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08.02.11

10 Great Reads on the Debt Deal

Did Obama surrender? Has the Tea Party jumped the shark? As Congress prepares to vote, The Daily Beast rounds up the best opinions on the debt deal—and what it means for the key players.

Obama Was Not a Lousy Negotiator
by Jared Bernstein, former Chief Economist to Vice President Joseph Biden

obama-debt-vote-tomasky-box
Mandel Ngan / AFP / Getty Images

Bernstein, until recently, worked for the vice president. He is a former Chief Economist and Economic Policy Adviser to Biden, and is a well known progressive economist. In his blog, On the Economy, he argues that the president is not a lousy negotiator, and that Obama's negotiating skills did not get the Democrats’ butts handed to them. The problem for progressives goes much deeper, and the problem is that not very many Americans are progressive. Naturally, liberals will be hugely disappointed by the debt deal that will cut spending significantly. Bernstein admits sadly that progressive liberals will not be abel to defeat those who, persuaded by Fox News and the Tea Party, strive to act against their own welfare and get rid of progressive programmes, by becoming better tacticians and negotiators. "We will only find success when a majority of Americans agrees with us that government is something worth fighting for."

Congress Taps, Rather Than Slams, Brakes
by Ryan Avent, The Economist

The upside to the debt ceiling getting raised is clear: the debt ceiling will be raised. If the only measure of success is whether the debt ceiling was raised to avert economic failure, then "one should be satisfied enough." But by any other standard, Avent of The Economist says, the debt deal is a huge disappointment for the Democrats. According to some analyses, the bill is enough to chop some 1.5 percent of growth from 2012. Is the U.S. economy able to withstand such a cut if the economy this year only grew by 0.4 percent in the first quarter and 1.3 percent in the second? "To be sanguine about this result is to reveal that one has already revised expectations of the American political system down accordingly," Avent wrote. "It looks all right against the entire set of possible outcomes. But against the set of policy choices we'd expect a functional government to achieve? No, on that score, it's pretty disappointing."

The President Surrenders
by Paul Krugman, The New York Times

Krugman, a Nobel Prize winner and noted liberal, says Obama’s deal is a disaster, not only for his future as president, but also for Democrats and the economy. “It will take America a long way down the road to banana-republic status,” he writes in The New York Times. For starters, slashing government spending through 2013 will depress the nation’s weak economy even further. Furthermore, Obama’s debt deal will certainly not help his “wimp” reputation. This is the third time he has surrendered to Republicans on the budget matters. He could and should have demanded an increase in the debt ceiling back in December, Krugman says. “Make no mistake about it, what we’re witnessing here is a catastrophe on multiple levels.”

Family Feud: GOP Rifts on Display in Debt Ceiling Debate
by Alex Roarty, National Journal

The internal arguing among House Republicans over the debt deal last week has revealed a deep rift and between the actual party establishment and major conservative activists. Conservative pundits like Eric Erickson complained that Boehner’s proposal wasn’t conservative enough, while more moderate Republican groups like the Chamber of Congress argued that not supporting Boehner’s bill would ultimately leave the ball in Senate Democrats’ court. Sound familiar? The same issue caused a rift among the Republican Party during last year’s primary elections. Über-conservative Tea Partiers battled it out with centrists who seemed more likely to win and were thus endorsed by the GOP. Oddly enough, Sen. John McCain—a onetime political maverick—has been a central figure in the rift and has even denounced his fellow Republicans. “The idea seems to be that if the House GOP refuses to raise the debt ceiling, a default crisis or gradual government shutdown will ensue, and the public will turn en masse against ... Barack Obama,” McCain said.

Did Obama Get Rolled?
by Jonathan Chait, The New Republic

Liberals aren’t happy with President Obama’s debt deal, wondering how we get here. Jonathan Chait at The New Republic lays out the president's strategic errors. First, in December, he agreed to extend the Bush tax cuts without demanding a debt-ceiling increase then and there, even though some commentators were urging him to do so at the time; as a result, Republicans were able to pass a deficit-increasing measure and then foot Obama with the blame. Then, in the spring, Obama should have refused to negotiate when Republicans began voicing concerns about the debt ceiling; instead, Obama agreed to include it in debate. Finally, he actually believed Republicans would agree to new revenues. Chait says Obama ended up with a “horrible piece of legislation,” but also “about as non-bad as it could have gotten.” Obama could get all the revenue he needs to help close the deficit by allowing the Bush tax cuts to expire next year, Chait says, but “there’s a limit to how much faith one can place in a man who has so badly misjudged his political opponents time and time again.”

US Economy Needs to Rid Itself of Debt Addiction
Larry Elliot, The Guardian

The United States has long been considered one of the wealthiest countries in the world. Paradoxically, the country is so deep in debt that the U.S. government narrowly avoided a default by a matter of days. Now more than ever, the U.S. needs to kick its credit addiction. Larry Elliot, economy editor of Brit paper The Guardian, argues the country has resorted to using the dollar as a “security blanket” that has “allowed Americans to believe that if they close their eyes all their problems will go away.” Moreover, Policy makers have always sought the easy way out, assuming that the U.S. is exempt from normal economic rules. The Bush administration didn’t help either, Elliot says: It destroyed Clinton’s solid economic foundation by spending excessively on two wars and cutting taxes for the wealthy. The U.S. can dig itself out of this large whole, but only by coming to terms with its private sector-debt addiction.

The Beginning, Not the End
by Andrew Sullivan, The Dish

The right made a significant concession that is being overlooked, writes The Dish’s Andrew Sullivan: It put defense cuts on the table. Finally, the giant Pentagon budget will be reviewed. But are defense cuts “better than revenue? Of course not,” Sullivan says, and revenue increases are the only thing that will help the underlying deficit mess at this point. And while the Republicans have been attacked for using the debt ceiling as blackmail for spending cuts, which has never been done before, Sullivan reminds us that this level of debt has also never been seen before.

Why the Debt Deal Made Sense
Michael Medved, The Daily Beast

Tea Party purists grumble Speaker John Boehner should have held out for more cuts, but spurning compromise and forcing a shutdown would have been political suicide for the GOP, says Michael Medved. The problem is that as admirable as their stand on principle may be, none of the hardliners--including Michele Bachmann and a host of Tea Party freshmen—was ever able to present a plausible scenario in which their cause would be advanced if they waited until after the August 2 deadline. There’s no profit from increased borrowing costs, which would surely have resulted from waiting, and there’s no doubt that although Obama would have been hurt by default, the results for the Republican Party would have been nothing short of calamitous. Conservatives should be celebrating: Boehner has successfully created an about-face in the Washington discourse, from how much to spend two years ago to how much to cut today.

How Republicans Screwed the Pooch
Paul Begala, The Daily Beast

As Republicans crow that the budget deal reached Sunday night will save the country from Obama’s reckless spending, it’s important to recall that it’s the GOP’s policies that have driven the nation into the ground, Paul Begala argues. Think back to 1999, when President Clinton passed a balanced budget for the first time in decades—and put the country on a path to paying off its debt by 2009. Twelve years, one two-term Republican president, and a GOP-dominated Congress later, the nation is loaded down with crippling debt from two wars, unfunded Medicare spending, massive tax cuts, and a recession caused in large part by reckless banks encouraged by Republican-backed deregulation. Hearing the same crowd sound the alarm over Obama’s allegedly reckless spending might be entertaining—if the potential impact on the economy hadn’t been so dire.

Annihilating Democracy with the Tea Party
Gregor Peter Schmitz, Der Spiegel

Forget the end of the America’s AAA credit rating: the debt-ceiling debate could well herald the end of America’s democratic experiment. German journalist Gregor Peter Schmitz, a Washington correspondent for Der Spiegel, says the Founding Fathers’ checks-and-balances system was brilliant but only worked if legislators saw their job as legislation—not sabotage. Tea Partying members of Congress came to Washington and took the benefits and prestige of the job without any of the responsibility. And despite their donning tricorn hats, they’ve missed two essentials of democracy. First, and most simply, the founding fathers were unstinting in their belief that the nascent republic had to pay its debts. Second, and more importantly, they understood that compromise is the very essence of democracy. They’ve won the battle today, but their victory could come back to haunt them.