President Obama said Sunday night that the deal "begins to lift the cloud of debt and the cloud of uncertainty that hangs over the economy." He added that political leaders now "should be devoting all of our time" to the nation's broader economic challenges.But economists say the deal could complicate that task. There is broad agreement that the United States needs to pay down its debts, but most economists say the government should have waited a year or more for the economy to strengthen."We sure missed a big window of opportunity to reduce our debt in those strong years when asset prices were booming," said Carmen Reinhart, senior fellow at the Peterson Institute for International Economics and co-author of "This Time Is Different," a history of debt crises. "Instead we're stuck trying to do it now, when the economy is so weak."The economy grew at an annual rate of only 0.8 percent during the first half of the year. Millions of homes remain empty. Twenty-five million Americans could not find full-time jobs last month. And even without the debt ceiling deal, federal spending is in rapid decline. Little remains of the federal stimulus money. Payroll tax cuts are set to expire at the end of the year.
A quick pivot--I would be utterly shocked if African-American voters didn't come out in droves to support the President. Presidential elections don't happen in the abstract, and they can't substitute for the long work of movement-building. With that said, I think it's quite fair to ask what this president has done for the livelihood of those suffering under the crushing weight of this economy.
This, from Ezra Klein late last year, looks utterly prescient now:
What's important to understand about the debt-ceiling vote -- where Democrats and Republicans will either strike a deal to increase the Treasury's borrowing cap or the country will collapse into default -- is that it's not like Democrats have simply forgotten about it. It's not that they haven't realized that they could tie it to the tax cuts, which Republicans want and which will add $900 billion to the debt. It's that they simply don't want to. "Let the Republicans have some buy-in on the debt. They're going to have a majority in the House," said Harry Reid. "I don't think it should be when we have a heavily Democratic Senate, heavily Democratic House and a Democratic president."The theory goes something like this: Republicans will demand sharp spending cuts in return for lifting the debt ceiling. Let them. "Boehner et al have had the luxury of proposing all sorts of ideas that bear no relation to reality," says Jim Manley, Reid's spokesman. "Next year, they'll have to lay it all out. No more magic asterisks, no more 'we'll get back to you.' "But this is a dangerous game of chicken that Democrats are playing, and not one they've shown much stomach for thus far.
If Democrats weren't willing to shoot the hostage on the tax cuts, what makes anyone think they'll allow it on the debt ceiling?Obama's answer was not comforting. "Here's my expectation," he said, moments after comparing the Republican negotiating strategy to terrorists who shoot hostages, "and I'll take John Boehner at his word. Nobody, Democrat or Republican, is willing to see the full faith and credit of the United States government collapse, that that would not be a good thing to happen.... Once John Boehner is sworn in as speaker, then he's going to have responsibilities to govern. You can't just stand on the sidelines and be a bomb thrower."
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