Obama: Debt, Default and Betrayal
Last week Sunny told us that he was frustrated with people like Glenn Greenwald who think Obama is giving away too much in the current negotiations over the US debt ceiling. He thinks that Republicans are in a bind “if they agree to increase taxes, they break their own pledges and annoy the hell out of their base. If they don’t – they lose independent voters.” and that Obama has “[r]ather than betray[ed] the left … nearly pulled off a master-stroke at a time his hands are badly tied.”
In reality this is just the latest in a line of betrayals of the left from Obama. ‘Win’ or ‘lose’ this fight over the debt ceiling Obama’s (and, to be fair, other Democratic leaders’) action has served only to move the debate to the right and make cuts to essential services more likely. As Digby says
by putting these drastic cuts on the table they are going to become the centrist and conservative baseline going forward. After all, “even the liberal Democrat Barack Obama thought this needed to be done.” I had not heard anything about raising the age of Medicare eligibility before this debate and now it’s everywhere, pushed by the White House and by the health care technocrats who think that everyone should be thrilled to get into the untested Rube Goldberg health care program as soon as they can buy their way in.(If they can afford it.)
Even the usually reliable Paul Mason was reporting on newsnight two days ago that the stimulus had failed and that cuts were now necessary. That the stimulus failed is, in my view, debatable in itself—it’s hard to prove any counterfactual, but the situation in the US could have been even worse if austerity had come earlier—but that it was less successful than many hoped is due to a lack of ambition, not too much. The stimulus that happened was too small, too slow to reach the real economy and badly focussed—too much of it came in the form of tax cuts and too little in job creation programmes and infrastructure.
But, maybe I’m being too harsh here. As Sunny says, Obama’s hands are tied, aren’t they? The Republicans are dominated by the Tea Party and prepared to do anything to hurt the Democrats, they’re threatening to let the country default; he’s been forced into this position.
Except, that he hasn’t. If he wanted to raise the debt ceiling he could. And, in fact, he will, whatever efforts to agree a deal on the deficit come to. The Republican party may have its share of “rightwing nutters“, but its leadership aren’t crazy enough to let the whole economy collapse, to force another credit event, potentially worse than Lehman and with no possibility, this time, of a bailout. When the US Chamber of Commerce says
failure to raise the debt ceiling would have calamitous results. It would halt government operations, make our debt and deficit situation worse, debase the value of the dollar and threaten its status as the world’s reserve currency, and hamper U.S. growth and job creation…
…jeopardizing our country’s credit rating and fiscal security by refusing to compromise isn’t the answer.
you can be pretty sure there’s a significant degree of pressure being put on Republican congressmen and women to be sensible, just this once. In fact, there are already public reports of that happening.
And even if the Republicans were just crazy enough to try blocking a clean bill to raise the ceiling, Obama has other options. Section 4 of the 14th Amendment states
The validity of the public debt of the United States, authorized by law, including debts incurred for payments of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.
Though originally drafted to refer to civil war debts, the supreme court has noted that the section applies more broadly. And that isn’t even the only option he has to unilaterally raise the ceiling, or in other ways bypass it.
The truth is, if the Democrats simply wanted to deal with the immediate debt ceiling issue, they could do so. They have the ability, they have the ability many times over. But what they want is to make a deal to reduce the deficit. And they want to use the issue of the debt ceiling to do so—as do the Republicans, of course. In order to remove the issue from next year’s elections and absolve themselves of responsibility, for their own short term political gain, they’re prepared to balance the budget on the backs of ordinary working Americans, to put at risk programmes they promised not to touch, to once more sell out the left and allow the political debate in the US to shift to the right. How anyone who considers themselves on the left can still support them astounds me.