Here's Mark Thoma's post on his blog Economist's View:
Sanctioning BlackmailThe only long term solution is an election that clears the air. But I'm pessimistic about that since the media in the US is right-wing dominated and a big chunk of the population think the Tea Party crazies are "patriots" with their blackmail stunt.
by Mark Thoma
We are about to sanction blackmail as a legitimate Congressional negotiating strategy. Anyone think this is the last time we will see this happen?
One side put a gun to the economy and said do it our way or else. The other side had many ways to disarm the strategy, the 14th amendment for example, that it didn't even bother to keep alive as an alternative. Why? Even if you don't plan to use the option, why not leave the other side wondering so that their leverage is reduced?
The best hope at this point is that Democrats in the Senate will not stand for this, and that they will somehow manage to get a better deal. But I'm not expecting much.
We are not going to default on our debt payments on Tuesday, or even run out of money. According to reports, Treasury can make it another week, and bond payments could be continued even longer (though there would have to be cuts in other areas). We don't have to take a terrible deal today, and if it were up to me I'd threaten to veto the current arrangement, and make good on that threat if needed. I'd also do my best to make it abundantly clear to the public what is really holding the deal up, the unwillingness of the GOP to give up anything in the negotiations.
I thought Obama promised to do just that -- to veto the deal unless it was fair -- where fair meant three dollars in expenditure cuts for each dollar in tax increases. To me, that was already an unacceptably right-tilted outcome, and now we aren't even guaranteed that will happen.
There is the scheduled expiration of the Bush tax cuts at the end of 2012, and we are supposed to be content with a promise that Democrats will even the score at that point. But there's nothing at all in recent negotiations to give confidence that Democrats will manage to get tax increases when the time comes. A vague promise from Democrats about the future is all but worthless right now, we've had too many promises broken already. Obama's promises in particular mean nothing.
I'm mad right now. I just got an email from a high school friend who lost his job after 17 years working at the same place, and he's only four and a half months from being eligible for retirement. Now he's left out in the cold with nothing. That's what we ought to be focused on right now, helping people get and keep jobs, making sure that workers are treated fairly. Promising employees future benefits so that they are dedicated, hard-working, and then pulling the rug out just as they are about to realize that promise is unacceptable. But why should business worry when nobody is there to stand up for the rights of the workers?
Instead of spending valuable Congressional time trying to help working class households deal with the effects of the recession, and deal with longer-run problems that are causing wages for those lucky enough to be employed to stagnate, etc., we are making things worse for them in a budget deal with no sense of shared sacrifice. What are the wealthy giving up in this deal? What did the GOP give up?
This is a terrible deal for Democrats, and a terrible precedent for future budget negotiations.
Obama was a fool not to stick to his original position: give him a clean debt ceiling bill, no debt reduction stuff added. The issue of the debt ceiling is whether the US will honour its commitments to pay its debts. If the US wants to fight over budgets and spending, then that is a separate battle. But the Tea Party fanatics knew that if they mixed debt reduction in with debt ceiling being raised, they could manipulate Obama. And they have. They have successfully mugged and robbed America.