Hopefully, they will shoot this bill down today…
President Barack Obama’s rightward lurch to reach a $3 trillion deficit reduction deal with no guarantee of additional revenues had liberals fuming and Republicans all but declaring victory Sunday afternoon.
Rep. Emanuel Cleaver, chairman of the Congressional Black Caucus, said early reports of the new deal appeared to be “a sugar-coated Satan sandwich.” The Missouri Democrat said the CBC hadn’t yet made a formal declaration that the group would oppose it, “but this is a shady bill.”
“This deal trades people’s livelihoods for the votes of a few unappeasable right-wing radicals, and I will not support it,” ripped Rep. Raúl Grijalva (D-Ariz.), co-chairman of the Congressional Progressive Caucus, before House Democrats had even been briefed. “The lesson today is that Republicans can hold their breath long enough to get what they want.”
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.
Start with the economics. We currently have a deeply depressed economy. We will almost certainly continue to have a depressed economy all through next year. And we will probably have a depressed economy through 2013 as well, if not beyond.
The worst thing you can do in these circumstances is slash government spending, since that will depress the economy even further. Pay no attention to those who invoke the confidence fairy, claiming that tough action on the budget will reassure businesses and consumers, leading them to spend more. It doesn’t work that way, a fact confirmed by many studies of the historical record.
Indeed, slashing spending while the economy is depressed won’t even help the budget situation much, and might well make it worse. On one side, interest rates on federal borrowing are currently very low, so spending cuts now will do little to reduce future interest costs. On the other side, making the economy weaker now will also hurt its long-run prospects, which will in turn reduce future revenue. So those demanding spending cuts now are like medieval doctors who treated the sick by bleeding them, and thereby made them even sicker.
And then there are the reported terms of the deal, which amount to an abject surrender on the part of the president. First, there will be big spending cuts, with no increase in revenue. Then a panel will make recommendations for further deficit reduction — and if these recommendations aren’t accepted, there will be more spending cuts.