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Posted by on Aug 1, 2011 in Economy, Politics | 9 comments

No Winners in Latest Debt Ceiling Limit Deal

Osama Hajjaj, Abu Mahjoob Creative Productions

While analysts, advisors and columnists disagree about who won and who lost the most — Republicans or Democrats, the president or Congress — the real losers are the American people who wanted signs that we have a responsible government (we don’t) and who want their cake-and-eat-it-too (and got neither).

The economy

…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. …Paul Krugman


The politicians

…The epic budget battle has failed to resolve another question: which party can be better trusted to govern?

The president, with his re-election on the horizon, emerges from the showdown in a diminished state after giving considerable ground and struggling to rise above a deep partisan intransigence that has engulfed Washington. And Republican leaders, especially Speaker John A. Boehner, are bruised after navigating the intractable sentiment of the Tea Party movement….

… The outcome, perhaps, was better for Mr. Obama as a presidential candidate than as a president. His ability to face down House Republicans over the next 18 months is in question, but when he faces voters next year, his advisers believe that the debt ceiling fight will have created a clear contrast between his priorities and that of a Republican Party that he and his allies will no doubt portray as extreme. …analysis, NYT

… This leaves Americans to contemplate two possibilities more alarming than debt-ceiling brinkmanship. First, that we’re living through yet another failed presidency. And second, that there’s nobody waiting in the wings who’s up to the task either. …Ross Douthat

I wish Douthat had gotten closer to the truth (but he frequently chooses to avoid it). We’re not talking about a failed presidency. We’re talking about a failed government and a failing nation.

Ezra Klein is smarter. He recognizes that the “deal” isn’t really a deal.

Perhaps this deal signals the end of the need to actually reach an agreement, however. If the Joint Committee fails, the trigger begins cutting spending. If negotiations over taxes fail, the Bush tax cuts expire and revenues rise by $3.6 trillion. Neither scenario is anyone’s first choice on policy grounds. But you can get to both scenarios without Republicans explicitly conceding to higher taxes or Democrats explicitly conceding to entitlement cuts in the absence of higher taxes. Politically, that’s the lowest-common denominator, and that might mean it’s also the only deal the two parties can actually make. But that’s because it’s the only deal that doesn’t require, well, making a deal. …Ezra Klein, WaPo

Obama put the best spin possible on the deal when he announced it in the White House briefing room. But there’s little good news for him and his party in what’s immediately known about the framework of the compromise…
… Showing a willingness to stand up to the liberal base is not necessarily bad – if it pays off in increased support from the Independents who often determine the outcome of elections. But there is no sign that Independents approve of the president’s handling of the debt issue. The combination of a depressed base and a disillusioned center is potentially toxic to the president. His challenge in the next 15 months is to find an antidote by showing he’s still able to govern under the terms of the deal and able to persuade his own party that they need to rally behind him. ...George Condon, National Journal/Atlantic


The American people

… Failing to raise the debt ceiling stops money already approved by Congress from being spent. If lawmakers see the debt ceiling as real, they will exercise less judgment in the ordinary budget process, on the reckless belief that fiscal restraint can somehow be imposed down the road.

Legislative obstacles like the debt ceiling are a source of mischief, not precaution. They aren’t found in the Constitution; they were put in place by previous Congresses seeking to tie the hands of their successors. Far from encouraging more responsible governance, they often have the opposite effect.

Unnecessary supermajority requirements are another culprit — the Senate filibuster chief among them. It has been transformed over the last generation from an extraordinary step taken by disgruntled minorities into a hard-and-fast “rule of 60” that makes compromise extraordinarily difficult. And when Congress fails to meet this extra-constitutional threshold, it is no surprise that the president tries to work around it.

Fast-track procedures that limit amendments and require an up-or-down vote may appear to limit Congress’s power, but could actually strengthen it by discouraging the executive from going it alone. If prior debt-ceiling legislation had included a fast-track provision, with an automatic increase that would go into effect in the case of inaction, much of the acrimony and brinkmanship of the past few months could have been avoided.

After the debt crisis ends, the democracy crisis must be tackled. Nobody wins when our constitutional system falters: not the president, who gains unilateral power but loses a governing partner; not Congress, which gets to blame the president but risks irrelevance; and certainly not the American people, who have to bear the resulting dysfunction. …Jacob Hacker and Oona Hathaway

Congress is far from doing its job. It has chosen to abdicate and turn the real job over to a “super” committee. The president isn’t much better, passing the buck to a commission whose results he then decides to ignore.

On the other hand, the president fought to keep Republicans from continuing their damage to our “fragile” economy and may well have preserved his relationship with Wall Street bankers. The election in 2012 will tell us a lot about that.

But the process, led by John Boehner for the most part, gets no congratulations, not even from serious budget cutters.

Budget experts viewed this process skeptically.

“I think it’s very unlikely that a special committee is going to make (serious bipartisan) recommendations right before an election year,” [non-partisan Concord Coalition director] Bixby said. He also feared that Congress will not allow steep automatic cuts to spending. “Democrats are never going to agree to major entitlement reform if revenues are off the table. The fact of the matter is, entitlement programs are very popular” with voters.

The most positive outcome in the deal to cut spending and raise the debt ceiling is that it would delay steep cuts awhile, so they wouldn’t come within the next year, when the economic recovery is still so fragile.

“We also made sure these cuts wouldn’t happen so abruptly that it would be a drag,” Obama said. …McClatchy

What’s still missing from all of this is the recognition on all sides — Americans, their representatives, and their president — that we want it both ways. We’re in favor of a government that spends its resources carefully but not a government that takes money away from programs that we value. The difference between the two parties is that one goes to the polls feeling guilt and a desire to punish others, and the other feeling optimism and a desire to reward everybody. Will we feel more guilt or more hope and optimism in November 2012?

Cross posted from
the blog Prairie Weather.

The cartoon by Osama Hajjaj, Abu Mahjoob Creative Productions, is copyrighted and licensed to run on TMV. Unauthorized reproduction prohibited.

EDITOR’S NOTE: Due to a technical glitch, this post was up on TMV for a minute with the wrong byline. It was quickly corrected. We regret the error.