts.

    “‘The president is firmly committed to significant cuts in spending and to dealing with our deficit and debt problems in a balanced way,” he said. “Bigger is better…It’s an opportunity for a game-changer, to put the United States on much firmer ground as we really get into the 21st century and the economic competition that confronts us.

    Posted by Kevin | July 14, 2011, 10:00 am
  3. See also Ezra Klein today: “A lot of Democrats took one look at the McConnell plan, which would raise the debt ceiling without substantive fiscal concessions, and saw their way out of this mess. But not the White House. What’s come clear in recent weeks is that the Obama administration is much more intent on reaching a major deficit deal, and much less intent on making revenues a major part of it, than most observers assumed.

    That’s led them to offer Republicans a deal that is not only much farther to the right than anyone had predicted, but also much farther to the right than most realize. In addition to the rise in the Medicare eligibility age and the cuts to Social Security and the minimal amount of revenues, it’d cut discretionary spending by $1.2 trillion, which is an absolutely massive attack on that category of spending.

    This deal isn’t just a last-ditch effort to save the economy from the damage of a federal default. The White House would far prefer this deal to the McConnell plan, or to the $2 trillion deal that was under consideration during the Biden negotiations.

    Posted by Kevin | July 14, 2011, 11:37 am

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