"This
compromise is a bitter defeat for Barack Obama and hurts the American economy. …
Less revenue and more spending have led to rising deficits. The idea that tax
cuts would pay for themselves with higher economic growth has long since proven
to be a fairytale of U.S. conservative politics."
At the last minute, U.S. lawmakers
have prevented Washington from not having the money to pay its bills tomorrow, thus
allowing the United States a narrow escape from banana-republic-like
circumstances.
This compromise is a bitter defeat
for Barack Obama and hurts the American economy because the president agreed to
almost all of the Republican demands: In spite of a record budget deficit, there
will be no tax increases, and budget consolidation will be accomplished with spending
cuts alone.
Increasing taxes for the rich
and those with higher incomes wouldn't have such a significant effect on the
economy, since such individuals save large portions of their income rather than
spending it. But the wealthy have been completely absolved of any responsibility
for the U.S. debt, which has risen so sharply since the financial crisis. Instead,
significant cuts in government social services are planned. This will widen the
U.S. income gap even further.
Posted by WORLDMEETS.US
With this compromise, the
Republicans can celebrate a complete and total victory: They have shown
perseverance and increased the likelihood that Obama will not be reelected due
to the sluggish economy and persistent unemployment. And finally, the U.S.
welfare state they hate so much has sustained a major blow.
The compromise is also a
result of Obama’s tactics of celebrating himself as the conciliator of American
politics. He would like to be a president who closes the gulf between Democrats
and Republicans. Ultimately, however, Obama only plays into the hands of his
political enemies.
Republicans - particularly
the mighty Tea Party movement - will use all possible means to end the
presidency of allegedly-socialist Obama as quickly as possible. No reasonable compromises
are possible with them. Their true goal is not to reduce the debt but to eliminate
the American welfare state, as built up by Roosevelt in the 1930s and President
Johnson with his Great Society in the 1960s.
Since Ronald Reagan, Republican
presidents have given no more than lip service to debt and deficit reduction. It
has never played a role in practical politics. Under Reagan and Bush Jr., taxes
were radically reduced alongside massive spending increases, in particular for
the military.
Less revenue and more
spending have led to rising deficits. The idea that tax cuts would pay for themselves
with higher economic growth has long since proven to be a fairytale of U.S. conservative
politics.
Republican governments, which
were in power before Obama, therefore bear the most responsibility for the
increased debt burden. As a result of their tax cuts, the government lost badly
needed revenue. Under Ronald Reagan, the public debt-to-GDP ratio rose by 33
percentage points and under George W. Bush, by 28 points. Thereafter, the lack
of revenue has always been used to justify cuts to the welfare state.
There was no need for Obama
to bow to pressure from the Republicans - and there was most certainly a legal
basis for raising the debt ceiling by presidential decree. The Republicans
would have had to file a complaint with the Supreme Court, but it would have
won Obama time - time to prove to the American people that he and the country
cannot be taken hostage. In addition, Obama should have clarified earlier the real
goals of the Republicans, and more emphatically clarified the policies that
they are fighting for. But his self-imposed role of conciliator prevented this.
If the compromise is passed
by the House and the Senate, the crisis of U.S. insolvency will be averted for
the moment. But the political price Obama will pay is high. The agreement
exacerbates the U.S. economic crisis, and more importantly: Global confidence
in the governability of the United States - a world power - has been badly
shaken.
