The debt crisis is only on hold

Plus, what does congressman Bill Keating have against Cuban families?
By EDITORIAL  |  August 3, 2011

editorial post debt crisis

That was fun, wasn't it? The United States was only hours away from joining in the international community of deadbeats and bunko artists — think Greece, Spain, Italy, Ireland, Portugal — when President Barack Obama signed the legislation raising the national debt ceiling and cutting trillions of dollars in federal spending.

It is a clever bill. Narrowly construed, it buys Obama time through the 2012 national election to avoid having to deal with the reality of America reneging on its financial obligations. But in a broad sense, the debt bill keeps the idea of default alive.

It is a peculiar compromise. Nobody is happy with it. It was a compromise rooted in shame and fear, and executed only though blackmail.

The shame of failing to pay the nation's bills just because a minority of right-wing radicals wants to cripple the federal government animated centrists of both parties.

The fear that so reckless an act would have kindled an international financial meltdown with unknowable consequences was impossible to escape in the final days of negotiations.

That Republicans could turn a routine cash-management function into an instrument of economic policy is nothing short of astounding. The crisis may have been manufactured, but it was very real.

The Republican congressional establishment used the threat of Tea Party nullification to block any efforts to reform corporate tax loopholes or increase taxes for the affluent. Any and all budget adjustments — never before part of a debt ceiling — must now come from cuts.

Who was using whom is still unclear.

If a recent poll from the non-partisan Pew Center is any indication, both Obama and the Tea Party have declined in equal measure. The biggest losers, however, were the Republicans. The nation sees the GOP as nay-saying gamesters more interested in political points than the national welfare.

Come Thanksgiving, when Washington comes face to face with the delayed budget-slashing aspects of the debt-ceiling compromise, the nation is likely to be in worse economic shape than it is now.

Despite all the jobs and prosperity that were supposed to flow from the extension of the Bush tax cuts, the economy is stagnant.

If the stock market is any indication, Wall Street fears the nation is heading for another recession. The economic indicators point in that direction, and just a few days ago, former treasury secretary Larry Summers wrote that recent statistics put the chances at one in three.

Obama seems to be rattled by all of this. He has begun, at long last, to talk about job creation, but he's touting the baseless Republican line that deficit reduction is a key to this. Obama has even started talking about new tax breaks for the middle class to spur consumption. Get a grip.

Augustine of Hippo once prayed, "Oh God, make me holy. But not today."

A variation on that theme should provide an action plan for the American economy. Almost any economist worth their salt agrees that this is the wrong time to cut federal spending, although many agree that it must eventually be trimmed and its rate of growth substantially slowed.

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