The middle class is shrinking. Those in power have run up enormous debts on public credit while shoveling most of the money into private pockets. The corporations that have benefitted from this borrowing binge, meanwhile, leverage the global trade system to transfer their profits beyond the reach of national governments.

Meanwhile, we have been told lies by Democrats and by Republicans, divided into artificial camps and led into debates that are either irrelevant or so dramatically scripted that we fail to realize every choice leads to the same result: the dismantling of the social framework that defined and sustained the opportunity of the last century. National mobilization of resources has given way to radical individualism under a narrative that, in the wealthiest nation in the world, we must always expect less.

In this tumultuous time, we search for a way forward - a new Square Deal for the American people.

Friday, July 29, 2011

Four More Days

Q: How can you tell that a government is dysfunctional?
A: It puts debate on hold to make time for persuasive arguments.

Last night, after bringing it up for debate and a scheduled vote, Speaker of the House John Boehner pulled from the floor a bill that he had crafted to raise the U.S. debt ceiling. His caucus then retreated into backrooms for meetings and dealmaking, the sort of thing that Republicans denounce as thoroughly un-American any time that they are not the ones doing it.

The retreat by Boehner, who had promised a vote yesterday and then delayed it before finally canceling it, demonstrates that his bill does not have the support of enough Republicans to actually pass it. That is a real problem, because the Speaker has already recrafted the bill once precisely to get those votes. Obviously, he did not go far enough for the hold-outs, all members of the Tea Party caucus of populists who stand for resolve rather than the compromise-oriented politicking favored by establishment politicians.

Unfortunately for the American people, even the original form of John Boehner's bill was already unacceptable to Senate Democrats, and everything that he might do to try and lure in the Tea Party members is only going to solidify their opposition. The issue here is no longer tax hikes; although he had said for months that he would absolutely not accept massive spending cuts without tax increases, President Obama jetisoned that requirement weeks ago, and the current Democratic bill crafted by Senate Majority Leader Harry Reid contains no tax increases or other "revenue mechanisms" that Republicans find so objectionable.

No, the hold-up here is that the Boehner bill, for all of its posturing as a solution to the debt crisis, only extends the borrowing limit for about another six months. Then, we can go through this all over again.

Having already bargained with Republicans over extending the Bush-era tax cuts (which were extended in exchange for outrageous liberal-socialist triumphs like a cut in the Social Security tax and an extension of unemployment benefits), President Obama appears to have finally gotten the message that the Tea Party is not bargaining at all; rather, it is dictating the only path that it will allow the United States to follow.

We are where we are right now for one simple reason: when people like Michele Bachmann, Jim DeMint, and Pat Toomey started claiming that we could pass the August 2 deadline and still have plenty of cash to pay the debt, and that default was thus a "smoke and mirrors" game, people like John Boehner and his Senate counterpart Mitch McConnell did not shut them down. They actually half-embraced those claims; they used them for leverage in negotiations with the White House.

That might have played well for them, except the rumor mill caught on quickly among the anti-intellectual, anti-elitist Tea Party. Millions of people now believe that if we fail to raise the debt ceiling, nothing will happen--that it is all a big lie. Sarah Palin added her considerably loud opinion on the matter yesterday, admonishing Tea Party Republicans to stay the course and not vote for a debt increase.

In a sense, this stance is patriotic and admirable. Tea Party Republicans ran on promises that they would cut government and cut spending. Unlike their establishment predecessors, who always run on those promises but only deliver spending on different line items than the Democrats, the Tea Party Republicans appear to take their mandate seriously.

The problem is that they are wrong.  The United States, a nation with a $26 trillion economy and the originator of the currency that serves as the reserve for international banking, is nothing whatsoever like a household or even a major corporation. The budget of the U.S. is not comparable to the budgets of either a family or a business. The implications of cash shortages are beyond imagining for even the most high-powered corporate executive, to say nothing of the average mom or dad balancing a checkbook.  There is no "simple" answer to anything on this scale.

But because of all of this chatter, creating uncertainty among a vast population utterly ignorant of economics, a grand bargain that would have cut $4 trillion or more of spending and brought in $1 trillion of revenues is dead. Now, Speaker Boehner cannot even round up the votes for his own legislation, a bill whose terms are harsh and whose value to the American people is questionable at best even if it were passed, since it does nothing to really address the debt beyond the next six months.

On Tuesday, the sun will rise. On Wednesday, the sun will rise. Life will go on, and every "maybe" will become a "no." People will think, Bachmann was right!  But she is not. Yes, we have enough cash to make the interest payments on the debt. Maybe we can also pay Social Security. But what about soldiers' salaries? Retiree pensions? Salaries for current government workers? Payments to all of the private-sector companies that have government contracts? Reimbursements to doctors and hospitals?

We are not looking at a "government shutdown" where we have money but cannot spend it.  A cash crunch will mean that there simply is no money, not for something urgent or important or whatever it may be. There will be enough revenues to pay a few things, but not everything. Within two weeks of the deadline, things will start to grind to a halt, and we will all see first hand just how wrong Michelle Bachmann, Pat Toomey, Jim DeMint, and the Tea Party really were about whether this was "smoke and mirrors."

You know, maybe that is for the best. The Tea Party, after all, wants to cut government spending and the size of government. What better way to do it than to just cut it off at the knees?

We may bring about the collapse of the economy. But isn't America worth it?

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