New Huffington Post Column

The American People Lost the Debt Ceiling Debate

The debt ceiling fracas was an insanity-inducing syllabus of everything that’s wrong with the American political system. Everything.

The very serious cable news media (and a considerable chunk of the blogosphere for that matter) were preoccupied with safe, superficial sports and/or poker metaphors: who won, who lost, who “doubled-down” and so forth. After all, covering the wonky aspects of the policy itself is no fun and involves math.

The Republican Party, meanwhile, having been responsible for the bulk of the debt in the first place, was allowed to get away with sabotaging the stability of the global economy as the centerpiece of its plan to subsequently sabotage the president. At the same time, one of its congressional leaders, Eric Cantor, was short selling government bonds — a blindingly outrageous conflict of interest that ought to vindicate Pete Rose for any comparatively trivial wagering sanctions he continues to endure.

The Democratic Party and the White House, paralyzed by fear (fear of taking an aggressive posture for fear of losing the fickle, insufferable middle), helped to push the Overton Window farther to the right.

Far-right conservatives and tea party activists continued to illustrate their willful inability to grasp an even grade-school level understanding of the economy and governing.

The progressive left was out-hustled by far-right activism yet again.

And a for-profit, publicly traded corporation, Moody’s, became the ultimate judge as to the viability and strength of the United States of America’s credit rating. Think about this while trying to fall asleep tonight: several for-profit corporations, with Moody’s at the helm, possess a staggering level of control over America’s ability to borrow money, and therefore they essentially controls the pulse of the American economy. Sleep tight!

But none of these observations match up to the super-colossal problem with the debt ceiling debate and the inexplicable outcry for deficit reduction.

Simply put: deficit reduction during a slow-growth recovery from an historically deep recession, with continued high unemployment and a housing market still in crisis, is just phenomenally stupid.

When has deficit reduction ever stimulated economic growth during a difficult recovery, and especially considering the disturbing economic indicators we’re experiencing today (sluggish GDP, high unemployment, housing crisis, etc)? Never. In fact, the next nearest example — the conservative budget cuts of 1937 during the recovery from the Great Depression — damned us to another major recession, which spiked unemployment by nearly 10 percentage points and required another three years for the economy to return to its pre-austerity levels.

So regardless of the deal’s content, this shouldn’t have been an issue in the first place and we’re all going to pay the price irrespective of political party or ideological affiliation.

We never should have been taking seriously the malevolent and utterly premature demands for deficit reduction — not until the economy was back on solid footing. In fact, and in the best of circumstances, all of the sturm und drang we’ve endured this year should have been over the magnitude of a second stimulus plan, because if there’s one thing that can be proved by historical precedent is that stimulus creates jobs and economic growth, which, in turn, increases government revenue. Indisputable fact.

When fewer of us are pumping money into the economy because, for example, we’re unemployed or our house is underwater or, if we own a business, sales disappear, the government is in a unique position to fill in the void with additional spending until the economy is stabilized and growing steadily. There’s nothing wrong with deficit reduction, but only when economic strength will allow it, and only if the wealthiest one percent, who disproportionately own 40 percent of the nation’s wealth, are willing to contribute in accordance with their means rather than saddling the least fortunate and the nation’s workers with the burden.

And the debt ceiling deal leaves those rich people unharmed, while, despite the president’s assurances, the rest of us will bear the cost.

Here’s how.

There are renewed warnings of another recession. The Financial Times reports that we’re “one false move” away from recession. In the same piece, Jim Reid, a strategist at Deutsche Bank, warned of a “1937 moment.” Well, of course. Harvard economist Martin Feldstein is predicting a 50/50 chance of another recession. According to the Huffington Post, Bill Gross, co-chief investment officer of the financial services company PIMCO, says we’re at the tipping point of another recession. Wall Street, for what it’s worth, is also bracing for another recession. Personally, I experienced the stinky ass-end of the previous recession, and, suffice to say, I’m not thrilled with the prospect of a sequel.

The deal will reduce job growth by millions. The nonpartisan Economic Policy Institute reports that the debt ceiling deal will reduce GDP by 0.3 percent in 2012. Not good considering current growth of around 1, or 1.5 percent at best. Plus, the real cuts don’t kick in until 2013. That means we’ll be hitting the serious cuts while teetering on increasingly unstable footing. But that’s not the grim news. The EPI is calculating that 1.8 million jobs will be killed in 2012 due to the big debt deal.

Poor people will, indeed, bear the cost. Due to the discretionary spending cuts in the deal, the states, which are limping through their own budget calamities, won’t be receiving enough federal money for crucial social programs. CBS News reports that the cuts will hurt “everything from the Head Start school readiness program, Meals on Wheels and worker training initiatives to funding for transit agencies and education grants that serve disabled children.” Additionally, “There also was concern among governors, state lawmakers and state agency heads that Congress would make deep reductions or changes in federal aid for health services for the needy, most notably through Medicaid. That could shift more of the costs onto states that already are having trouble balancing their budgets.”

I’m not sure how this deal does anything short of adding, at the very least, another major obstruction in the path to recovery in the best case scenario, and, in the worst case scenario, another 1937.

CNN’s Ali Velshi gets credit for the quote of the week:

“While Republicans and Tea Party members have been very effective at painting this as the single biggest problem that the U.S. economy is facing and that helped them succeed in the last mid-term elections, economically, it isn’t. It was always a distant second to jobs and economic growth. So the problem is we’ve got way too many unemployed people. Look, there’s three things affect you, right, your ability to earn a living, your ability to have your investments increase in value, and your home. This isn’t going to do anything for housing whatsoever. This does nothing for jobs. And in terms of investment, all this has done is cost us because of this game they’ve been playing in Washington.”

Remarkable. A cable news guy who wasn’t necessarily talking about who won or lost.

On second thought, strike that. Velshi was talking specifically about who lost.

We lost. Middle and working class Americans. We’re the losers here. Not President Obama or the Democrats. And it was always going to be this way. As soon as deficit reduction and austerity became the very serious issue to tackle inside the D.C. cocktail party circuit, completely ignoring major polls showing the priorities Velshi outlined above by the way, the rest of us were pretty much screwed. We never stood a chance.

This should never have been a thing — not now. And shame on everyone involved for getting it so brutally wrong.

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  • agrazingmoose

    And the markets are going to show us how wrong the Rs are. Starting today.

  • MarshallLucky

    Excellent article. Thanks especially for popping the win/lose horseshit meme that cable news has been spewing nonstop. This is so much bigger than the immediate political fortunes of President Obama, the Democrats or the Republicans.

  • MrDHalen

    Bob, I agree with everything in your article, but I am losing my patience with the American public with regard to letting this stuff continue. People may act like sheep, but they don’t have too. It really is not that hard to find out which party is fucking the country over, but they keep getting elected.

    Our government is allowed to act unserious, because too many Americans are unserious and don’t participate.

  • http://www.politicalruminations.com/ nicole

    This is all true, for all the good knowing this will do any of us.

    The only thing that will do any good is removing Republicans from power, and keeping them out.

    To that end, the focus must be on the Republicans, and the fact that they held the economy of the U.S.—-no, the entire world–hostage, and have plans to do it again.

    If that isn’t enough to persuade people that Democrats must come together and support this president from here on out, nothing will.

    Well, maybe when we lose the presidency and have literally become a third world nation, a true oligarchy.

    Adding…….Bob on Twitter:

    “The market sell-off is a reaction to GOP sabotage. They created the austerity issue then behaved like spazzy children. The street is scared.

    https://twitter.com/#!/bobcesca_go/statuses/99196737108979712

    Exactly right.

    • JMAshby

      Well said.

  • http://pulse.yahoo.com/_2MB4FBTFSTDLBUQXTE42HLLRSQ onecoolcustomer

    Bob, I just read your column on the HuffPost and, as usual, it is spot-on. However, I’ve been wondering if it was just a coincidence, in your opinion, if the DCD (debt ceiling debacle) was all over the media just as it was ratcheting-up the Fox hacking scandal. Whatever happened to that story, anyway? Just sayin…

  • mrbrink

    Yeah, excellent, though, depressing, though empowering(intellectually speaking)summation.

    When you say progressives were out hustled by the right, it’s helpful to remember two things.

    1) The right wing isn’t beholden to facts, or honesty and ethics, or hindered by lack of big block money(or “dark money”)support to disseminate their propaganda, or held to account by core believers in the notion that government’s role is to the majority of its people and the general welfare.

    Cut-throat-power is beating down the doors of the mightiest economy controlling the most powerful military the world has ever known. There are people who beat up old ladies to get to their coin purse. People who force themselves into your homes to get to your crappy foreign made DVD player. Now put that same mentality in a suit, give it a 10th grade vocabulary with a college degree from Glenn Beck University, and send it to Washington. Economically speaking, even speaking in terms of democracy and the power of the vote and the power of redress, the middle class and poor(especially the working poor)are having their throats cut watching our livelihoods and power spilling out into the backed up sewers of American discourse. There’s really not that many there sitting at the power luncheon of American hierarchy negotiating the rules on our behalf.

    Slightly more evolved street hustlers and community college carpetbaggers are working under contract for a small minority of wealthy corporations and theocratic billionaires which have spent hundreds of billions to have considerable points off their tax bills, regulations, vote tally, etc.– shaved. The playing field isn’t level by any stretch of reality. You would think a party whose supporters engage in open vote suppression would be dismissed from the arena of American governance and power outright. Not the case with the GOP. You would think that a party whose supporters engage in divisive anti-government rhetoric would be dismissed from power within that government. Not the case with the GOP. Which leads me to point two.

    2) The progressive left is dysfunctional, but only because of the historical nature of their abject frustrations with bona fide collective disenfranchisement. Facts do have a liberal bias. We’re sensitive to the problems we face. Well aware of the disproportionate power of redress. Students of the obvious– corporations have too much power, the planet is heating up, justice is too often blind to social justice, religious zealots are imposing their will, we’re all in this together for the most part and people who we believe should know better and with the power to address this disparity disappoint in these times that are always perilous to us. That sensitivity, that disappointment, has been replaced with cynicism, awkward snark, and distrust in the two-party system. We are the faithful believers in American values. The rightful descendants of the enlightenment– Unencumbered by some rigid, inflexible ideology.

    We play fair in a rigged game and it pisses us off.

    Apathy is the breeding ground for the rigged game.

    It’s quite a cycle, but when you’re dealing with people who can say the phrases “Job-killer,” “death panels,” or “tax and spend” to describe their fellow Americans’ politics, while we’re sitting there with stunned faces at the ease in which complex problems are summed up with two or three words, we seem to forget that the game is always afoot– That we’re still being hustled in the information age. There is no time off for good behavior by adhering to an indisputable articulation of the facts in one grand closing argument, or accurate interpretation in some checkmate end game in the bubble of American activism.

    Enemies of democracy are always beating down the doors of American justice, and hustlers of all stripes– religious and economic– must know that we’re on to them and we’re not giving up without a fight.

    It doesn’t help that self-proclaimed leaders of a nebulous movement adopt the purist posture of rigid ideology on behalf of nuanced, sensitive people.

    Movement politics needs movement, not apathy. Now I’m just rambling.

    • http://twitter.com/bphoon Brian C

      I don’t think I could have said it better myself.

    • MarshallLucky

      This is good, thoughtful analysis. I’m confused about your conclusion though. Are you calling for liberals to become…aggressively nuanced and sensitive? Frankly, the movement is going to stay nebulous and weak until we reaffirm our core ideological principals. Generations of chipping away at union rights, the social safety net and public-mindedness in general haven’t just strengthened the right, they’ve robbed the left of its purpose. What are we fighting for? Why do we still play this game? We need to find those answers as a movement before we can come to the necessary conclusion: our way, or the death of America. That’s the choice now.

      • mrbrink

        I’m saying don’t get trapped in the apathy tar pits. Don’t be bullied into apathy. Don’t be sold on apathy. Don’t turn policy losses into self-defeating reclusive politics.

        Vote. Take someone with you. Remind them that the Democratic party is the only political party in America capable of hosting big tent democracy. Build upon the foundation and infrastructure of core values within the democratic party. There are some who would suggest tearing it all down and rebuilding in their image. Accept the fact that you are an American– not America– and there are at least 60% of the population who agree with the core values in place. There’s a lot of jellyfish in the bowl, sure. But don’t be shamed into an indifferent posture. Push back against the peer pressure and aesthetic hard sell of false equivalencies. Build confidence, don’t be an accomplice to apathy.

        And most importantly, we’re all in it for the long haul. There is no time off in any electoral victory or any policy defeat.

        And most, most, importantly– Stay gold, Ponyboy.

        ; )

  • mrbrink

    Also, in terms of American economics, it’s helpful to remember that there are a few schools of thought working against us.

    Austrian economics, Friedmanites, and Randians.

    None of which adhere to the most sensitive aspects of the U.S. Constitution and all of which time and time again need Keynesian to bailout their failure in real world application.

  • http://twitter.com/bphoon Brian C

    When–not if–the economy dips back into recession as a result of this “deal”, count on the GOP to loudly and repeatedly try to pin the blame on Obama. In fact, they’ve been setting this up for some time now. That’s the point of their economic sabotage: do everything they can to undermine the economy then make Obama the fall guy. Their political strategy has hinged for years on the idea that none of us can or will remember anything that happened more than a couple of years ago if that.

    When–again, not if–that happens, it will be up to us to set the record straight at each and every opportunity no matter how tedious and mind numbingly repetitious it gets.

    We’ll need to expand our scope as well. It’s all well and good to comment here and call Republicans morons and point out all their lies and other fallacies but we’re preaching to the choir. We’ll need to hold our noses and visit conservative blogs and places like CNN.com and the Washington Post’s blogs and lay out our arguments there as well. Not to try convincing the residents of Wingnutia, mind you, but to reach out to any independents who are checking them out.

    We also need to continue battling the Firebaggers since they’ll be trying everything they can think of to get progressives to stay home on election day in order to make their “point”. We can’t let them cede the election to the Republicans.

    Nothing will be harder for me to do, believe me. I have a real hard time stomaching more than about a paragraph or two of that shit–either the Wingnuts or the Firebaggers. But, I care too much about our future and I, too, believe we’re at a tipping point. If we don’t jump on the teeter-totter, this country will tip to the right again. If that happens, I fear that we won’t even circle the drain for very long before we go down the tubes.