NYT: The President Surrenders
Unfortunately, I completely agree. :frustration:
There's some more details that provide a bit of comfort on this NYT article.
- Barry
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Op-Ed Columnist
The President Surrenders
By PAUL KRUGMAN
Published: July 31, 2011
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.
And then there are the reported terms of the deal, which amount to an abject surrender on the part of the president. First, there will be big spending cuts, with no increase in revenue. Then a panel will make recommendations for further deficit reduction — and if these recommendations aren’t accepted, there will be more spending cuts.
Republicans will supposedly have an incentive to make concessions the next time around, because defense spending will be among the areas cut. But the G.O.P. has just demonstrated its willingness to risk financial collapse unless it gets everything its most extreme members want. Why expect it to be more reasonable in the next round?
In fact, Republicans will surely be emboldened by the way Mr. Obama keeps folding in the face of their threats. He surrendered last December, extending all the Bush tax cuts; he surrendered in the spring when they threatened to shut down the government; and he has now surrendered on a grand scale to raw extortion over the debt ceiling. Maybe it’s just me, but I see a pattern here.
Did the president have any alternative this time around? Yes.
First of all, he could and should have demanded an increase in the debt ceiling back in December. When asked why he didn’t, he replied that he was sure that Republicans would act responsibly. Great call.
And even now, the Obama administration could have resorted to legal maneuvering to sidestep the debt ceiling, using any of several options. In ordinary circumstances, this might have been an extreme step. But faced with the reality of what is happening, namely raw extortion on the part of a party that, after all, only controls one house of Congress, it would have been totally justifiable.
At the very least, Mr. Obama could have used the possibility of a legal end run to strengthen his bargaining position. Instead, however, he ruled all such options out from the beginning.
But wouldn’t taking a tough stance have worried markets? Probably not. In fact, if I were an investor I would be reassured, not dismayed, by a demonstration that the president is willing and able to stand up to blackmail on the part of right-wing extremists. Instead, he has chosen to demonstrate the opposite.
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.
Re: NYT: The President Surrenders
It's impossible to win a game of chicken from an adversary you think - rightly or wrongly - to be insane.
Re: NYT: The President Surrenders
I think that is very true, Zeno.. on the other hand it's pretty hard to win a game of chicken in general.. best to avoid those if at all possible.. it's a stupid, ego-driven death trip. hey, look what happened to James Dean!
Quote:
Posted in reply to the post by Zeno Swijtink:
It's impossible to win a game of chicken from an adversary you think - rightly or wrongly - to be insane.
Re: NYT: The President Surrenders
Congressional candidate Norman Solomon released this statement today:
https://www.solomonforcongress.com/i...a_huge_mistake
This is a very bad deal and a huge mistake. Instead of capitulating to Republican ideologues in Congress, we should stand our ground on behalf of seniors, children and other vulnerable Americans. All the rhetoric about “shared sacrifice” rings hollow when the vast majority of us are being sacrificed to the benefit of big banks and Wall Street.
There are plenty of sensible and effective ways to reduce the deficit -- including a transaction tax on Wall Street, an end to the Bush tax cuts for the very wealthy and a major reduction in military spending. But the bipartisan dealmakers in Washington are ripping up the social compact and slashing the safety net that’s essential for vast numbers of Americans.
One of the most dangerous aspects of this deal is that it explicitly sets the stage for future actions to undermine Medicare. This scenario is a betrayal that strikes at the heart of precious values, and it’s among many of the current threats to vital social programs. I am committed to defending Social Security and Medicare on the campaign trail and as a member of Congress.
As a progressive Democrat, I will support the president’s policies when he’s right -- and I will oppose his policies when he’s wrong. With this budget deal, he is profoundly wrong.
The people of this congressional district have a right to know how each candidate for Congress would have voted on this budget deal. I would have joined with other progressive House members in voting no.
Re: NYT: The President Surrenders
This so-called deal enshrines debt hostage-holding for all time. Furthermore, the deal violates the Constitution because it sets up a shadow government, the so-called Supercongress, that can make deals without oversight or public accountability.
This legislative teratoma (" a tumor made up of a heterogeneous mixture of tissues") begins the destruction of Medicare and Medicaid and Social Security. Senators Feinstein and Boxer both voted for this act.
Barack Obama represents the interests of the corporatocracy, he does not represent the interests of citizens. I am a senior, and I paid for my Social Security and Medicare, and I am righteously angry that the President and both of California's senators have betrayed me and other seniors.
I call on all Democrats to demand that Obama decline to run for re-election. I call on all Democrats to petition for Bernie Sanders and Dennis Kucinich to campaign for the presidency. People, it cannot get any worse than this.
Star Man
Re: NYT: The President Surrenders
Robert Reich is Chancellor's Professor of Public Policy at the University of California at Berkeley. He has served in three national administrations, most recently as secretary of labor under President Bill Clinton. He has written thirteen books, including The Work of Nations, Locked in the Cabinet, Supercapitalism, and his most recent book, Aftershock. His "Marketplace" commentaries can be found on publicradio.com and iTunes.
Ransom Paid
https://robertreich.org/post/8331408301?7dcce8f8
Monday, August 1, 2011
Anyone who characterizes the deal between the President, Democratic, and Republican leaders as a victory for the American people over partisanship understands neither economics nor politics.
The deal does not raise taxes on America’s wealthy and most fortunate — who are now taking home a larger share of total income and wealth, and whose tax rates are already lower than they have been, in eighty years. Yet it puts the nation’s most important safety nets and public investments on the chopping block.
It also hobbles the capacity of the government to respond to the jobs and growth crisis. Added to the cuts already underway by state and local governments, the deal’s spending cuts increase the odds of a double-dip recession. And the deal strengthens the political hand of the radical right.
Yes, the deal is preferable to the unfolding economic catastrophe of a default on the debt of the U.S. government. The outrage and the shame is it has come to this choice.
More than a year ago, the President could have conditioned his agreement to extend the Bush tax cuts beyond 2010 on Republicans’ agreement not to link a vote on the debt ceiling to the budget deficit. But he did not.
Many months ago, when Republicans first demanded spending cuts and no tax increases as a condition for raising the debt ceiling, the President could have blown their cover. He could have shown the American people why this demand had nothing to do with deficit reduction but everything to do with the GOP’s ideological fixation on shrinking the size of the government — thereby imperiling Medicare, Social Security, education, infrastructure, and everything else Americans depend on. But he did not.
And through it all the President could have explained to Americans that the biggest economic challenge we face is restoring jobs and wages and economic growth, that spending cuts in the next few years will slow the economy even further, and therefore that the Republicans’ demands threaten us all. Again, he did not.
The radical right has now won a huge tactical and strategic victory. Democrats and the White House have proven they have little by way of tactics or strategy.
By putting Medicare and Social Security on the block, they have made it more difficult for Democrats in the upcoming 2012 election cycle to blame Republicans for doing so.
By embracing deficit reduction as their apparent goal – claiming only that they’d seek to do it differently than the GOP – Democrats and the White House now seemingly agree with the GOP that the budget deficit is the biggest obstacle to the nation’s future prosperity.
The budget deficit is not the biggest obstacle to our prosperity. Lack of jobs and growth is. And the largest threat to our democracy is the emergence of a radical right capable of getting most of the ransom it demands.
The Hostage Crisis Continues: Why Obama Can’t Pivot to Jobs and Growth
https://robertreich.org/post/8396689309
Tuesday, August 2, 2011
With the hostage crisis behind him, the President is now ready to talk about the nation’s real problem.
Nine paragraphs into his remarks today announcing the nation has paid most of the ransom the radical right demanded as a condition for maintaining the full faith and credit of the United States (he didn’t use these exact words), the President pivoted to the agenda he should have been talking about all along:
“And in the coming months I’ll continue also to fight for what the American people care most about: new jobs, higher wages, and faster economic growth.”
But what precisely will he fight for now that the debt deal has tied his hands?
He says he wants to extend tax cuts for middle class families and make sure the jobless get unemployment benefits.
Fine, but the new deal won’t let him. He’ll have to go back to Congress after the recess (five weeks from now) and round up enough votes to override the budget caps that now restrict spending. What are the odds? Maybe a little higher than zero.
He says he wants an “infrastructure bank” that would borrow money from private capital markets to pay private contractors to rebuild our nations roads, bridges, airports, and everything else that’s falling apart.
Fine, but the new deal he just signed may not let him do this either – if the infrastructure bank relies on federal funds or even federal loan guarantees to attract private money. The only way he could create an infrastructure bank without sweetening the pot would be by privatizing all the new infrastructure. That means toll roads and toll bridges, user-fee airports, and entry fees everywhere else.
Apart from its potential unfairness to lower-income people, such a privatized infrastructure would have the same effect as a tax increase. After paying more for roads and bridges and all other infrastructure, Americans would have less cash for to spend on goods and services. That means no boost to the economy.
The President also wants to complete trade deals and reform the patent process. These may make the economy slightly more efficient, but they’re not going to have any perceptible positive impact on the lives of the 26 million Americans who are now either looking for work, working in part-time jobs but needing full-time ones, or have given up looking.
More importantly, the deal he just signed makes it impossible for the President and Democrats to launch any major jobs program – no WPA or Civilian Conservation Corps, no major lending program to cash-starved states and locales, no new help for distressed homeowners, and so on. Nada.
“We’ve got to do everything in our power to grow this economy and put America back to work,” the President says, now that the hostage crisis is over.
But the sad truth is he and the nation remain hostage to the ideology of right-wing Republicans who won’t let the government spend more money. Yet if the government can’t spend more – at least this year and next, until the pump is primed and the economy is growing again – we won’t see job growth. And without job growth, the economy will remain anemic.
That’s why even the stock market is reacting badly to the end of the hostage crisis.
If you hadn’t noticed, the number of people unemployed or underemployed keeps growing. (We’ll know Friday how many it added in July, but remember it needs to add 125,000 a month just to keep up with the growth of the labor force. Anything below 125,000 means we continue to slide backward.)
The reason: Consumers, who are 70 percent of the economy, haven’t been able to pick up the slack. That’s because they’re still deep in debt. Their homes have plummeted in value. They can’t borrow. Their jobs are on the line and their wages are dropping.
So where will the demand come from if not government? The radical right points to the alleged “failure” of the stimulus program as evidence that government spending doesn’t work. The fact is it did work – it saved at least 3 million jobs, and would have saved far more if the stimulus was on the scale needed and directed to job creation.
To be sure, pump-priming is more difficult when the well is almost dry, as it is now. And widening inequality – the rich taking home an increasing share of the nation’s total income and wealth – has left the vast middle class with even less purchasing power.
But the pump still needs to be primed.
And the well has to be filled: The nation must also push for real tax reform that reverses the surge toward inequality – raising taxes on the wealthy, cutting them for the middle, and expanding the Earned Income Tax Credit for the poor.
To do this, though, requires that Americans understand the truth. But where will they learn it?
The radical right has not only captured the federal budget. In convincing so many Americans the problem is the size of government rather than their shrinking paychecks and growing economic insecurity, the radical right has also captured the American mind.
Re: NYT: The President Surrenders
I sincerely think it's a mis-characterization to say that Obama surrendered, capitulated, lacked backbone etc. It takes brass balls and a sociopathic heart to so consistently and blatantly betray hundreds of millions of people.
Our political system has been completely hijacked.
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Re: NYT: The President Surrenders
Pay No Attention to the Man Behind the Screen
The President has not Surrendered. He is only following Orders = Orders which come from the folks at the top of the Pyramid, the Men@Rockefeller Center, who hang in the snazzzy Men's Club in the closed Quarters at the top of Bankers' Trust @ 16 Wall Street, kids. Those are the Men who hired 'Bama to do his Job on the American People. In this respect the recent installment of the "Debt-ceiling Crisis" was a charade and a farce. It is Theatre. Not the sort of Play we go to enjoy at Shakespeare in the Park, but Theatre none-the-less.
The so-called "hard right," the "tea party" folks, who sleep in their offices in the Congress Building, are not the Power Elite, kids. They are not the ones pulling the strings behind Debt-Collection. The tea party folks are simply, vestigially, trying to Remember a moment when the Grand Old Republican Party stood for "balanced budgets." This in itself is not bad. -- And most of the Tea-partiers were not reading from a prepared Script; one they did not write, the way 'Bama continually does.
No, this is not "political war" - It is Class War - and the main players are not the ones who get to be seen on prime-time network Television. The main action was behind the Scenes, kids: among Los Ricos; the Bond-holders, who were supposed to get their Quarterly dividends on the first of July. Their checks were late, and they were Pissed !
