Monday, August 1, 2011

Debt Ceiling Ransom Delivered - Hostages May Be Shot Anyway

Sorting out the wheat from the chaff:

The President Surrenders

For the deal itself, given the available information, is a disaster, and not just for President Obama and his party. It will damage an already depressed economy; it will probably make America’s long-run deficit problem worse, not better; and most important, by demonstrating that raw extortion works and carries no political cost, it will take America a long way down the road to banana-republic status.

Start with the economics. We currently have a deeply depressed economy. We will almost certainly continue to have a depressed economy all through next year. And we will probably have a depressed economy through 2013 as well, if not beyond.

The worst thing you can do in these circumstances is slash government spending, since that will depress the economy even further. Pay no attention to those who invoke the confidence fairy, claiming that tough action on the budget will reassure businesses and consumers, leading them to spend more. It doesn’t work that way, a fact confirmed by many studies of the historical record. Read the rest here.

Robert Reich

Anyone who characterizes the deal between the president, Democratic, and Republican leaders as a victory for the American people over partisanship understands neither economics nor politics.

The deal does not raise taxes on America's wealthy and most fortunate -- who are now taking home a larger share of total income and wealth, and whose tax rates are already lower than they have been in eighty years. Yet it puts the nation's most important safety nets and public investments on the chopping block.

It also hobbles the capacity of the government to respond to the jobs and growth crisis. Added to the cuts already underway by state and local governments, the deal's spending cuts increase the odds of a double-dip recession. And the deal strengthens the political hand of the radical right.

More here.

The Four Big Problems With - And Four Silver Linings Around - The Debt Limit Deal

Progressives are furious. Conservatives aresomewhat less furious. And for the most part all anybody knows about the budget plan is that it cuts a lot of spending over 10 years, and includes no guarantees that anybody -- particularly the well-off -- will pay more in taxes. Thus, the anger: after huge tax cuts for the rich, two unfunded wars, and a financial crisis triggered by Wall Street greed exploded budget deficits, the people asked to narrow the gap are overwhelmingly regular folks.

All of this while the economy is still reeling. It might not be as bad as this, but there's certainly a lot missing here.

So with that background in mind, here are the four worst problems with, and four silver linings around the debt limit deal. More here.

The Blame Goes Beyond Obama For Debt Ceiling Compromise

Before any critic starts in, the proposed spending cuts and debt ceiling increase is not good and will not solve the problem of increased revenue. Now that is out of the way, the appropriate question is; just what was President Obama supposed to do? Although the deal is less than ideal, it averts a disaster of epic proportions that would cripple this nation’s economy to the point that America may well have never recovered. However, that is not really the issue, but since the nay-sayers are throwing words like sellout and President Obama caves again, it is worth a brief perusal of exactly who is at fault. More here

Fact Sheet: Bipartisan Debt Deal: A Win for the Economy and Budget Discipline

From the White House Web Site

Bipartisan Debt Deal: A Win for the Economy and Budget Discipline
  • Removes the cloud of uncertainty over our economy at this critical time, by ensuring that no one will be able to use the threat of the nation’s first default now, or in only a few months, for political gain;
  • Locks in a down payment on significant deficit reduction, with savings from both domestic and Pentagon spending, and is designed to protect crucial investments like aid for college students;
  • Establishes a bipartisan process to seek a balanced approach to larger deficit reduction through entitlement and tax reform;
  • Deploys an enforcement mechanism that gives all sides an incentive to reach bipartisan compromise on historic deficit reduction, while protecting Social Security, Medicare beneficiaries and low-income programs;
  • Stays true to the President’s commitment to shared sacrifice by preventing the middle class, seniors and those who are most vulnerable from shouldering the burden of deficit reduction. The President did not agree to any entitlement reforms outside of the context of a bipartisan committee process where tax reform will be on the table and the President will insist on shared sacrifice from the most well-off and those with the most indefensible tax breaks.
Mechanics of the Debt Deal
  • Immediately enacted 10-year discretionary spending caps generating nearly $1 trillion in deficit reduction; balanced between defense and non-defense spending.
  • President authorized to increase the debt limit by at least $2.1 trillion, eliminating the need for further increases until 2013.
  • Bipartisan committee process tasked with identifying an additional $1.5 trillion in deficit reduction, including from entitlement and tax reform. Committee is required to report legislation by November 23, 2011, which receives fast-track protections. Congress is required to vote on Committee recommendations by December 23, 2011.
  • Enforcement mechanism established to force all parties – Republican and Democrat – to agree to balanced deficit reduction. If Committee fails, enforcement mechanism will trigger spending reductions beginning in 2013 – split 50/50 between domestic and defense spending. Enforcement protects Social Security, Medicare beneficiaries, and low-income programs from any cuts. Details here.
There you go kids - have at it.

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