Moral Outrage
Whew! God help us!

Obama Surrenders to Republicans on Debt Ceiling Agreement

Excerpt of New York Times article by Paul Krugman, professor of Economics and International Affairs at Princeton University:

Many commentators declare that disaster was avoided through the deal to raise the federal debt ceiling. But they are wrong.

For the deal itself is a disaster. 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.

Did the president have any alternative this time around? Yes. He could and should have demanded an increase in the debt ceiling back in December. When asked why he didn’t, he replied that he was sure that Republicans would act responsibly. Great call.

In the long run, however, Democrats won’t be the only losers. What Republicans have just gotten away with calls our whole system of government into question. After all, how can American democracy work if whichever party is most prepared to be ruthless, to threaten the nation’s economic security, gets to dictate policy?

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One Response to “Obama Surrenders to Republicans on Debt Ceiling Agreement”

  1. The crisis is far from over. In 4 months time, six Democrats and six Republicans will debate, and attempt to come up with proposals for major entitlement and tax reform.

    “Entitlement reform”, by the way, is really a nice way of saying cuts in Medicare, Medicaid and Social Security.

    “Tax reform” is really a nice way of saying tax increases.

    It may be possible to agree on these kinds of painful choices, but it certainly won’t be a given. Assuming an agreement probably won’t happen, that would mean pulling the trigger on $1.2 trillion in automatic spending cuts, half coming from defense programs and the other half from non-defense programs, including cuts in Medicare payments to health-care providers, those cuts beginning in 2013.

    Obama would be authorized to increase the debt ceiling by up to $1.5 trillion. If the recommendations are not enacted, Obama can still raise the debt ceiling by $1.2 trillion. At that point, however, the budget “trigger” would kick in, imposing mandatory across-the-board spending cuts matching the size of the debt ceiling increase.

    The fact that the cuts would be split between defense spending and non-defense programs is at least an unpopular formula intended to motivate legislators to approve the committee’s recommendations.


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