Monday, August 01, 2011

This Is A Better Idea?

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.


thwap said...

No surprise that they ended all the fake drama and come to a "grand compromise" that sticks it to ordinary US-Americans.

It's hard to say who the bigger loser will be politically.

The Repugs have alienated all the moderates and remained loyal to their nutbar base. Obama and the Dems will be seen as less insane by the moderates but they will have completely alienated their base.

The next election is going to have a very low voter turnout and that tends to reward the Repugs. But the Repug base is such a small fringe that it could go either way.

Economically, they're going to plunge North America (and perhaps the world) back into recession.

ck said...

I think Obama is just like the Republicans. He is just as conservative as they are. Nothing progressive about him. He could've invoked the 14th and gone it alone as George W Bush had many times before during his own presidency, If Obama really were that progressive, but no.

I would go further in saying that those Conservadems, along with Obama, just like the Republicans are in Corporate pockets. This is what you get when you allow Corporations to spend unlimited funds on political candidates at election time. It's why a decent health care bill can't get passed. Hence, why no one will dare increase taxes on kazillionaires, despite the fact that polls in the US reflected a majority of Americans favoured tax increases.

The US has a revenue problem, no matter how much spending they cut, they still don't have revenue coming in.

Like I said, Obama is another Republican, ideologically speaking, anyway.

The Mound of Sound said...

America's Congress, Republicans and Democrats alike, is hastening their nation's decline and, quite possibly, also positioning the rest of the world for a true depression.

Those of us who can remember when America genuinely stood for greatness can see when it detoured away from that path with the arrival of Reagan. It is no small irony that Reagan achieved their fervent adoration by contending their best days were still ahead of them even as he introduced a toxic political philosophy certain to prevent just that.

Lewis Lapham writes that the rot sat in even earlier, during Nixon, when wealth came to be equated with virtue.

Americans still yearn for greatness but seem to think it's owed to them by virtue of their tortured notions of exceptionalism.

Owen Gray said...

What is most disappointing, thwap, is to see how much clout the nutbars have.

Their influence doesn't bode well for the future.

Owen Gray said...

I agree, ck, that Obama has been very disappointing during this crisis.

As Krugman says, he could have easily raised the debt ceiling during the lame duck session.

He has fundamentally misread his opposition. And now -- having concluded that he can't beat them -- he has decided to join them.

Owen Gray said...

With the exception of a few expatriates, Mound, Americans have never been able to see their country from a distance. They have always assumed that the world would follow -- rather than reject -- their example.

When someone like Fidel Castro or Hugo Chavez made a point of trumpeting their disagreement, they demonized them.

They will probably not understand why so many countries will slowly start to disengage themselves from the American orbit.