The most striking element of the debt ceiling deal announced by President Obama is that there are no winners, and the biggest losers are the American people.
Here is the video from MSNBC:
The big sell point for Obama was possibility of increasing revenue by raising taxes on the wealthy and closing corporate loopholes in the second part of the agreement,
Now I have said from the beginning that the ultimate solution to our deficit problem must be balance. Despite what some Republicans have argued I believe that we have to ask the wealthiest Americans and biggest corporations to pay their fair share by giving up tax breaks and special deductions. Despite what some in my own party have argued I believe we need to make some modest adjustments to programs like Medicare to ensure that they are still around for future generations.
That’s why the second part of this agreement is so important. It establishes a bi-partisan committee of Congress to report back by November with a proposal to further reduce the deficit which will then be put before the entire Congress for an up or down vote. In this stage, everything will be on the table. To hold us all accountable for making these reforms, tough cuts that both parties would find objectionable would automatically go into effect if we don’t act, and over these next few months I’ll continue to make a detailed case to these lawmakers about why I believe a balanced approach is best to finish the job.
Now, is the deal I would have preferred? No, I believe that we could have made the tough choices required on entitlement reform and tax reform right now rather than through a special congressional committee process, but this compromise does make a serious down payment on the deficit reduction we need, and gives each party a strong incentive to get a balanced plan done before the end of the year. Most importantly it will allow us to avoid default and end the crisis that Washington imposed on the rest of America. It ensures also that will not face this same crisis in six months, eight months or twelve months, and it will begin to lift the cloud of debt and the cloud of uncertainty that hangs over our economy.
Obama thanked the American people for getting a deal done, “Most of all I want to thank the American people. It’s been your voices, your letters, your emails, your tweets that have compelled Washington to act in the final days, and the American people’s voice is a very powerful thing.”
This deal has a loss in it for everyone. Obama loses because he got no immediate revenue increase. Republicans lose because Obama got the extension he wanted through the 2012 election, the GOP got zero entitlement cuts, the cuts that they will have to vote yes on will be mostly paper illusions, and they got stuck with facing possible cuts to defense spending if they don’t act. Congressional Democrats lost because in the second part of the plan entitlements are on the table.
Looking towards 2012, Obama now gets to run for reelection by claiming that he has cut $2.4 trillion off of the national debt. The idea that he is tax and spend Obama will be a tough sell for the GOP nominee next fall.
Republicans won because they managed to get Democrats and even progressive activists who consider themselves the watchdogs of the Democratic Party to buy into the nonsensical premise that the debt ceiling and debt reduction are related and got them to do something that was previously unprecedented. They for no rational reason have now set the precedent that debt ceiling increases must be tied to spending cuts. However, you can look for this new interpretation of conditional debt ceiling raises to fall by the wayside as soon as the government returns to one party control.
The biggest losers in this whole debacle are the American people. As Paul Krugman pointed out today, this deal is likely to increase unemployment and cause more people to become permanently unemployed.
No matter how both the right and left try to sell it over the next few days, this is a bad deal for the American people. The result of the Republican Party’s refusal to pass one line of legislation is that millions of Americans will be forced to endure more hardship and suffering.
The Republican Party created the debt ceiling crisis to politically wound President Obama, but the deepest wounds will be inflicted on people who have already been devastated by one recession and will now likely have to endure another.
In 2010 some Americans decided that they wanted a divided government, and now we all are going to have to live with the consequences of their fulfilled wish.