It's a major victory. The shutdown's ending, the government isn't defaulting (at least not yet), and Democrats didn't yield in the face of threats and bullying. But what happens next could shape our fate for many years to come.
Congratulations are in order. The President vowed not to negotiate over the debt ceiling, and he was as good as his word. He stood up to the closet ideologues of the artificial "center," the ones who unwisely argued that being the "adult in the room" meant surrendering to the tantrums of children.
Sen. Harry Reid's tough talk was matched by equally tough action. (Reid also deserves credit for coining the phrase "banana Republicans," as pithy a summation of their approach to governance as we've seen.)
Once and Future Losses
But the celebrations are premature. Yes, the public is furious at Republicans -- Tea Partiers and plain-vanilla GOP extremists alike -- for causing so much damage in pursuit of an ideology so far outside the political mainstream. Most Americans have rejected the things Republicans stand for: their values, their priorities, and their apocalyptic economic vision.
And yet, unless something changes, this deal will bend the next few months' deliberations along the same misguided lines that have guided our political discourse for years now. House and Senate members will be encouraged to come up with a "deficit reduction plan" -- in other words, to impose another round of cuts just like those which have already wounded the economy and shredded millions of jobs.
That's hardly cause for celebration. The conservative Peter G Peterson Foundation estimates that the "crisis driven fiscal policy" of the past several years has resulted in the loss of 900,000 jobs. Discretionary cuts of the kind that will be urged upon Congress have already cost us 1.2 million jobs, according to the study, and have resulted in a loss of 0.7% from the GDP.
Remember, these estimates are on the conservative end.
This pointless and futile round of threats has cost the economy significant losses in both consumer confidence and business investment. That's not just our conclusion. It's also what a visiting panel from Wall Street told the House Financial Services Committee earlier this week. The shutdown has cost our economy $24 billion and lowered the GDP by 0.6%, according to an analysis by Standard & Poor's.
As we've said before: we can't afford Republicans anymore.
Yes, there will be talk about "increasing tax revenue." But it won't focus on raising the top tax rates for millionaires and billionaires, even though the generally conservative International Monetary Fund recently proposed raising top tax rates to pre-Reagan levels. In this country, that would mean nearly doubling the top tax rate from its current 39.5 percent to 73 or 74 percent.
(We discussed this topic on the Thom Hartmann show yesterday. The video is here.)
Lawmakers are more likely to discuss limiting tax deductions and exclusions -- "tax expenditures," in Beltway parlance. And the "expenditures" they're likely to target are likely to target include the deductions that are currently keeping the struggling middle class afloat, like health expenses, mortgage interest, and child care tax credits.
There will also be talk of "tax reform," but it will most likely focus on tax code tinkering designed to lock in today's historically -- and unfairly -- low rates of taxation for corporations and very high earning individuals. That's not "reform": it's a payoff to big campaign contributors.