As the debt doomsday of August 2 draws closer, what sort of end-game can we imagine?
The worst scenario would be for an outbreak of common sense and self-interest to overtake the extremism of the House Republican caucus. If the Republicans were to accept Obama's proffered deal, they would weaken Social Security and Medicare -- and put the Democrats' fingerprints on the deed -- depriving Democrats of their traditional defense of America's best loved social programs. They would also get a ten-year deficit-reduction agreement that is mostly program cuts. And they would get an austerity package that guarantees high unemployment as Obama heads into a difficult re-election. And a Democratic president is offering this deal!
The Republicans would also get to savor the spectacle of a badly divided Democratic Party, as the White House twists arms of unwilling House and Senate Democrats to vote for a right-wing package.
It's quite a drama. Who will save us from a perverse approach to deficit reduction that is bad economics and worse politics -- the unreality of the Republicans, or the principled resistance of rank and file Democrats?
Obama and his advisers, weirdly, believe that his stance as "the only grownup in the room" who forces his own party to abandon its core principles for the sake of an austerity program will somehow win the gratitude of voters struggling with declining incomes and rising joblessness.
The unemployment may be stuck near ten percent, but good old Obama brokered a deal to balance the budget in 2021. So re-elect this man.
On which planet is this?
A better scenario would be for Sen. Mitch McConnell to prevail among Republicans, with his idea to allow Obama to raise the debt ceiling unilaterally and then to keep negotiating a long-term budget deal along a parallel track. That would spare the country both a default on the debt and an awful ten-year budget agreement.
But this offer seemed almost too good to be true, and it is. There are a few mickeys in the deal now being negotiated by McConnell and Senate Democratic leader Harry Reid. In one version, Obama would have to keep coming back to Congress to get approval to increase the debt, a little bit at a time between now and the end of his presidential term. And Obama would have to match debt increases with $1.7 trillion in budget cuts. In another variation, the deal would create a deficit-reduction commission that could send a budget-cut plan straight to the House and Senate floor for an up or down vote.
In the game of chicken that the Republicans are playing with Obama, the president has a couple of big things going for him. One is reality. There actually will be dire consequences if the United States defaults on its debt.
It is one thing for right-wing Republicans to deny Darwin, or sexual orientation, or even climate change, where the consequences can be fuzzed up via junk science and the impact of science-denial is diffused or delayed. It is quite another to deny the reality of an event scheduled to happen in a couple of weeks. That actually might backfire on you politically.
A second presidential advantage is that the nation's most powerful corporate executives, normally the allies of Republicans, have been imploring the GOP to stop playing these games. McConnell blinked first after dozens of CEO's emerged from a White House session to meet with Republican leaders and request them to stop fooling around with the nation's solvency, and nearly 500 signed a letter demanding action.
But the big disadvantage is the president's own penchant to be the Conciliator-in-Chief. When the opposition party has lost all sense of reason, a leader has a duty to say so, and not to keep splitting the difference.
The stakes are so high that Obama can probably win this one without giving away the store. As the deadline comes closer, the Republicans will have to shift ground. The question is whether he will needlessly give up much of Social Security, Medicare, and the resources he needs to pull the country out of recession, along the way.
As often has been the case, Obama's lack of spine puts his own party in a difficult spot. So far, the Democrats' Congressional leadership, from Reid and Pelosi on down, have done a courageous job of saying to Obama: No Social Security and Medicare cuts, no way. But if the Republicans suddenly agree to a deal and Obama tells the Democrats that his presidency and the country's solvency are on the line, what will they do then?
If 2012 is not to be a blowout, Congressional Democrats and base progressive organizations will need to be even firmer with their president. At times, the labor leadership has warned the White House that failure to deliver a jobs program and a cave-in on Social Security and Medicare will mean rank and file activists campaigning for Democratic House and Senate candidates but not going all out for Obama. That message -- from all of the progressive forces that helped elect Obama -- needs to be even more pointed.
We need to get this budget fight behind us, so that the President and other Democrats can begin talking seriously about jobs, economic recovery, and saving the middle class. The more fiscal resources Obama gives away as part of a budget deal, the harder that shift will be.
Robert Kuttner is co-editor of The American Prospect and a senior fellow at Demos. His most recent book is A Presidency in Peril.
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The jobless recovery shows that Obama's bailing out the financial sector and austerity programs is not a surprise after his appointment of Tim Geithner and Larry Summers. Obama's ultimate plan is to cut wages by 30% for working people. This will send us into a depression while the wealthy financial sector is bailed out for the gambling debts of Wall Street.
http://www.globalresearch.ca/index.php?content=va&aid=25676
You have to scroll down to the article, "Global Economic Crisis is the New Mode of Warfare."
Dr. Hudson is a distinquished Professor of Economics at the University of Missouri-Kansas City.
He writes of the new economic order and has published several books since 1972.
Obama has betrayed his constituency in favor of international finance
http://en.wikipedia.org/wiki/Democratic_Leadership_Council
Vote for the Progressive caucus in the primaries and the dems in the general. The real founders types.
http://cpc.grijalva.house.gov/
Look who we owe most of our debt to: The FED, the Banksters who crashed the economy!
http://en.wikipedia.org/wiki/File:Estimated_ownership_of_treasury_securities_by_year.gif
Hey, you Tea party folks, learn the real Liberal history of the US founders:
"If you love wealth more than liberty, the tranquility of servitude better than the animating contest of freedom, depart from us in peace. We ask not your counsel nor your arms. Crouch down and lick the hand that feeds you. May your chains rest lightly upon you and may posterity forget that you were our countrymen."
- Samuel Adams
John Adams was more pro-British than his brother.
Marx saw labor vs. industrialists. Professor Hudson sees Big Finance vs. everyone else. Ownership of the means of production means little to nothing compared to the power to control the issuance of money and zero interest rates from the FED to the chosen few so that they can invest the money overseas.
Obama is running to the right of the republicans. The Tea Party is just some wackos who are extreme on social issues and are playing bad cop to Obama's good cop routinue, according to Professor Hudson.
Prof. Hudson was Dennis Kucinich's adviser while Obama uses McCain's advisers.
The last sentence you wrote resonates with me, because before he ran, I did not even know who in the world Barack Obama was-as far as I was concerned-he was some figment of Oprah Winfrey's imagination. Seriously, I had never heard of the man. Now, everything I know about him makes me cringe with disappointment.
I also think that with eight years of Bush and three years of Obama, most of the country has a case of what I call "hittyS President Fatigue". Eleven years of hittyS Presidents are wearing us out.
I've cynically come to believe that Obama is enjoying this impasse because it allows him to weasel out of trying to grapple with unemployment/jobs. He appears to not want to do anything politically difficult, so the longer this drags out the less he has to do.
Really disappointed in this guy.
When the police tag team you, you go to jail.... Obama is just as much a cop as Bush... there is no "Change" in your future except begging for spare change....
Obama wants you to be poor... LOOK at his actions...
He prevented a depression... are you sure about that? Maybe for the rich people he did... but have you tried to get a job lately? If you have a job.. how many relitives are you "helping" right now?....
Exactly what I have been posting for two weeks, but stated more eloquently. Thank you Mr. Kuttner. I'm still creeped out that so many self proclaimed progressives want Obama to "stand firm" on his stupid Grand Bargain because they think it will help his reelection chances and care more about that than the deal's affect on their own lives. That's not supporting the president, that extends to being a self loathing groupie.
Not War and Austerity.
No country has ever austeritied its way to prosperity.
2 hours ago (6:44 PM)
"What would you say about a relative that made $45,000/year, spent $75,000/year, and denied the need to reconcile the gap?
Sorry character at the least, in need of a family intervention.
The US populace demands government services beyond their ability to fund them, and has elected the government it deserves."
That person is ignorant (not a sorry character) because they "denied the need to reconcile the gap". That has nothing to do with taking on debt to have revolving credit, or getting into personal debt through malicious practices on the uninformed. You're thinking of the debt ceiling like a credit card instead of like a mortgage.
However, it's become a sad necessity because modern media can't just cover events, they have to tell a story about characters and drama.
If the debt ceiling is not raised, we will get to see the real priorities of President Obama. THIS IS NOT AN AUTOMATIC DEFAULT ON THE NATIONS DEBT. He will have to decide if Social Security, Medicare, Military pay, and debt service (which are the items they are dragging out to scare us) are really a priority. If you want to play politics with this, the President’s position is weak because he will have to defend his priorities which are not the same as the American people.
With that said, you should all be ashamed of yourselves to burden your children and grandchildren with the obligations of this debt. ( $14 trillion / 300 million Americans = $47,000 per American )
2) There isn't enough money to pay for any of those things. He would have to massively shrink federal outlays to just match the trickles of revenue coming in. And there wouldn't be money to pay the interest on the national debt, after a couple of months.
Except there hasn't actually been any Keynesian "massive government spending" in decades to prove your point. On the contrary, what has been proven is that Supply-Side, Trickle-Down, Voodoo economics does not work.
Once again, the American people are being played. The fix is in.
http://finance.yahoo.com/news/Obama-announces-plan-to-cut-apf-2226973376.html?x=0
http://en.wikipedia.org/wiki/Conservative_liberalism