"In Italy, the economy is melting due to the Berlusconi non-government. And in the U.S., Republicans used a type of 'legislative terrorism', employing a weapon never used before and prompting Standard & Poor’s to downgrade U.S. Treasury bonds due to government dysfunction."
It’s been a dramatic week in
both the USA and in Italy. The agreement (or rather the “cease-fire”) between
Obama and the Republicans on the national debt triggered the biggest market
decline in two years, while in Italy the economy is melting due to the
Berlusconi non-government.
I didn’t write this week
because I was in a kind of dilemma over the way the dispute over the debt
ceiling between Obama and the Republicans ended. It seemed to me like Obama's latest
surrender to Republicans. They used a type of “legislative terrorism,”
employing a weapon never used before. Over recent decades, the debt ceiling has
been raised 66 times by both Republican and Democratic presidents in an
automatic and bi-partisan way. In this case it was used as a kind of pistol to
take the national economy hostage - do what we say or we’ll ruin the nation's
credit! And Obama, after all, gave in. But he, too, had the chance to use a new
and more powerful weapon: raising the debt ceiling on is own by invoking a clause
from our Constitution that says that the credit of the United States is
inviolable [the 14th Amendment]. He would have created a ruckus and a
constitutional challenge between government branches, but he would have saved
the nation's credit and shown some grit.
Posted
by WORLDMEETS.US
I write this with great pain,
having been one of his most enthusiastic voters, that Obama have greatly
disappointed me. Every time he's challenged, his instinct is to search for compromise
and immediately offer a middle path. The Republicans well understand this and took
evermore extreme positions, knowing that Obama would immediately offer half of
what they wanted, so as to drive him to concede more and more to obtain a settlement.
And in fact the plan that just passed contains at least 80 percent of what
Republicans wanted. In the case of the national debt, while many economists assert
that the U.S. economy needs government spending to stimulate growth and raise employment
- and tackle the problem of the debt as a later stage when the economy is
stronger. But the new plan does precisely the opposite: it cuts large amounts
of government spending, especially for the middle class - including pensions,
unemployment subsidies, Medicare spending - without a dollar of new taxes for
the wealthy, the only category that benefitted during this period of Republican
hegemony.
If the Republicans were a
little more serious about wanting to confront the debt problem, they would have
eliminated at least some of the absurd tax loopholes - like the measure that
allows corporations to subtract the purchase of private jets from their taxes,
or the one that allows hedge fund executives to pay only 15 percent of their income
in taxes - less than their secretaries. The lack of seriousness in the plan
evidently failed to satisfy markets - which have dropped about 10 percent in
the past month. And now Standard & Poor’s has downgraded U.S. Treasury
bonds due to the dysfunction of our government.
The only positive aspect: the
severity of the crises has created a sense that some government action is
necessary to avoid a second recession. So the possibility for a new stimulus
plan does exist. In the short, Republicans have won the battle over the debt, but
come away with some bruises: 72 percent of Americans disapprove of their
approach, while “only” 47 percent disapprove of how Obama acted. So the ugly
reaction of the markets has put Obama back in the game.
It really makes one laugh, however,
to have heard Berlusconi's response to how the Milan stock market plummeted. He
encouraged the public to buy Mediaset
stocks - as if he were a securities dealer rather than prime minister of the
entire country - and, without laughing as the stock market collapsed - he tells
the entire world that, “the international credibility Italy enjoys is due to
the fact that at the head of government is a tycoon.”
Posted
by WORLDMEETS.US
At this point, Berlusconi’s
detachment from reality, his way of locking himself away inside his
narcissistic dream - is complete. The rest of the world, both countries with
conservative governments and those with leftist ones, watch Berlusconi with a mixture
of horror, astonishment and mirth. Everything is collapsing around him, and he
always talking about how he's the savior of the country.
