News & Politics

Gary Tischler •

Somebody once said that just because you’ve hit bottom doesn’t meant there isn’t a basement down below, and a cellar below that.

Now I’m wondering what’s below the cellar.

The Washington Post, in its weekly dubious award of who had the worst week in Washington, handed it to President Barack Obama, an obvious choice. I’ll give you another: we, the people.

I don’t think this political city has ever quite seen anything like the performance put on by the astigmatic, irresolute and way too resolute, panic-and-partisan stricken performance by all parties—the two political parties, the members of both the Senate and the House of Representatives, the administration and the media who read the political and economic tea leaves as if they were written in Chinese.

In short, have you ever witnessed a spectacle like the great 2011 hot-summer-in-the-city crisis over raising the debt ceiling?

The answer—if you discount a southern senator caning a northern senator during events leading up to the civil war—is no.

And boy, were there consequences.

It’s bad enough that this summer produced unprecedented heat waves, crops turning to dust in Texas and elsewhere starvation in Somalia, and rioting in London.

We now officially have a pretty much completely dysfunctional government, according to the financial agency Standard & Poor, which downgraded the U.S. in its list of risk-free borrowers from AAA to AA. If you’re a battery, that’s not so bad. If you’re supposedly the world’s most powerful country, that’s a financial embarrassment and possible disaster.

The S&P announcement, made after the stock market closed on Friday and after a big tumble in the Dow Jones, was made in spite of the fact that in its figures to determine the downgrade, the agency had made a $2 trillion mistake. You could argue that the S&P might have reconsidered, but the agency, like many politicians, lawyers, consultants, preachers and just plain folks, was not deterred by a little thing like facts. They made a political and policy judgment, prompted by the debt ceiling debacle and the behavior of everyone involved and while you can’t disagree with the observation about a “gulf between the political parties” and a lack of confidence in the government and elected officials being able to solve the country’s debt problems, the downgrading itself seemed arrogant and not a little reckless.

The raising of the debt ceiling used to be routine. Not this time. The newly elected Tea Party members of the house and senate made their no-prisoners, no-compromise policies about huge budget cuts in entitlement programs, no tax increases or changes, a part of the resolution of the debt ceiling issue.

President Obama and the Democrats have now continued to blame the GOP and the Tea-ists for the whole mess. You can blame them because they’re all a bunch of little Robespierres, burning the government down and locking the exit doors.

But Obama continued to believe that he could actually negotiate with Boehner, Cantor, McConnell and the gang of Teabags.

He acted like a man who was dealing with a group of outpatients from St. Elizabeth, among them people who believed they were Jesus, Napoleon, Stalin and Charlie Chaplin and says to them “Come to the White House and let us reason together. We’ll have some tea and scones.”

Every meeting, every phone call, or lack thereof, was scrutinized by the media for signs of wonder or resolution. They never came until the very end when both sides, the clock run down next to nothing—cobbled together a deal that everyone swallowed like it was a piece of coal and did not nothing to prevent recurrences or offer true long-range solutions. And don’t you even say the word “taxes,” you just hush now.
When the downgrading, predicted by many economic experts, came, the results were devastating. The New York Times opined that the downgrading “carried few clear financial implications.”

How’s this for a clear financial implication—the Dow Jones dropped 635 points Monday, prompted by the downgrade, but also a continued debt problem in Europe.

Oddly enough, the only stock being bought up was U.S. Treasury bonds, which, even with the downgrade, seemed the safest bet around.

President Obama gave a speech mid-Monday, chiding the S&P, saying “we were still the United States of America,” trying to reassure the American people. Unfortunately, as he spoke, stocks were tanking on a scale not seen since 2008.

Come to think of it, he may yet get the worst title two weeks running.

David Post •

The Top 10 list of why the debt ceiling debate was a big joke (and this is no joke):

1. The train wreck in Washington, disguised as the debt ceiling debate, was only about posturing and how much should be cut. But no one debated what should be cut. The what is hard to find. How much spending did Congress really cut? $21 billion in 2012. And $42 billion in 2013. Not even a blip. Where is the other $900 billion going to come from? Much of it is expectations of defense cuts as the wars in Iraq and Afghanistan wind down which should happen anyway. After all, those wars are 10 years old. They should be over 10 years from now.

2. A $1 trillion tax cut last December – the extension of the Bush tax cuts for two years – took a couple days and led to a lot of bipartisan congratulatory back slapping and talk of a new era of cooperation.

3. A $1 trillion spending cut – actually $917 billion – took months of bitter acrimony, almost led to a national default, worldwide angst, and exposed the most dysfunctional government on the planet.

4. Congress agreed to raise the debt ceiling by $917 billion only if accompanied by $917 billion in budget cuts. That sounds like any additional spending must equal the budget cuts. The difference is that the debt ceiling increase covers eight or nine months while the budget cuts are spread out over 10 years. The entire debate was not about spending cuts. It was about marketing and branding for the next Presidential election.

5. This Congress acted more like a parliamentary government with four large political factions: Tea Party Republicans on the far right, moderate Republicans, moderate Democrats, and far left Democrats. Usually, the moderate middle is large enough to cut a deal. This time, the Tea Party and the far left were large enough to cause a logjam, and ironically, for different reasons, effectively joined forces refusing to compromise. They were like war time allies who fight together because, “The enemy of your enemy is my ally.”

6. Sarah Palin popularized bridges in Alaska. This year, just before the debt ceiling debate, Tea Party members in Minnesota, South Carolina, Wisconsin, and Mississippi quietly sought and received federal money for bridge construction and repair in the name of “economic development” (formerly called earmarks or pork), cashed their checks, and then began blasting Washington for “out of control government spending” and opposing an increase in the debt ceiling. Washington is the only city in the world where you can reward yourself by publicly criticizing what you do.

7. In 2001, the US spent $200 billion interest on $6 trillion in debt. In 2011, the US will spend only $200 billion interest on $14 trillion in debt because interest rates are lower. A mere 1% increase in interest rates could cost more than $100 billion per year. When the smoke clears, the cuts might only cover the increased interest cost.

8. Is the debt ceiling to become a political football from this time forward? Are Congress and the President destined to spend half of every year fighting over increases in the debt ceiling? Will there be payback when a Republican is in the White House?

9. Keynesian economics said that government spending can create growth. It worked in the Great Depression and lessened the pain in other recessions. Congress just did the opposite. It reduced government spending on the theory that less spending will create growth. Does that mean that the economy grows both when the government spends more and when the government spends less?

10. Oh Boy! ANOTHER new commission to figure out how to reduce the deficit. How will this budget commission – what, number 17? – be different? It has “triggers” that will implement “across the board cuts” if the commission can’t agree on an overall plan to cut another $1.5 trillion. What’s higher? Congress’ 14% approval rating or the percentage who think this commission will find the magic answers?

11. Health care costs have more than doubled over the past 10 years and are projected to double over the next 10 years. The government pays 50% of the national health care bill already. 80 million baby boomers are standing in line to join Social Security and Medicare over the next 20 years. If Congress cannot agree on an approach to a budget until hours before a potential calamity, how can it plan a budget ten or twenty years in advance?

OK, that was 11, not 10. Regardless of your political stripes, this is scary, isn’t it?