OpEdNews Op Eds

The Bad Deal

By       Message James K Galbraith     Permalink
      (Page 1 of 2 pages)
Related Topic(s): ; ; , Add Tags Add to My Group(s)

View Ratings | Rate It

opednews.com

- Advertisement -
Cross-posted from Deutsche Welle

Political news travels slowly, and in my casual observation progressive Europeans have held on to the myth of Barack Obama as a good man much longer than most progressive Americans did. How could a young black American from Chicago and Harvard be otherwise?

Over here reality has been evident for a while, thanks to the President's pattern of giving way to banks, lobbies, Republicans and right-wing extremists. Whether your prime interest is housing, health care, peace, justice, jobs or climate change, if you are an activist in America you have known for a long time that this President is not your friend.

Still, even on these shores disillusion often took a mildly forgiving form. The President was a "disappointment." He was weak.  He had "bad negotiating skills." He had a tendency to "deal with hostage-takers," to "surrender." All of this fed the image of a man with a noble spirit, a good heart, the best intentions, but trapped by limited ability and the relentless and reckless determination of his foes.

Obama is no progressive

The debt deal will make things clear. The President is not a progressive -- he is not what Americans still call a "liberal." He is a willful player in an epic drama of faux-politics, an operative for the money power, whose job is to neutralize the left with fear and distraction and then to pivot rightward and deliver a conservative result.

What Barack Obama got from the debt deal was exactly what his sponsors have wanted: a long-term lock-in of domestic spending cuts, and a path toward severe cuts in the core New Deal and Great Society insurance programs -- Social Security, Medicare and Medicaid. And, of course, no tax increases at all.

To see the arc of political strategy, recall that from the beginning Obama handed economic policy to retainers recruited from the stables of Robert Rubin. From the beginning, he touted "fiscal responsibility" and played up the (economically non-existent) "problem" of the budget deficit. From the beginning his team sabotaged economic recovery with optimistic forecasts and inadequate programs -- in the clear interest of protecting the banking system from reform.

As the presidency moved along, false claims of economic recovery supported a transition toward obsessive focus on debt and deficits, validated by a federal commission and constantly reinforced by a Washington propaganda chorus funded by Peter G. Peterson, for many decades a billionaire campaigner against Social Security and Medicare.

- Advertisement -

Debt ceiling a pseudo-crisis

But it wasn't enough. Even with the Republican victory in the 2010 mid-terms there wasn't the political will-power simply to pass the cuts and make them stick.  For it wasn't sufficient just to pass them: politicians need cover when they do ugly things.

They need an excuse, something that will offer protection from the anger of the victims, or more precisely from other politicians who might exploit that anger. In the well-practiced manner of organized crime, blood needs to be on everyone's hands.  That way, no one can defect; no one can turn states' evidence and safely get away with blaming the others.

The debt-ceiling pseudo-crisis created the necessary panic. The debt ceiling is a unique American law -- no other country has one -- a little travesty of democratic bad faith. It was first enacted in 1917, to allow congressmen to hoodwink the rubes back home even as they voted for a large issue of Liberty Bonds to finance the Great War.

It has been a vehicle for posturing ever since -- but that it would be raised has never been in doubt. (Even this time the markets never showed the slightest worry.) It became a vehicle for blackmail because it was convenient. It was convenient, because Obama failed to insist it be his price for agreeing to extend the Bush tax cuts last December. Whether that omission was accidental or calculated at the time is, for the moment, unknown.

- Advertisement -

Obama's neglected options

Even as "crisis" loomed, the President had powerful options. The Constitution of the United States flatly forbids default on debt or any other public obligation. The President could have simply asserted his duty and refused to negotiate.

Even more cleverly, he could -- under a quirk of existing law -- have turned drama to farce by minting a large platinum coin -- say for a trillion dollars -- and using that to buy back public debt held by the Federal Reserve, so that the debt ceiling would never have been breached. (There would have been an uproar but no other economic effect.) 

Next Page  1  |  2

 

- Advertisement -

View Ratings | Rate It

http://utip.gov.utexas.edu/JG/default.html
Galbraith is the author of six books and several hundred scholarly and policy articles. His most recent book, "Unbearable Cost: Bush, Greenspan and the Economics of Empire, was published by Palgrave-MacMillan in late 2006. His next book will be "The (more...)
 

Share on Google Plus Submit to Twitter Add this Page to Facebook! Share on LinkedIn Pin It! Add this Page to Fark! Submit to Reddit Submit to Stumble Upon


Go To Commenting

The views expressed in this article are the sole responsibility of the author and do not necessarily reflect those of this website or its editors.

Writers Guidelines

Contact AuthorContact Author Contact EditorContact Editor Author PageView Authors' Articles
Related Topic(s): ; ; , Add Tags
- Advertisement -

Most Popular Articles by this Author:     (View All Most Popular Articles by this Author)

Economic Crises Rooted in Fraud

Tremble, Banks, Tremble

Casting Light on "The Moment of Truth"

The Bad Deal