There are many around the world who are resting easier this morning. But Paul Krugman isn't one of them. He writes that the deal which President Obama reached with congressional leaders is a disaster:
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.
So, first and foremost, the deal is profoundly stupid policy -- policy which seems to have gathered a world wide consensus. Certainly, the Harper government intends to follow suit. But, on a much more important level, it sends a signal that hostage taking works. Following the Ayn Rand template, Republicans threatened to blow up the building and got their way. Krugman argues that
In the long run, however, Democrats won’t be the only losers. What Republicans have just gotten away with calls our whole system of government into question. After all, how can American democracy work if whichever party is most prepared to be ruthless, to threaten the nation’s economic security, gets to dictate policy? And the answer is, maybe it can’t.
There is an old adage: "In the land of the blind, the one-eyed man is king." But there can be no king -- and there can be no democracy -- when everyone is blind.