It has been made clear by many experts, at many sites, for many days, that the issue of the debt ceiling is a complete sham. It is another political sleight-of-hand -- a misdirection designed to hold your attention here, while they pilfer your wallet there. The debt ceiling issue need not have been bound up with deficit reductions -- this is the misdirection, where a manufactured crisis was heroically solved by delivering up an austerity package that could never have been won otherwise. This again proves the Rahm Emanuel dictum that "you never want a serious crisis to go to waste", even if you have to make one up yourself.
Matt Taibbi of RollingStone summed it up the outcome quite nicely in his most recent blog when he said: "Is it possible that by surrendering at the 11th hour and signing off on a deal that presages deep cuts in spending for the middle class, but avoids tax increases for the rich, Obama is doing exactly what was expected of him?"
I'll answer loudly in the affirmative. Obama did not get the best he could under difficult circumstances -- he did deliver exactly what was expected of him.
Obama has made it clear through his actions and his words that it was always his intention to deliver policies well to the right of centre. There is not a progressive bone in his body. And, despite the evidence that has been mounting from the day he took office, this fact continues to astonish his supporters. It is time to acknowledge the awful truth, Barack Obama came to the Presidency as the manchurian candidate for Corporate America.
The deal is bad for everyone who is struggling in America and, as I demonstrated in my last post, Wealth and Democracy, that includes millions of people. And, as Paul Krugman said in a New York Times column, it's a bad deal for the American economy.
What prompted Obama to tie deficit reduction to the fake crisis over the debt ceiling? Most point the finger (middle) at the Tea Party. It is true that this group of home-schooled zealots came to Washington on the so-called populist wave of the 2010 midterm elections. Set aside for a moment that these people know absolutely nothing about economics; they also refuse to listen to anyone who does -- their most salient political attribute is that they believe what they believe because they believe it, and therefor they know what they know because they know it. But this faux populist movement is really a creature of corporate America, and so under the guise of a no-tax reform movement, in the aftermath of the biggest transfer of wealth to Wall Street in history, and in the midst of a financial and economic crisis that may yet push us all into another Great Depression, these people have managed to legislate a reduction in spending and the continued tax cuts for the rich. It is an unprecedented victory for the elite in this escalating class war.
But again I return to the question: what prompted Obama to tie deficit reduction to the fake crisis over the debt ceiling? Go back to last year's G20 conference in Toronto and you find in the summit Declaration the following: "The advanced economies have committed to fiscal plans that will at least halve deficits by 2013." At the time of the G20 Declaration, the general consensus among serious economists was exactly the opposite -- that increased employment and wages were the critical need. This remains true today (see the paper from the PERI Institute, Austerity is Not a Solution).
How, then, has "austerity" become the order of the day in the midst of the worst economic crisis since the Great Depression? According to Robert Pollin, in an interview with TheRealNewsNetwork, the financial imbalances of the 2008 financial crisis (a real one, by the way) have not yet been solved, and this has been seized upon by business to affect the kind of "serious crisis" that Rahm Emanuel says allows you to do things you couldn't otherwise get done, like gutting America's social programs.
In support of the points outlined above, an excellent analysis by Dean Baker provides real insight: