Tuesday, July 05, 2011
The President gave us the latest on the debt talks:
Over the July Fourth weekend, my team and I had a series of discussions with congressional leaders in both parties. We’ve made progress, and I believe that greater progress is within sight, but I don’t want to fool anybody — we still have to work through some real differences.
Now, I’ve heard reports that there may be some in Congress who want to do just enough to make sure that America avoids defaulting on our debt in the short term, but then wants to kick the can down the road when it comes to solving the larger problem of our deficit. I don’t share that view. I don’t think the American people sent us here to avoid tough problems. That’s, in fact, what drives them nuts about Washington, when both parties simply take the path of least resistance. And I don’t want to do that here.
I believe that right now we’ve got a unique opportunity to do something big — to tackle our deficit in a way that forces our government to live within its means, that puts our economy on a stronger footing for the future, and still allows us to invest in that future.
Keep in mind that even if one agrees that the most important thing you must do at a time of 10% unemployment, a dead housing sector and anemic growth is tackle "the deficit", there is absolutely nothing anywhere that says it has to be done under a threat to not raise the debt ceiling. That is an artificial deadline, completely made up with absolutely no authority whatsoever. He is fundamentally misleading the American people about this at this point. Raising the debt limit is a pro-forma vote that if passed simply allows the government to keep paying its bills, it's not "kicking the can down the road."
Most of us already agree that to truly solve our deficit problem, we need to find trillions in savings over the next decade, and significantly more in the decades that follow. That’s what the bipartisan fiscal commission said, that’s the amount that I put forward in the framework I announced a few months ago, and that’s around the same amount that Republicans have put forward in their own plans. And that’s the kind of substantial progress that we should be aiming for here.
To get there, I believe we need a balanced approach. We need to take on spending in domestic programs, in defense programs, in entitlement programs, and we need to take on spending in the tax code — spending on certain tax breaks and deductions for the wealthiest of Americans. This will require both parties to get out of our comfort zones, and both parties to agree on real compromise.
I’m ready to do that. I believe there are enough people in each party that are willing to do that. What I know is that we need to come together over the next two weeks to reach a deal that reduces the deficit and upholds the full faith and credit of the United States government and the credit of the American people.
The "bipartisan fiscal commission" agreed on nothing and issued no report. If they couldn't get a consensus among that small group, it should have been a clue that there is no consensus about doing this at all. It would appear that the lesson they did learn was that they needed to attach doing what they wanted to a catastrophic event so as to foreclose any real debate and just "git 'er done."
Moreover, the much touted "balanced approach" at the moment is 83% spending cuts to 17% phony loophole closings and subsidy eliminations. But hey, if people want to believe that's a fair deal, who am I to argue? You'll have to pardon me if I skip the celebration on this one.
It is "big." That much is true.
By the way, I was informed via twitter that Wikipedia says this:
Keynes's influence waned in the 1970s, partly as a result of problems that began to afflict the Anglo-American economies from the start of the decade, and partly because of critiques from Milton Friedman and other economists who were pessimistic about the ability of governments to regulate the business cycle with fiscal policy. However, the advent of the global financial crisis in 2007 has caused a resurgence in Keynesian thought. Keynesian economics has provided the theoretical underpinning for economic policies undertaken in response to the crisis by Presidents George W. Bush and Barack Obama of the United States, Prime Minister Gordon Brown of the United Kingdom, and other global leaders.
I'm fairly sure that if cutting spending and raising taxes is the "big thing" that the American government seeks to do to end this economic crisis, the Japanese earthquake was actually Keynes rolling over in his grave.
Update: David Frum makes an interesting observation:
And now President Obama has summoned Republicans to another round of negotiations over the debt ceiling.
Perhaps he will there deploy some previously invisible form of leverage.
To the uninstructed eye, however, it looks like Obama has set up yet another lopsided bargaining table: He needs the Republicans to give him something, anything, that he can claim as a victory. This need, however, perversely puts the Republicans in the situation where if they give him something, anything, it will be represented as a defeat. The president’s own weakness has had this perverse effect on his political opponents: it has reduced the value of his own concessions (no matter how big) and hugely exaggerated the significance of any offset he achieves (no matter how small).
I've written before that I think Boehner wants to let his Tea Partiers run free, so I suspect everyone will play this out until the very end and then Obama will get his symbolic face saving concession. The majority that votes through these massive, painful spending cuts in the House will likely be composed of far more Democrats than Republicans. It may take all of them. Isn't that special?
digby 7/05/2011 04:30:00 PM