Cross Posted at Legal Schnauzer
Barack Obama signaled that he was going to be a weak president on January 11, 2009. That is when Obama, nine days before his inauguration, told ABC News' George Stephanopoulos that he was going to take a "look forward, not backwards" approach on the apparent crimes of the George W. Bush administration.
Obama, unfortunately, followed through on that pledge, and it helped Republicans claim the U.S. House of Representatives in November 2010. The House takeover, in turn, led to last night's debt-ceiling deal, which a leading columnist calls a "disaster"--and a "political catastrophe" for Democrats. The deal probably will make the nation's economy worse, not better, and it provides more evidence that Obama is headed for a failed presidency.
How bad is the debt-ceiling deal, from both an economic and political perspective? Allow Paul Krugman, New York Times columnist and Nobel Prize-winning economist from Princeton University, to explain:
A deal to raise the federal debt ceiling is in the works. If it goes through, many commentators will declare that disaster was avoided. But they will be wrong.
For the deal itself, given the available information, is a disaster, and not just for President Obama and his party. It will damage an already depressed economy; it will probably make America's long-run deficit problem worse, not better; and most important, by demonstrating that raw extortion works and carries no political cost, it will take America a long way down the road to banana-republic status.
Is Krugman going over the top? Could the U.S. really become a banana republic? We think the answers are no and yes. And it's because the White House, the Congress, and the public seem to be clueless about fundamentals of macroeconomics. Writes Krugman: