2011-07-13

On the Current US Deficit and Debt Crises

It's been a long time since I've posted here about straight-up US politics (that doesn't have much to do with technology, technological freedoms, et cetera), but I felt that what's happening now deserved a post.

Unless you've been living under a rock, you probably know that the US has a pretty big deficit and a whopping debt. The debt is so high that the US is rapidly nearing the debt limit; if it doesn't raise the debt ceiling, it will default, and the US credit rating will probably be downgraded from 'AAA' to 'AA'. Of course, this will have catastrophic consequences for the economy, which until recently I didn't really understand, but now I sort of do. Many government workers, probably including myself (in my summer internship at NIST) and someone in my direct family will be laid off at least for a while. Interest rates will shoot up. Elderly people will stop receiving Social Security and Medicare, at least until this whole thing can get straightened out again. And the reason why this hits home is because if government workers do get laid off, I may not be able to attend college again until my family has income again to pay for my education. It's a scary and saddening thought, and it's certainly not something I thought I would ever have to worry about in my four years of undergraduate education.

Just for a quick rundown of what's happened so far, President Obama has been trying to bargain and compromise with Republicans in the House of Representatives and Senate in order to actually raise the debt ceiling. These negotiations stalled thanks to Republicans, especially House Majority Leader Eric Cantor, repeatedly walking out of these talks. Obama has moved steadily to the right to try to court Republicans, promising $5-6 in spending cuts, even in things like defense and entitlements that traditionally haven't been touched, for every $1 in tax increases. Recently, House Speaker John Boehner seemed to be agreeable to such deals, but that all fell apart, probably under pressure from Cantor.

Just this week, Senate Minority Leader Mitch McConnell came up with a last-resort plan to raise the debt ceiling, if all else failed. This would involve Congress passing a resolution against raising the debt ceiling, which Obama would veto in order to raise the debt ceiling. For the veto to stand, 1/3 of the representatives and senators would need to block attempts to override the veto. This would happen in all likelihood, and this would have the effect of Obama unilaterally raising the debt ceiling without Congress's help. This would be done in conjunction with trillions of dollars in spending cuts, and this would be repeated 2 or 3 times, once every three months. Most people in Congress have supported it as a last-resort measure, yet Cantor still opposes it, despite it coming from a Republican senator.

There are so many problems with this whole thing, it's unbelievable. Leaving aside the mechanics of the actual debt and deficit reduction plans for a moment, let's just focus on the behavior of the people in DC. Obama and Boehner have been the most agreeable people here for actually seriously considering solutions to the problem, even risking disapproval from members of their respective parties. Cantor has been the No-Man here, saying no to any deal here. In fact, Cantor has had the gall to say that even choosing to negotiate with Obama and the Democrats is itself a compromise. Hello? Last time I checked, negotiation is a prerequisite for compromises to be made. If your idea of sticking by your principles is sticking your fingers in your ears and screaming, people are probably going to give up trying to reason with you. Sadly, you're endangering the economy at the same time by choosing to do absolutely nothing.

And the McConnell plan strikes me as almost as ridiculous as Cantor's stance. It's obvious this is done so that Republicans can place the full blame of raising the debt ceiling on Obama. (As if saving the economy from survival is now supposed to be a shameful act...) This is in response to Obama rightly calling out Republicans on refusing to do/going back on things like closing tax loopholes, ending subsidies for ethanol, and ending tax breaks for toys for very wealthy people. In effect, this also places the blame on Republicans should the US default due to Republican obstinacy. Yet Republicans, more focused on staying in power than actually serving their country and constituents, would rather not act to prevent the US from defaulting by putting the whole burden of raising the debt limit on Obama. I suppose it's marginally better than no plan at all, but the overtly political nature of the stunt is frankly disgusting.

(All for what? To please a guy named Grover Norquist, who has never himself been elected, and who said on The Colbert Report that grandmas should die at the hands of terrorists before taxes can be raised. Yes, he really said that, and judging from the genuinely taken-aback expression on Stephen Colbert's face upon hearing that, Norquist was serious. So really, it's Norquist holding the economy hostage so that his whims may be pleased. What's worse, people paying small portions of their income for the public good, or people losing their jobs, possibly to never get them back? It's insane, but I slightly digress...)

It's sometimes amusing to watch the antics of politicians, and to watch them act like screaming 4-year olds. It's no longer fun when the economy, my college education, and loved ones' jobs are on the line. I think I'll stop before I puke repeatedly and before I get a prescription for hypertension medications.

4 comments:

  1. This article from USA Today puts things in better perspective: http://usat.ly/p3sRRS

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  2. What you seem to forget is that the Republicans have been in this circumstance with the Democrats before and the result has always been that the tax increases fly through just fine but for some reason none of the spending cuts get through. What Cantor and the others opposing Obama are really saying is get the cuts done, approved and in place and then we will talk about the tax increases. You need to check your history on this one. See Reagan with Tip O'Neill, Bush I with Tip O'Neill, Bill Clinton with Tip O'Neill, Bush II with Pelosi - and that is just in the past 25 years. The Democrats will talk a compromise but the only thing that seems to happen is the tax increases, never the spending cuts. In the current situation the spending cuts are the things that really need to happen. There has to be a limit on how long the nation can keep on spending what it does not have on programs that are failing before the crisis really clicks in and that is what Cantor, Ryan and the other Republicans are talking about. Besides they have seen this president in action and he truly is not to be trusted in what he says because it does not translate into what he actually does. All presidents are like this to some extent but this one is far more so than any in my lifetime and I go back to FDR.

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  3. Lexington in this week's economist does a good summary:
    http://www.economist.com/node/18958711

    Points 4 and 5 are I believe the most significant.
    Politicians find it hard to see beyond the next election - and the next election for most of them is not the one in 2012, but the primaries (which for most means only the most partisan end of their party membership).

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  4. @Lyle: I wonder why they don't compromise and go for those making $500,000 and above.
    @dick: But if you've noticed, this time the Democrats do seem more serious than in the past about spending cuts, and while some are opposed to deep cuts in entitlements, I think many are OK with the general proposition. Republicans (or just Eric Cantor), on the other hand, aren't even willing to negotiate, period, unless it goes 100% their way.
    @T_Beermonster: That does make sense, but I still find it hard to believe that politicians of any stripe would be willing to essentially hold an entire economy hostage just to get their demands from a constituency (in this case, big business) that itself is now telling said politicians to calm down, compromise, and get stuff done.
    Thanks for the comments!

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