The die has been cast. Obama's "nearly complete capitulation to the hostage-taking demands of Republican extremists," as an editorial in the normally sedate New York Times described the deal to raise the debt ceiling, is a disaster in the making. It rules out a vigorous government response to the persistent economic stagnation in which joblessness, housing foreclosures and an ever-widening gap between the top 2 percent and the rest of Americans have become the norm.
But to use the word "capitulation" is too kind, since this president, as was Bill Clinton before him, is clearly one of those "New Democrats" who welcomes the opportunity to jettison the legacy of Franklin Delano Roosevelt as outmoded political baggage. Otherwise, why would Obama have reached for a "grand bargain" in which he even put Social Security and Medicare cuts on the table before the Republicans rolled him?
That same opportunistic reasoning got us into the Great Recession, thanks to President Clinton joining with congressional Republicans to destroy the sensible controls on Wall Street greed that FDR had put in place in order to prevent a repeat of the Depression. That was also the rationale of the Clinton alums that Obama appointed to clean up the mess they themselves had created. Instead of worrying about jobless workers and swindled homeowners, they bailed out the swindlers, following the example set by George W. Bush.
Those policies caused the 50 percent run-up of the national debt between 2007 and this week, when the debt ceiling had to be raised. While the trillions wasted made the bankers whole, it did nothing for the 50 million Americans losing their homes or the 20 percent of the workforce that can't find the full-time employment for which they are qualified. The economy has zeroed out in the past six months, relative to population growth, and in June consumer spending had its biggest drop in two years. The fundamentals are rotten, as reflected in the steep descent of the stock market despite the raising of the debt ceiling.