113 thoughts on “Open Thread On Debt Deal”

  1. The Debt Ceiling Deal: ‘A Sugar-Coated Satan Sandwich’
    By Julian Brookes
    Rolling Stone, 8/1/2011

    “This deal is a sugar-coated satan sandwich,” Democratic congressman Rep. Emanuel Cleaver tweeted this morning. “If you lift the bun, you will not like what you see.” I’m not so sure about “sugar-coated”; he deal looks pretty awful even this side of the bun: to oversimplify, the agreement reached on Sunday by the White House and congressional leaders – and headed for a vote in Congress – heads off economy-crashing default by raising the debt ceiling in two steps while making $1 trillion in cuts now and $1.5 trillion later. It contains new revenues – that is, no tax hikes, not even on corporate jets. Which is to say, it shrinks government. Republicans got much of what they wanted; Democrats got … well, they successfully fended off cuts to Medicare and Social Security, for now.

    Here, some early reactions:

    The deal is a “disaster … that will take America a long way down the road to banana-republic status,” says Paul Krugman in his Times column today. The worst thing about it: by cutting government spending – extensions to unemployment insurance and the payroll tax credit were among the chips the White House bargained away – it deprives the weak economy of a key booster (consumers and businesses aren’t spending), making slow growth more likely and the long-run deficit problem worse, not better.

    The spending cuts, even if they reduce some waste, will undermine vital government services, notes TNR’s Jonathan Cohn, inflicting “pain” on middle-class Americans. And just to be clear, “Pain means more people eating tainted food, more people breathing polluted air, more people pulling their kids out of college, and more people losing their homes — in other words, the hardships people suffer when government can’t do an adequate job of looking out for their interests.”

    The deal is a good thing, writes former Obama administration economist Jared Bernstein, “in the same way that ceasing to bang yourself on the head with a hammer would be a good thing.” But he points out that talk of reductions to “discretionary spending” mask the reality that “these cuts will hurt our ability to pursue … most positive aspects of the President’s economic agenda—investment in infrastructure, clean energy, research, education. They will pinch programs that are already budget constrained…programs that help low income people with child care, housing, and community services.”

    Kevin Drum at Mother Jones says the agreement is “a shit sandwich no matter how you look at it,” and in two specific ways: “(1) It means we’ll continue to live in a fantasyland that says we don’t need any tax increases even though our population is aging and we’re plainly going to need higher revenues to support this demographic reality. (2) We’ll continue to live in a fantasyland that says our problems are primarily caused by discretionary spending. This is, of course, exactly the opposite of reality, which means we’re going to screw the poor and do nothing serious about the long-term deficit. Nice work, adults.”

  2. Debt Ceiling Deal: The Democrats Take a Dive
    By Matt Taibbi

    So the debt deal has finally been reached. As expected, the agreement arrives in a form that right-thinking people everywhere can feel terrible about with great confidence.

    The general consensus is that for the second time in three years, a gang of financial terrorists has successfully extorted the congress and the White House, threatening to blow up the planet if they didn’t get what they wanted.

    Back in 2008, the congress and George Bush rewarded Hank Paulson and Wall Street for pulling the Cleavon-Little-“the-next-man-makes-a-move-the-n—er-gets-it” routine by tossing trillions of bailout dollars at the same people who had wrecked the economy.

    Now, Barack Obama has surrendered control of the budget to the Tea Party, whose operatives in congress used the same suicide-bomber tactic, threatening a catastrophic default unless the Democrats committed to a regime of steep spending cuts without any tax increases on the wealthy.

    Commentators everywhere are killing the president for his seemingly astonishing level of ball-less-ness. Both the New York Times house editorial and the Nobel prizewinning liberal columnist Paul Krugman are insisting the president should have invoked extreme measures to counter the radicals on the other side, using emergency legal tactics to unilaterally raise the debt limit. Or, at least, he should have threatened to do this, according to Krugman:

    And even now, the Obama administration could have resorted to legal maneuvering to sidestep the debt ceiling, using any of several options…

    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.

    Is Krugman right? Probably. In a perfect world, where the president was what he is supposed to be, i.e. a representative of that majority of American voters who elected him, that is what a good president would probably have done. No matter what the situation was with the deficit, or what cuts were or were not justified, a real leader would have invoked such powers at the very least to set a precedent that the government is not to be held hostage by irresponsible lunatics bent on invoking a catastrophe for purely political reasons.

    But that isn’t what happened. What did happen? The popular take is that Obama is a weak leader of a weak party who was pushed around by canny right-wing extremists. Observers like pollster Sydney Greenberg portray Obama and the Democrats as a group of politically tone-deaf bureaucrats who fail because the public associates them with a corrupt government that benefits the rich and connected.

  3. Debt deal set to pass but what were the costs?
    By Tim Reid and Emily Kaiser


    WASHINGTON/SINGAPORE (Reuters) – While the immediate crisis over a threatened default seems to have been averted by the eleventh-hour deal between the White House and Congress, the debt-limit drama has left behind crucial questions about the American political process, the viability of economic policy options and implications for the rest of the world.

    The long, tortured debate exposed toxic partisanship and legislative dysfunction in Washington just when judicious efforts at reform were most needed, shaking the faith of international investors and ordinary Americans alike.

    The most palpable concern was that gridlock had deprived policymakers of the monetary and fiscal tools they needed to shore up one of the world’s bedrock economies, which some feared was already close to stalling.

    “Because of the very public and intense squabbles in D.C., already-anemic economic growth will be weaker, the unemployment crisis will worsen, income and wealth inequality will deteriorate further and, ironically, the fiscal dynamics will be more challenging,” said Mohamed El-Erian, co-chief investment officer of the international bond fund giant Pacific Investment Management Co., or PIMCO.

    China, Washington’s largest foreign creditor, has been particularly blunt about other countries’ exposure to Washington’s partisan warfare. “The ugliest part of the saga is that the well-being of many other countries is also in the impact zone when the donkey and the elephant fight,” China’s state-run news agency Xinhua wrote in a commentary, referring to the symbols of the Democratic and Republican parties.

    Reuters posed several key questions to dozens of investors, policymakers, strategists and economists to gauge the implications of what the debt ceiling fight means for America and the world. While their judgment was almost uniformly dismissive to dire, their collective judgment was not entirely bleak: Republicans and Democrats were at least united on the fact that America must get its fiscal house in order.


    Virtually everyone agreed that America’s fiscal path is unsustainable: With a national debt of more than $14.3 trillion, the U.S. borrows forty cents of every dollar it spends.

    Yet there is intense, fundamental disagreement on how to solve the problem, with Tea Party Republicans as passionately opposed to increasing taxes as progressive Democrats are to making deep cuts in the Social Security pension system and other so-called entitlement programs.

    In the marginalization of the political center and dismal prospect for expedient reform, experts saw a threat to America’s geopolitical strength.
    “It’s hard to maintain your influence globally when you can’t manage your own country,” said Barry Bosworth, a veteran fiscal and monetary policy expert at the Brookings Institution.

    The former chair of President Barack Obama’s Council of Economic Advisers tacitly agreed. “There is no way we can have persistent deficits of the size the Congressional Budget Office is predicting over the next 25 years and hope to remain the world’s preeminent economic superpower,” said Christina Romer, who left the CEA in September 2010. “If we don’t deal with these deficits there is no way we won’t eventually default and become a much weaker country.”

  4. Vice President Joe Biden, with a big smile on his face, walked to the House floor and said, “I came to see Gabby, that’s why I’m here.”

    …When Biden was asked about what he spoke with Giffords about, he joked, “She’s now a member of the cracked head club like me.”

    The debt ceiling bill passed the House 269-161. The Senate will vote on the measure on Tuesday.


  5. Rafflaw: “Lotta, If anarchists sing this song, shouldn’t the Tea Party establish it as their anthem?”


    But it would be a waste of a perfectly good song of the revolution. The Teabaggers prefer a strong, intrusive government on a state level so the purity of the label would be compromised IMO. It’s tough to call yourself an anarchist if you want a morality cop in the room with every woman and her doctor or standing between every 2 workers that want to discuss their community of interest.

  6. There are a number of possibilities and theories about this debt ceiling bill that I am hearing now via TV and have been reading. It boils down to this: The majority of cuts don’t cut in until 2013, in 2013 the Bush tax cuts expire and if the Congress messes with that Obama (who will be re-elected) can just keep vetoing the bill (budget) because he’s politically bulletproof. In the meanwhile, the Teabaggers have scared the crap out of many people and at the state level, downright hurt people so they are going to get their ass’s handed to them in 2012 if the Democrat’s know and practice basic election politics. Come 2012 the Republicans won’t have job 1 to point to as having been created by their programs but will have pissed a whole lot of people off with their incessant culture war. So, it’s all good. Considering the political landscape just waiting, treading water and giving the Republicans enough rope to hang themselves is the very best that could have been done.

    Actually, that sounds like the kind of multi generational planning that characterized the brilliance of Don Vito Corleone. I would never have cast the Prez in that mold or role but I did help elect him because he was the smart one, the really smart one. Like it or not there’s not much to do at this point but wait and see. There are 3rd party candidates I’d vote for; if they don’t run it will tel me something.

  7. The Budget Control Act of 2011 just passed the House 269-161. In the end, Republicans provided about two-thirds (about 173) of the yes votes, along with 66 of the nays, while the Democratic caucus split right down the middle, 95-95. The Senate will vote tomorrow.

  8. wosty=^..^, Internationale, do they sing it in France?

    It was written (from Wikipedia) “in June 1871 by Eugène Pottier (1816–1887, previously a member of the Paris Commune)[1] and were originally intended to be sung to the tune of La Marseillaise.[2] Pierre De Geyter (1848–1932) set the poem to music in 1888.[3] His melody was first publicly performed in July 1888[4] and became widely used soon after.

    The Internationale became the anthem of international socialism, and gained particular notoriety under the Soviet Union from 1922 to 1944, when it was that communist state’s de facto national anthem. Its original French refrain is C’est la lutte finale / Groupons-nous et demain / L’Internationale / Sera le genre humain. (Freely translated: “This is the final struggle / Let us group together and tomorrow / The Internationale / Will be the human race.”)

    The Internationale has been translated into many languages. It is sung traditionally with the hand raised in a clenched fist salute. The Internationale has been celebrated not only by socialists but also by communists and social democrats, as well as anarchists.”

  9. Mike Spindell1, August 1, 2011 at 11:21 am
    yes, except I am not so hard on the President….he tried damn hard to talk reason with turds. If he pushed harder he would be acting as recalcitrant and pre-pubescant as the repuublicans and as vague,clueless and nasty as the teabaggers…..I give him credit and much respect and share the nasty gall he had to swallow in order to end the domestic terrorism….

  10. Oui, Culheath, je suis américain, donc je vais être plus à l’aise dans un pays qui ne supporte pas les fascistes et terroristes économiques!

    Lottakatz…most excellent! I’ve never heard that before I love it!

    do they sing that in France too? 🙂

  11. Woosty=^..^, I’ll see your Marseillaise (The best national anthem EVER!, thanks) with the Internationale. Nice bookends for a bad law.

  12. Woosty encore un chat en France ou à Woosty est Catfood aux USA. Bye bye et ça a été agréable de vous connaître!

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