Monday, August 1, 2011

The Debt Ceiling Deal is a Disaster

Yesterday, July 31st the outline of what will almost certainly be the final agreement to raise the debt ceiling was announced. It calls for at least 2.1 trillion dollars in spending cuts over 10 years without a penny in tax increases. The Republicans get a spending cut almost equal to the size of the debt ceiling increase with no new revenues. The democrats get an extension of the debt ceiling beyond the 2012 election, the thing which all responsible economists said was necessary to prevent a downgrade in our credit rating and a spike in interest rates that would ultimately increase the deficit.

Here is how this drama unfolded. Republicans took the American economy hostage by saying that they will refuse to raise the debt ceiling unless they get spending cuts to reduce the deficit. Then, Obama agreed to tie a reduction in the deficit to raising the debt ceiling. If he stood his ground and demanded a clean increase in the debt ceiling, as Ronald Regan did, he could have at the very least negotiated the Republicans to much smaller spending cuts. When Obama agreed to tie the debt ceiling vote to deficit reduction he strongly demanded that the bill include tax increases. If he would have specified the percentage of deficit reduction that should come from tax increases, he could have negotiated down from there. But he didn’t.

When asked by a reporter at a press conference what changes he would make to entitlements to reduce the deficit Obama proposed raising the Medicare eligibility age, the one change to any government program that would have the largest and most inexcusable impact on the most vulnerable of our citizens, the portion of the elderly who live in poverty.  He could have easily trotted out a Democratic proposal, using Medicare to negotiate down the cost of prescription drugs, means testing Medicare and Social Security so that any cuts would be placed on the backs of those most able to afford it, or raising the taxable maximum on Social Security that currently makes our tax code far less progressive than it needs to be. Instead, he gave the Republicans their holy grail, and in so doing, guaranteed the denigration of our social safety net.

Then Obama gave away the only democratic idea left in the debate, tax increases. With an overwhelming majority of the American public on his side, he agreed to a deficit reduction plan with 100 percent spending cuts.

And after all of this, an economic advisor to the Obama administration told MSNBC, “This president stood firm, never blinked and this agreement reflects that.”

 Capitulation is nothing new for this president. He never stood up for the public option. He codified indefinite detention. He extended all of the Bush tax cuts. He gave the Republicans more and more cuts during the government shutdown battle earlier this year. For all intensive purposes, we don’t have a divided government.

On CNN’s reliable sources, Howard Kurtz interviewed Chrystia Freeland, a Thompson Reuters reporter, about how unemployment and the economy are being eclipsed by coverage of the deficit. She also points out, as few in the mainstream media have, that cutting spending is bad for short term economic growth. She also commented on Paul Krugman’s brilliant editorial, The Centrist Cop-Out,

I think mainstream journalism is adverse to making judgments and I also think that mainstream journalists are particularly scared of being labeled as liberal. We all want to be seen as objective and sometimes I think there is a bit of bending over backwards to be seen as objective by the right because that is where a lot of the criticism comes from.

An excellent example of this was seen on CNN today when CNN anchor Kyra Phillips described the debt ceiling deal as a compromise. A compromise requires both sides to give up something. Democrats gave up everything. Republicans gave up a balanced budget amendment and decided not to force the country into Armageddon. They received 2.1 Trillion in spending cuts, an amount almost equal to the 2.4 Trillion debt ceiling increase. The Republicans got 90 percent of what they wanted and Democrats got what every reasonable expert agreed was absolutely necessary in the first place. Compromise!

All of this stems from the Mainstream Media’s fear of being called liberal, even though the criticism comes no matter what they do. When a crisis emerges both parties are to blame. When a crisis is averted, it was the result of both sides compromising, never mind the facts.

Meanwhile in the alternative universe known as Fox News, their show America’s Newsroom did an unscientific poll on their website on whether their viewers supported the debt ceiling deal.  Their options were Yes its as good as this Congress can do, No we’re still raising the debt ceiling by trillions, and I don’t know need more details. There was no option for opposing the deal because they cut too much from the federal budget. But then again, that’s the kind of shoddy journalism we have come to expect from Fox News.

P.S. There is one bit of good news today; Platoon of Power Squadron released the first segment of its new episode.

Originally Written August 1st, 2011

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