Historians will look back on tonight and this week as the beginning of the age of austerity in America ~ Jonathan Alter (b. 10/6/1957) speaking in his role as an MSNBC contributor on 7/31/2011 and referring to the debt-ceiling deal. Alter is a journalist and author who has written books on Franklin Roosevelt and Barack Obama. Alter was the senior editor for Newsweek magazine from 1983 until 2011, and is currently a lead columnist for Bloomberg Review.
One of the final nails is close to be hammered into the coffin. Yesterday (7/31/2011) the President and Republican leadership reached an agreement to withdraw life support from a dying economy. There may be something to Lawrence O'Donnell's claim that President Obama won the debate by appearing to be the only reasonable party amongst the negotiators, and that could very well help him win Independent and Moderate votes in 2012, but at what cost?
The economy will not recover nor will jobless numbers drop by any significant amount. Unemployment figures are likely to start rising again once the cutting begins and we'll head into a double-dip (or a prolonged period of stagnation). Will Independent voters still go for Obama in November of 2012 because 16 month previously he capitulated to Republican demands for zero tax increases (or even elimination of loopholes) for the wealthy? Or will they cast their votes for Willard Romney?
The title of economist Paul Krugman's 7/31/2011 New York Times article is The President surrenders. Krugman says that when the deal goes though, "many commentators will declare that disaster was avoided. But they will be wrong". The entire package may turn out to be a wash anyway, since slashing spending will further depress the economy and thus tax receipts. Krugman compares spending cuts to "medieval doctors who treated the sick by bleeding them, and thereby made them even sicker".
This is the lesson the Republicans learned when they forced the president to agree to the very bad deal back in December of 2010 when the bush tax cuts were extended. Paul Krugmann says that this is when the President should have "demanded an increase in the debt ceiling".
Krugman calls the deal a "catastrophe", pointing out that "just a few weeks ago [Democrats] seemed to have Republicans on the run over their plan to dismantle Medicare [but] now Mr. Obama has thrown all that away". Because this deal creates (another) comission that will recommend (by November) an additional 1.5 trillion in cuts (in addition to the 1 trillion in cuts already agreed to). The big three, says the president, will again be "on the table".
According to Robert Reich's article, "Ransom Paid", "Anyone who characterizes the deal... as a victory for the American people over partisanship understands neither economics nor politics". In his absolutely correct assessment of the situation, Reich says, "biggest economic challenge we face is restoring jobs and wages and economic growth". Mr. Reich also makes the point that cutting spending will cause the economy to contract (therefore if you think this is a good deal you do not understand economics). Also, the deal was arrived at not through negotiations but through brinkmanship and hostage taking, which isn't how the political process is supposed to work.
This is a very bad deal for the Democrats and for the country - and the Republicans know it. In fact, I say they are banking on it. When the cuts are enacted and the economy predictably contracts - the Republicans will be quick to blame the president. The worsening economy will help the presidential campaigns of Willard Romney and (for certain) Michele Bachmann (who didn't want to raise the debt ceiling at all). I've heard it suggested that we could see a Romney-Palin ticket in 2012. With Michele as VP the problem some Republicans who may have a problem voting for a Mormon will be overcome.
First on the agenda for President Romney will be the repeal of the Affordable Care Act, followed by passage of Cut, Cap, and Balance. Although, even if all three branches of government were controlled by the Republicans, I doubt 3/4ths of state legislatures would pass a balanced budget Constitutional amendment. But even without a Constitutional amendment, a Republican-controlled government could institute a lot of harsh austerity measures, even over the objections of the people (austerity measures have been passed in Greece, despite the fact that Greek citizens are demonstrating against them).
Is this the beginning of an age of austerity and plutocracy to coincide with depression and decline? Contrary to the hypothesis put forward by Lawrence O'Donnell who believes the President prevailed in the debt ceiling negotiations, I think Barack Obama may have set himself up for defeat in 2012. I'm worried that the bush recession will lead to the Romney depression.
This is the second half of the very bad deal and, in my opinion, should be rejected by Democrats (or all non-Blue Dog Democrats, at least). I've included a list of petitions below. It is my strong belief that Barack Obama should reject any deal that does not include tax increases and invoke the 14th amendment if necessary.
Petitions to Reject President Obama's Capitulation
->Tell Congress: Kill The Bill a petition from Democrats.com.
->Dennis Kuchinich's petition to tell President Obama that Social Security is not a Pawn.