Heigh ho, into the darkness we go!
August 2nd 2011
Right up until the end, I thought Obama was gaming the Republicans. I figured that he was just letting them climb further and further out on a limb with their unreasonable and extortionate demands, and then would suddenly shake their branch, announcing that negotiations were canceled, and to either extend the limit or wreck the economy, and they could put the rest of their demands up to a separate vote.
It turns out that, at best, he was being gamed, and at worst, he was gaming us. He’s either weak, or a liar, or perhaps both. With his capitulation on the debt-limit increase agreement, he has assured himself of being a failed one-term President.
I’ve been comparing him to Neville Chamberlain. That’s a little unfair to Chamberlain, who faced a more horrific and vicious foe, stood to lose more if the negotiations didn’t work out, and didn’t have to sacrifice his own political base in order to do so. Indeed, he returned from the Munich Conference with his bumbershoot, grandly announcing there would be peace in our time, to wildly cheering crowds. He had much more reason to capitulate, but is seen as an class example of weakness and lack of resolve 70 years later.
Obama had the leash. He could have pulled the carpet out from under the Republicans at any time. All he had to do was say, “Enough. No more.” The Republicans, with the world watching would then have had to decide whether to raise the limit, or smash the economy. And even if they were sane enough to care (and the Teabaggers apparently aren’t), their puppet masters most certainly DO care, and weren’t going to let it happen.
Obama faces a historical legacy of being a failed one-termer who cost the country dearly, and he’ll be getting just what he deserves.
Given that the agreement was brought about under duress, the direct result of willful extortion (Republican leadership should be facing charges of racketeering!) it sucks right off the bat. No self-respecting government would have accepted those demands under the conditions they were offered. The French surrender to Hitler was carried off with about as much dignity. This agreement should never have happened. I can’t say that enough.
Everyone is still going through the terms and trying to determine what they mean. There are smallish cuts now, draconian ones a few years down the road. A commission that seems designed to fail will try and devise another $1.5 trillion in cuts, and if they fail—which I regard as certain—then automatic cuts take place, 40% military and 60% discretionary. It’s a bit like governing by dropping random pieces of your country into a spinning abattoir.
And the committee, which goes by the absurd name of the “Super Congress” is to comprise of 6 Republicans and 6 Democrats, 3 of each from each house. They have until Thanksgiving to produce their turkey, and yes, that is the literal target date. No mechanism for breaking tie votes.
It will fail.
The cuts for 2012 are relatively tiny: $25 billion or so. Even so, the non-partisan Economic Policy Institute projects that it will cost the country 1.8 million jobs, which would raise the official unemployment rate to near 11%, and the effective unemployment rate to near 25%.
If you know any teabaggers, you can explain it to them this way: it’s all $25 billion that the government is not spending on people. It isn’t going into the economy, it no longer hires anyone, and it no longer produces secondary activity. It’s as if Raytheon suddenly closed all its plants and went into Chapter 7. Only with Raytheon, less individuals would be affected, because the money isn’t distributed as randomly or widely as governmental money usually is.
In 2013, there will be an additional $41 billion in cuts. That would be about the size of the impact the closing of Ameriquest had on the economy in 2008. Yeah, you remember. That didn’t work out so good. It was a seminal event in the near-collapse of the global economy.
The Turkey commission, aka the Super Congress, will weigh in with their recommendations. The first of which should be that you really need a 13th person to break tie votes. The second of which will be a request by the members to be put in the Witness Protection Program, because nothing they do is going to be even faintly popular, and will probably results in mobs with pitchforks and torches looking to hang them.
I’m guessing the teabaggers are the only ones crazy enough to want to be on that commission, and half the ones in Congress are already considering a run for higher office and thus not available.
Now, you need one sane Republican and six Democrats with backbones to ensure the Turkey Commission doesn’t do too much damage. This is a bit like finding three wise men and a virgin in Fresno. It can be done if you aren’t to wedded to concepts like “They must be human.”
Obama and his apologists have been shouting that the agreement spares Social Security, Medicare, and Pell Grants from cuts, and that’s true. However, immense damage to the nations neediest, eldest, and most vulnerable will happen anyway, since most of the cuts will come in the form of federal funding for state social programs. Got a good in-home health care system in your state that saves millions by letting people live in their homes instead of institutions? Are you SURE? Check to see how much of that is federal funding. And while you’re at it, check a lot of other state programs, ranging from unemployment to county health and welfare services to Meals on Wheels. A lot of indispensable programs will go on the block, but don’t worry. Rand and Ron Paul won’t lose any sleep over it. It’s just their way of freeing you from government tyranny.
Worried about riots as a result of people losing vital services? Well, federal funding hired a lot of cops for you (think Clinton, and 3,000 more cops), and chances are that will get cut, too. Better round up local biker gangs who will work for meth just in case. And good luck.
But making this gawdawful agreement saved the economy, right?
Well, the markets are dubious. They all plunged today. The Dow lost over 200 points, and has given up 900 in seven trading sessions. At one point I forecast that if they didn’t reach an agreement, the Dow might lose 2,000 points. Now that they have an agreement, the Dow may end up losing 2,000 points anyway.
Somehow, I don’t think the movers and shakers of industry are convinced that the Teabaggers saved the economy. Granted, they normally show the courage and calm resolve of a flock of chickens in a thunderstorm, and regard panic as just part of their daily exercise, so a little nervousness is understandable.
Isn’t “saving the economy” as generally GOOD thing?
Granted, the Wall Street banksters generally regard “the economy” as being the top 1%, the so-called “job creators”, and the rest of the country as minions lucky enough to be working for those job creators. This agreement goes out of its way to screw the minions whilst protecting the job creators.
The rest of the world has realized some problems. For whatever reason, America has gone mad and is busily electing ignorant lunatics. That’s bad enough, but not bad enough by itself. After all, Congress has always been a home for people who might otherwise be in Bellevue. Second, America has a weak President. Again, there is ample precedent for this. Some of America’s most famous weak presidents got elected a few years before a really major crisis engulfed the country.
The CIO of Guggenheim just announced that Europe was “on the brink of a major financial collapse.”
Double oh, oh.
A Reuters declared today’s route “trouble for Wall Street.”
The debt-limit farce has shown that not only are the ignorant lunatics willing to push for what they want, but the president is more than willing to accommodate them.
There’s a difference between Chamberlain and Obama. When Chamberlain returned to Whitehall and announced peace in our time, Hitler backed him, saying that this would be his last territorial demand. The Republicans can’t even be as classy in victory as Hitler: Mitch McConnell has already announced that they will use the next debt-limit situation in early 2013 to push for whatever else they can extort.
Don’t be surprised if in the budget talks, the Republicans in Congress are threatening to cut off funding for the Secret Service detail unless Obama comes to the hill and performs oral sex on every Republican there. Afterward Obama’s followers—and he’ll still have a few—will brag that he didn’t swallow, at least. By this time next year, I expect Obama’s job performance ratings to be in the 20s, ahead of Congress and Charlie Manson and that’s about it.
In the meantime, the rest of the world, already teetering at the edge of a financial precipice, has learned that not only is America willing to play silly buggers with the debt-limit, but will continue to do so, and that they don’t much care how much damage they inflict on themselves or others whilst doing so.
This is not a message designed to reassure world markets, and makes it likely that even though default has been avoided, the US may lose it’s triple-A rating anyway, with all the damage that will entail.