Unfortunately, negotiating with Republicans these days is rather like negotiating with suicide bombers. Yet, despite this kabuki dance (or game of chicken — complete with daily dueling press conferences), I have no doubt that the debt ceiling will be raised before the August 2 deadline.
(Washington’s political food fight over debt ceiling, The iPINIONS Journal, July 25, 2011)
Just as I predicted, when all was said and done, Congress passed a bill moments ago that will raise the country’s $14.3 trillion debt ceiling and avert a default that would have devastated the U.S. economy.
But this bill is neither fair nor balanced — as President Obama insisted it had to be. Instead, it merely calls for trillions in cuts from programs for the poor in exchange for raising the debt ceiling by enough ($2.1 trillion) to get the federal government through the 2012 general elections without having to repeat this “ridiculous [and] disgraceful” kabuki dance again.
This has shortsighted members of his own Democratic Party accusing Obama of “caving in” to Tea Party demands that no taxes – not even the revenues that would be generated by eliminating tax breaks and closing tax loopholes for millionaires, billionaires and big corporations – shall be included in this bill.
In other words, members of the Tea-Party faction in the Republican Party held the U.S. economy hostage by threatening to blow it up unless they got their way. And, like spoiled children, they got their way. Just keep that in mind when you hear politicians patting themselves on the back for averting an economic meltdown … which they themselves ignited.
This bill also calls for a bipartisan, 12-member commission to recommend fair and balanced cuts, as well as new revenue streams (aka tax reform) to tackle America’s ongoing debt crisis. Significantly, if commission members are unable to agree on cuts by late November, which seems highly likely, a trigger mechanism to make cuts across the board and raise revenues in a progressive fashion will take effect.
No doubt Obama is hoping that, either through commission recommendations or via this automatic trigger, his balanced approach will ultimately be vindicated. I think it will….
In the meantime, though, the United States has become the laughing stock of the world. And nothing demonstrates what reputational damage this crisis has done quite like Russian Prime Minister Vladimir Putin declaring indignantly that its unsustainable debt has the U.S. “living like a parasite on the global economy”.
But let me hasten to note that, despite all of the carping about America’s fiscal and economic woes, not even Russia (or China) would dare ditch the U.S. dollar as the international reserve currency. To paraphrase what Churchill said in defense of democracy: they say the dollar is the most untrustworthy currency except that they cannot think of one they trust more. The dollar, especially in the form of Ua .S. Treasury Note, is still king!
In a similar vein, despite threats by the major rating agencies to downgrade America’s AAA credit rating, chances are now slim to none that they will actually do so. This reflects one of the ironic (or oxymoronic) perks of being both the richest and most-indebted nation in the history of mankind: rating agencies have to think twice about downgrading America because, in doing so, the ripple effect throughout the global economy would be disastrous — hence Putin’s indignant lament.
Anyway, thusly emboldened, Tea Party zealots are likely to seize any and every opportunity to extract more draconian, one-sided debt-reduction concessions — even if this means bringing on the economic Armageddon, which, for them, seems so devoutly to be wished.
Accordingly, playing a game of chicken, instead of forging compromise, will become the modus operandi for governing in Washington.
Stay tuned.…
NOTE: I have been utterly stupefied by the way Democrats (who control two-thirds of the federal government) have allowed Republicans to proselytize throughout this debate the plainly absurd fiction that only they were speaking for, and acting in the interest of, the American people. Hell, they were carrying on as if all Democrats, including the president, were elected by people from Uranus. I urge Democrats to begin calling them out on this self-righteous and almost fascistic bit of propaganda.
Related commentaries:
Washington’s political food fight
President and Speaker duel over debt ceiling
*This commentary was published originally yesterday, Tuesday, at 2:45 pm