The White House and Congressional Republicans strike a deal to prevent a U.S. government default, but it’s a deal slanted heavily toward Republican priorities with nothing of any significance for average Americans.
So Congress struck a deal to avoid the U.S. Treasury defaulting on its loans for the first time in this nation’s history. Whoopdiedoo. Color me unimpressed.
Once again President Obama and the rest of the Democratic coalition got taken to the cleaners by a Republican Party that doesn’t care one bit about the American people. They got their clocks cleaned by a Republican Party that considers the word “compromise” to be in the same category as the four-letter words that would cause your mother to wash your mouth out with soap at their utterance.
So here we sit today, one day before the Treasury is set to default on its financial obligations, and the President and Harry Reid are all over the media extolling the wonderful compromise that they’ve managed to strike with Republicans, and how they’ve saved the United States from the catastrophe of default.
Now, don’t get me wrong: Avoiding a default is a good thing. But the manner in which it was achieved is nothing but complete capitulation. Make no mistake about it: This bill has all kinds of goodies for Republicans, and virtually nothing for Democrats. This president proved once again that Democrats simply don’t have the stomach for a fight.
Here’s the thing: Republicans were perfectly willing to run this country into default. In fact, I’m almost convinced that’s what they wanted all along. But what they also knew was what has been traditionally true: Push them hard enough; play the brinksmanship game long enough, and the Democrats will cave, and the Republicans will get everything they want. It happened last December when Obama agreed to extend the Bush tax cuts for two years in exchange for not shutting down the government (gee, what a marvelous bargain that was). And it happened again when Republicans threatened to push us into another depression. They knew Democrats would knuckle under. They knew that this president—in an effort to win over moderates and independent voters—would eventually give up the farm.
And right on cue they did. There is nothing in this “compromise” for Democrats to hang their hats on. There is nothing in this “compromise” that even remotely puts this country back on a responsible fiscal track and will foster economic growth and job creation. In fact, it is widely believed that this “compromise” will hurt the economy, and stymie already non-existent job growth. Nobel Prize winning economist Paul Krugman said as much in his column today.
And I believe he’s right. After Obama insisted that revenues be a part of any deal, there are no revenues anywhere to be found. Taxes are at their lowest level since the 1950’s. Revenues currently stand at 76% of 2001 levels. We’re spending the same amount of money on education as we were in 2001. We’re spending 174% of what we were in 2001 on the military. And our health care costs have skyrocketed, becoming a significant driver of the current morass . This is not a spending problem as Republicans gleefully insist. This is a revenue problem.
The wealthiest among us are currently paying an effective tax rate of 18%, while the average household is paying an effective rate of around 25% (that’s after deductions and tax credits). Let me say that again: The wealthiest 400 people in this country—who average over $270 million per year in earnings—pay an effective tax rate of barely 18%, while the rest of us are stuck paying considerably more. The main reason for that is capital gains taxes: Capital gains (i.e. the entirety of the earnings of a hedge fund manager) are taxed at 15%, and capital gains are how most wealthy people make their money. They don’t make it in salary or earned income. Oh, and those hedge fund managers? They don’t actually create any jobs, because they don’t actually produce anything. They simply move money around from stock to stock, money market fund to money market fund, investment to investment. Raising the capital gains tax will have virtually no effect on those “job creators” that Republicans like to tell us about so much.
Bush era policies account for over half of our current national debt, and nearly the entirety of the current budget deficit. Three trillion dollars in tax cuts, $4 trillion in spending hikes on war and an unfunded, poorly written, and completely misleading prescription drug benefit package partnered with regulatory policies that allowed businesses to do whatever they wanted whenever they wanted with exactly zero accountability crashed this economy. In 2001, under policies left behind by Bill Clinton, the CBO said that our national debt would be paid off by 2009. Yet here we sit today saddled with $14.3 trillion in debt.
But we’re supposed to take advice from Republicans?
Revenues must be a part of any deal, but they’re nowhere to be found in this one. The “deal” being proposed, according to the CBO, cuts $917 billion almost immediately, with another $1.2 trillion to come by November via a new “Super Congress,” a commission of sorts made up of equal parts Democrat and Republican, House and Senate. The White House insists that there’s a good chance that that special commission will come up with a deal that includes some sort of revenues in their plan. Good luck with that. Not gonna happen. Republicans will NEVER go for it, and we’ll be stuck cutting more from Medicare, Medicaid, and Social Security, education and research, and our infrastructure will continue to crumble because Democrats will cave like they always do.
Should this joint committee fail to come to an agreement, the “deal” includes certain triggers that will spur further automatic cuts that are onerous to both sides of the aisle. It’s funny, though, that those triggers do not include any sort of revenue—the most onerous thing to Republicans. Come Thanksgiving we’ll be saddled with even more drastic cuts to the most vulnerable, and the wealthiest people in America and the wealthy corporations who are raking in record profits but not creating any jobs in the process will contribute nothing. Companies like GE and B of A will continue to not pay anything in taxes, and the rest of us will suffer even more.
The joint committee will not accomplish anything because the Republicans will not agree to anything except the complete obliteration of government.
There is no way to spin this in any other way than a complete victory for Republicans. There is virtually nothing in this “deal” that even remotely resembles a Democratic principle. Once again Republicans got their way, and President Obama and Congressional Democrats failed to stand up for average Americans.
There is very little to be pleased about today. There is very little to be proud of today. So congratulations, Mr. President. You have sold us out yet again.
Economist Jared Bernstein and Robert Greenstein, founder of the Center on Budget and Policy Priorities with Lawrence O’Donnell. They discuss exactly what we should expect from this “Super Congress.” Here’s a hint: Exactly NOTHING.