POLITICS AUGUST 1, 2011
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You don’t need to be a Congressional budget analyst to grasp one salient fact about the deal that President Obama has worked out with House and Senate leaders: It would impose drastic spending cuts, without any corresponding increase in spending, or any tax reduction, on an economy that is still staggering and that could easily fall back into a minus-growth recession. During the last two years, a major factor in keeping the wolf of a great depression at bay was federal government spending; now Obama and the Congressional leaders propose to cut it. Insane? You betcha.
Some wise and prudent people advise that it is better for Democrats in Congress to accept this deal because the alternative—a default on the nation’s debt—is much worse. It’s true that a default would have calamitous results, but the threat of default does not arise (in the manner, say, of Greece) from internal economic contradictions that must be addressed. It arises from a threat by rightwing Republicans to shut down the government if the president and the country don’t accede to their crusade against government spending. The crisis, as my colleagues have said repeatedly, is not economic; it’s political; and the president, instead of addressing it straightforwardly, has buckled under to the Republicans’ blackmail.
What should happen now? Democrats in Congress, and any Republicans who have not lost their senses, should turn this deal down. They should demand that any deal include compensatory increases in spending (or tax cuts) aimed at creating jobs and that any future spending cuts be contingent upon the economy achieving a specific lower unemployment rate—say, below 7 percent. To bring in some Republicans, the new deal could include tax cuts. Some Democrats are fixated on the expiration of the Bush tax cuts, but in my view, the government should not raise taxes (by act or expiration) as long as the downturn continues, unless it is prepared to use those new revenues to create jobs.
What happens if the Republicans, and a few Democrats, refuse to go along with this new deal? There’s a simple solution. While pointing out that the Republicans have rejected measures that would create jobs, the president should invoke the Fourteenth Amendment and end this phony political crisis. Would he do it? Of course, his spokesmen have said he would not, but his spokesmen also said earlier that he would not accept a deal that did not include revenue increases. So the president is persuadable. The problem is that the pressure has come primarily from the other side—from people whose proposals, whether wittingly or not, would wreck the economy. It’s time the president feels some pressure from people who want to create jobs rather than destroy them.
John B. Judis is a senior editor of The New Republic and a visiting scholar at the Carnegie Endowment for International Peace.
16 comments
I still don't get see this as anything other than a postponement. Ten years ago, they passed the Bush Tax Cuts ( which put us in this hole,) and they were supposed to expire in 2010. The idea of an estate tax, where if a person died a day earlier or a day later, it would cost an estate millions of dollars, was absolutely rediculous. Congress was expected to fix it before it happened; but they didn't. Can we rely on the "deal" to make decisions for Congress that they otherwise refused to make without such a deal? They only commit to the expedient. As soon as they get into whose Ox is gored, it will fall apart and start up again.
- Nusholtz
August 1, 2011 at 11:45am
So, the debt was created by people who've wanted to cut Medicare, Medicaid, and Social Security, by supporting the Bush tax cuts, unfunded wars, unfunded Medicare Part D, and the hands off of the out of control financial markets. We're addressing the debt by ignoring the causes. It's a victory for those who are willing to see us become a wealthy third world country of a few haves and however many have nots. May the Tea Party feel free under the corporate monarchy.
- bsemple
August 1, 2011 at 12:20pm
I agree with Mr Judis. Congress are considering passing a bill with significant economic impact, and that impact is very likely to hurt the faltering recovery and the many Americans who are unemployed or underemployed in this miserable job market. This deal is not only bad in terms of the effect of speciifc cuts on the direct beneficiaries of the affected programs, but more impartantly in terms of the broader economy and working men and women and their families. I have asked my Senators and Congressman to vote down the deal, but I have no hopes they will have the courage to say no. I fear very much that they will follow the President's mistaken and disastrous lead. Neil
- purcellneil@aol.com
August 1, 2011 at 12:52pm
I'm very sympathetic to your argument favoring rejection, John, and completely agree with your analysis that this deal--scratch that, capitulation--does far more harm than good. But I'm afraid the train has left the station. For the Dems to reject the capitulation places the burden of political responsibility on them for extending this crisis (which would not end with Obama invoking the Constitution, even assuming he would ever have the guts to do that), which in turn hurts their chances of retaining the Senate and Presidency and winning back the House.
- Thunderroad
August 1, 2011 at 1:10pm
I'm beginning to think Congressional Dems should not vote for this and Obama should invoke the 14th Amendment to protect our credit and the global economy. Unfortunately, that would undoubtedly lead to the circus of his impeachment. Thus, more not paying attention to the people, the environment, and the really awful economy, but maybe while the circus goes on the people, having gotten the picture, can somehow pull ourselves out of this mess while the "leaders" fiddle. And, who says we have to endorse our own destruction and go like sheep to the slaughter? Is this what happened to the Weimar Republic? No doubt I overstate. But Obama, it seems to me, is so caught up in his own narrative of no blue states, no red states, just the United States, which is clearly baloney, that he's trapped in a lie. And the rest of us are now trapped with him. Would any Democratic president be allowed to lead? I'm beginning to think not. I wonder if they wouldn't harrass and impeach ANY president to the left of Mussolini. Look at the damage they managed to do since the 2000 "election." In fact that was the beginning of the end. Gore should have taken it to Congress and to the people, who elected him. But he rolled over. He was wrong.
- Sophia
August 1, 2011 at 1:11pm
As to the issue of political responsibility. So what. Maybe every Dem in Washington falls on his/her sword. It is better than selling the country to the far right. The voters are clearly aware of what the far right is up to and they don't approve. Everybody is so worried about 2012 that they are screwing the pooch in the interim.
- Sophia
August 1, 2011 at 1:13pm
Judis thinks that if the debt limit is not raised, Obama can ignore it based on the 14th Amendment. Judis is woefully wrong, for at least three reasons. 1)Here is what the 14th Amendment says: "Section 4. The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned." Note the key words, "authorized by law." If the Treasury borrows in excess of the debt limit, it will be issuing obligations which have not been authorized by law, and so the 14th Amendment is irrelevant. I challenge Judis to answer that obvious point. 2) It is not clear that there would be a market for bills and notes issued in violation of the debt limit. Who would want to loan money when there is a possibility that any claim or repayment could be held to be unenforceable? Would that be the result -- probably not, but who would take the risk? 3) The president's assertion of power, given the history to date, would not calm anything. It would probably make things worse, since an immediate GOP response would be impeachment. The result would be rising interest rates, plunging stock markets, and general financial panic. And Obama would look like a 3d world strongman. Nope - Judis' argument is out to lunch. Yes, the deal is not good, but for the moment nothing better is possible, and elections which would turn around everything are only 18 months away.
- PeteBeck
August 1, 2011 at 1:19pm
Pete- I don't know about the EFFECT of the president invoking the 14th amendment, but I think you misconstrue the 14th amendment argument. Section 4 arguably compels the Executive to honor the debts that have already been authorized by law. Congress itself created the situation in which further borrowing is required to service the debt. The debt ceiling is thus functioning to prevent the Treasury from borrowing in order to service the debt that has already been authorized. As others have pointed out, the Executive's obligation to honor the United States' debt trumps the debt ceiling not only because that the debt was incurred later in time, but because the Constitution trumps legislation. Dhurtado
- NR143296
August 1, 2011 at 3:08pm
Obama isn't going to invoke the 14th amendment. If he had it in him to do so, he would have been able to fight of the Tea Party nut cases. I hope he doesn't run for re-election.
- arnon
August 1, 2011 at 3:52pm
Earth to liberals, The Gov has never created sustainable private sector jobs. We don't need Gov-funded temporary jobs, we need sustainable jobs that create real economic value. Not surprisingly, Obama's economic policies have failed. Liberalism never works in the long-run and only works in short-run where debt is not a constraint. As Gov shrinks, so will the co-dependent parasite class that Democrats depend on for support. Democrats are lost without parasite pockets. That is why liberals are apopleptic.
- mr_rationale
August 1, 2011 at 5:57pm
And if you understand Keynesian economics, Mr rationale is nuts.
- drofnats1
August 1, 2011 at 6:28pm
And if you understand the Constitution and Separation of Powers, there is no clear answer to invoking the 14th Amendment. And it would take years to get through the courts (if ever-- there is a question of who has standing to bring it to the Supremes). And if you understand impeachment proceedings, it takes 2/3 of the Senate to sucessfully impeach. So BHO's failure is a failure to lead -- both in speeches and in actions. He's a nice, bright, guy with policies and a personality unfit for the crises of his times. The same could be said of James Buchanan, Herbert Hoover, Neville Chamberlain, LBJ (albeit hois tragedy is of a more Shakespearean kind) and Jimmy Carter. The sooner replaced the better.
- drofnats1
August 1, 2011 at 6:41pm
Correction: nobody ever called LBJ "nice".
- drofnats1
August 1, 2011 at 6:43pm
"Earth to liberals, The Gov has never created sustainable private sector jobs." Complete nonsense. The babble of infants. Not only are government services essential to private sector output, but the people and firms who are paid by government generate lots and lots of private sector demand for private firms to meet. Does rat think that people who are directly and indirectly employed by government do not eat, buy and drive cars, live in houses, go to the movies? The only difference in macroeconomic terms between private sector and public sector employment is who decides to hire and fire and who gets the benefit of the services. In the private sector, the buyer captures most of the benefit. In the public sector, there is no direct connection between your tax bill and the benefits you receive, except that no one would have income to pay a tax bill if it were not for government. Then we would be living in Somalia. The only parasites in this country are the wacko right-wingnuts. If they vanished overnight, the country would be strictly better off.
- roidubouloi
August 1, 2011 at 9:21pm
Maybe rat would like to rise to the challenge that seattle could not meet and tell us one policy success of the right in the last 150 years. One will do.
- roidubouloi
August 1, 2011 at 9:22pm
You missed the wiffle ball pitch Roid. The 'internets' was (were) created with government money (Rat better not bang on his keyboard anymore; too much gov't waste to build them toobz). Modern telecommunications was developed with government funds, aerospace exists via government expenditures as was many medical advances. The railroads in the US were developed with massive government backing. Going back in history a few other inconsequential things came from government money, like the Pyramids and the Colosseum. The library of Alexandria comes to mind too. I wouldn't mind seeing government shrink to shake off the parasites. The teabaggers would be the first to feel it as they seem most dependent on it.
- tmmats
August 1, 2011 at 10:08pm