The president reportedly met with members of congress this morning to discuss the ghostly mystery deal. Whatever. Either the Tea Party forbids Boehner from making a deal, or he is being forced to grandstand all the way to the very brink, before he and Mitch McConnell feel themselves fortified and insulated enough to endorse a legislatively passable arrangement handing full responsibility for raising the ceiling to President Obama. This is the best hope, and for all intents and purposes, the only hope.
Otherwise, here’s the harsh but unavoidable truth: deal or no deal, the nation is going to suffer.
There’s no other way to say this: anybody who tells you debt default will not thrust America into economic anguish with genuine pain for almost all Americans, is tragically wrong, stupid or simply lying.
And almost any deal so far thrown against the wall (excluding the McConnell escape hatch) to see if it will stick, makes spending cuts in the trillions of dollars. Either choice, default or deal, will be economic euthanasia.
Tearing into government spending with unemployment above 9%, and economic growth sluggish, is by any economic or historical measure suicidal. It is a guaranteed loss of state, local and federal jobs, a loss which, aside from the personal consequences for those directly affected is another suffocating blow to consumer demand, already crippled by the recession, and an earlier round of worker lay-offs at every level of government.
Two principal conservative lies have prevailed, their victory affirmed by the president’s own endorsement of them. The first is that a high debt to GDP ratio is an indicator of economic peril and a threat to future growth. The debt to GDP ratio has been higher historically than it is now. And then, at the end of World War Two, a strongly rebounding economy allowed the nation to pay of the debt in its entirety quickly.
Debt to GDP means only the ratio of debt to ANNUAL GDP, the annual calculation entirely an arbitrary measurement. Nations do not need to pay off their entire national debt in a year, so the ratio has little real as opposed to perceptual or political relevance.
Furthermore, the ratio is not higher now because of government spending. It is higher because GDP has been bottled up by a deep recession, and the lingering stall in consumer demand. The ratio is higher when the economy is weak: in other words, when the GDP number grows smaller. Rather than cut spending, economic sanity demands it be increased in order to stimulate the economy more. The ratio of debt to GDP. naturally diminishes as GDP rises.
The second magnificent lie is that American business is lacking confidence, that it is sitting on its capital because it is quaking in its loafers paralyzed with fright at the very thought of stricter future regulations. No. Business increases inventory and business hires employees when demand exists and money is to be made. So it always has been and inevitably it always will be. When consumers have no jobs or have no money to spend, there is no demand. And in their infinitely hydrocephalic wisdom the Republicans would propose to address this lack of demand by cutting government jobs, reducing spending that results in jobs, and hacking into the safety net with the inevitable result of stripping spending power once again from potentially consuming Americans.
And if I hear the word courage applied one more time by a pundit to a Democratic president’s alleged willingness to cut the social safety net, I’m going to have to hunt the pundit down.
There is nothing courageous, in fact only everything cowardly in cutting debt through the sacrifice of the least fortunate alone, preening about debt reduction at the expense of people with negligible political power or political influence. Bluntly, they are lambs sacrificed to full economic protection of America’s wealthy, and the corporate sector, and to the terrorist demands of batty ideologues who are the tail wagging the entire government now.
To set the record straight, Social Security produces its own funding, has a surplus that continues to loan money to the American treasury; and like everything else in this economy produces revenue to the government whose end result is to keep taxes lower than otherwise for America’s fatted corporations and upper brackets. It can, without adjustment pay out its benefits in full till 2042.
Medicare gets more expensive only because health costs in our still fully privatized health care system continue to go through the roof, the health insurance companies and their profits always sacrosanct and every other civilized country’s universal system too “socialistic” for America’s Luddite ideologues and avaricious profiteers.
While the President appears to be winning the political popularity battle now (how could he not be, really) his prospects for reelection 15 months from now, if current agreements or non-agreements set off an expected spiral of negative economic consequences seem precarious to me.
And anyone who believes any of the current deals on the table from either side, all of them substantively conservative, and economically backward proposals, will improve the economy or increase jobs, is manifestly deluded, ideologically bonkers, fretfully gullible, or in a persistent vegetative state.