Upon further review, we’ve determined that the deal isn’t really much of a deal

Well, everything turned out just swell after all the drama over the debt ceiling debate, didn’t it?  I mean, so long as you don’t mind that:

–the sorry spectacle of the political fight led one rating agency to drop America’s debt rating a notch below AAA anyway: it doesn’t doubt that the U.S. can pay its debts, but feels the political stalemate raised questions about the government’s willingness to pay its debts, and so lowered the rating as a warning to investors;

–the deal doesn’t actually reduce the nation’s debt, it just lowers the rate at which it is rising; and

–taking the nation’s financial health hostage in a political negotiation was shown to be an effective tactic, so we can expect to see it used again in the future.

Among the lessons learned:

–the deal assumes the elimination of the so-called Bush tax cuts at the end of 2012, meaning Republicans gave up the very thing they fought so hard for a year ago.

Plucking flaccid compromise from obstinacy should not be mistaken for victory, just as the smell emanating from Washington after this deal shouldn’t be mistaken for success.

82% of Americans are unhappy (disgusted?) with the performance of Congress on the debt issue, nearly half are unhappy with the president’s handling of the situation, and 40% view the Tea Party unfavorably.

More than four out of five people surveyed said that the recent debt-ceiling debate was more about gaining political advantage than about doing what is best for the country. Nearly three-quarters said that the debate had harmed the image of the United States in the world.

–the political system in Washington, D.C. is becoming more and more unproductive, and may not be able to help us with anything.

The president has tried reasonableness and he has failed. It has been astonishing to watch Obama’s sheer unwillingness to give up on his opponents after their refusal to work with him on the stimulus package, health care reform, or the extension of the Bush tax cuts last fall. A Congress dominated by mindless cannibals is now feasting on a supine president. But surely even he now realizes there’s no middle ground with antagonists whose only interest is in seeing him humiliated.

More real fun is going to come later in the year when a new federal fiscal commission tries to come up with a plan to solve the federal government’s money problems.  If it’s anything like the most recent such commissions, it will find that cutting the budget just can’t produce enough savings to right the ship and it will also look for equitable ways to increase revenue.  It could start by checking this week’s local paper: Ezra Klein outlines a plan for Democrats to boost revenue by negotiating like Republicans, and Charles Krauthammer offers a very rational outline for reforming and simplifying taxes so our representatives in Washington could have a fresh starting point on the coming negotiations on tax rates and entitlement reforms…and they are coming.

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This is our time

To call for sacrifice, the president will have to be willing to make a sacrifice himself.  Obama can offer his own political career. He can put his reelection on the line. He can make the 2012 election a national referendum on doing the right thing.

Evan Thomas, Newsweek, Nov. 13, 2010

George Bernard Shaw suggested that “If all the economists were laid end to end, they would not reach a conclusion.”  I prefer the rephrasing (source forgotten) that if you laid all the economists in the world end to end, they’d still point in every direction.  Like me, trying to figure out what to make of the budget compromise in Washington, D.C.

President Obama and the Senate Republican leadership agreed on a two-year extension of the Bush tax cuts, including those for the highest-earning Americans, in exchange for a 13-month extension of unemployment benefits and a temporary reduction in payroll taxes.  Is that good or bad?  Sounds like it’s good for the highest-earning Americans and the people who’ve used up their state unemployment benefits, at least.

Do you go with the argument that Obama is too reasonable for his own good, and that although he gave in on something he wanted in order to get something else he thought was more important right now, he’ll eventually have to say no to his political opponents or he’ll never get what he needs to deliver on his promises?

How about the argument that Obama’s emulating President Clinton by siding with “the people” rather than with one party or against the other, hoping that in two years the people will hate both parties enough to vote for him?

There’s no guarantee Congress will sign off on the deal: do you wonder about the fact that the GOP leadership doesn’t have all its ducks in a row to support this compromise, precisely because it will increase the deficit by hundreds of billions of dollars, especially one leading quacker who supported Tea Party favorites over establishment Republicans in the last election and might have some sway over new members?  Is it at all concerning to you that the White House finds it necessary to “warn” Democrats that not supporting the compromise could revive the recession?

Are you persuaded by the argument that this compromise, in which neither side made a truly painful political concession, means that no one in Washington is really serious about doing anything about the deficit right now?

I’m persuaded by Clarence Page’s conclusion that both sides are putting off the bloody fight until spring, when they’ll have to make a decision on raising the national debt ceiling—nothing focuses the attention quite like impending doom.

Whether the big fight happens then, or sooner or maybe later, I think I’d like to see what Evan Thomas suggested: that Obama take a stand—and yes, stake his presidency—on a call for Americans to make the necessary sacrifices to save ourselves from catastrophe.

…being honest about the real choices is the only way Obama can break through the noise and chatter. It is also absolutely necessary to save the country from very hard times ahead, or at the very least a steadily declining standard of living. Obama needs to start by explaining the mess we’re in.

Presidents have an ability to go to the people and ask us for what we wouldn’t choose to give.  And Americans stand up for their country, and for each other, in the face of a common enemy, whether we voted for the guy in the White House or not.  This could be our time to find out who the real patriots are, if only our leaders are strong enough to ask us to stand up.

Hard economic truth for $2000, Alex

If only that were the figure—the real issue on deck in Washington, D.C., the issue that drove last week’s election results, is economic recovery: when will the economy get stronger, when will job growth get stronger.  It’s the issue that all of most of the nation’s journalists largely ignored, except for predictable emotional pitches.  Alan Mutter recently pointed out the reasons why: the economy is a hard story to tell, and it has nothing to do with easy stories like who is the new president and what will he do, and why do we think he’ll do it, and what do the polls say about what the people think about what he’ll do.

…the myopic press stuck to covering the inside-the-Beltway story of the day – health care, Afghanistan, Supreme Court picks – instead of zeroing in on the things that really mattered to all but the very wealthiest Americans.  Things like: Will I keep my job? What will I do if I get fired? Can I keep my house? Will I be able to send my kids to college? How can I afford to retire?

It’s anybody’s guess if the myopia will be cured soon; the prognosis is not encouraging, but there’s always hope.  There are some trying to sound the alarm: Mutter points out Paul Krugman at the New York Times as one good example (and notes that the good professor is, in fact, not a journalist in the usual sense of the word, but an economist).  I’ll give kudos to Loren Steffy, the very good and very readable business columnist at Houston’s Leading Information Source.  He’s written an excellent summary of where we stand, and it’s not pretty.  Quoting the Congressional Budget Office,

“Unless policymakers restrain the growth of spending substantially, raise revenues significantly above their average percentage of (gross domestic product) of the past 40 years, or adopt some combination of those two approaches, persistent budget deficits will cause federal debt to rise to unsupportable levels.”

Some of the people crying about the national debt these days come off as wacky, but there is a scary kernel of truth in that cry and our government is going to have to address the problem—and blindly rubberstamping an extension of tax cuts followed by another round of collecting campaign donations from lobbyists is not the answer.

The national economy, at its core, is subject to the same rules as your household economy and mine.  If you spend more than you take in, you go into debt; reducing your income doesn’t magically translate into higher revenues; you pile up enough debt and most of your payments are going to the interest and very little to principal, and you never get out of debt.

I’m not saying you and I, or the government, should never borrow money, although it would be sweet not to have to.  But you borrow money to buy a house or a car; sometimes you have to charge to your credit card, like when the extra thousands it takes to buy a replacement air conditioner are not just sitting there in your savings.  But you can never borrow enough to repay all of the principal—ask Bernie Madoff.  At some point you have to bite the bullet and make unpopular choices.

Texas Monthly’s Paul Burka writes today about how the economic rescue plan known as TARP catches flak as an example of big government run amok, despite (a) the fact that it was dreamed up and implemented during the Bush Administration, allegedly a conservative regime that believed in small government, and (b) is costing less than one-tenth of the advertised $700 billion.  TARP was the best thing the administration could come up with to save the whole economy, and if some of the bad guys who caused the collapse got caught up in the rescue then we’re going to have to learn to live with that.

What will Congress and the president do to get this country’s economy headed in the right direction?  I hope more news agencies commit the resources to dig into the question and produce some journalism that will help the economic illiterati like me understand what’s going on.

For that to happen we need more of them to adopt the idea Jack Shafer discusses today in Slate: we don’t need journalists to be unbiased in the sense of not having an opinion on issues, we need more who are honest and curious and hard-working and are committed to using an objective process to reach some verifiable conclusions.

As Bill Kovach and Tom Rosenstiel write in their 2001 book, The Elements of Journalism, traditionally, it was the journalistic method that was supposed to be objective, not the journalist. As long as the partisan journalist comes to verifiable conclusions, we shouldn’t worry too much about the direction from which he came.

This will require an agreement that there are—as a…well, as a matter of fact—certain verifiable truths, and abandoning the current craze of dismissing as biased any “facts” that don’t conform to one’s current opinions.  How about we start with a little optimism about each other on that score.