Welcome to the post- debt-ceiling-fight world. It’s a dandy.
Liberal economist Paul Krugman writes that the debt-ceiling agreement will actually set the economy back.
Meanwhile, conservative Sen. Tom Coburn — of Gang o’ Six fame — voted against it and writes that the agreement will do nothing. He says when Americans understand how little it does, there may be yet another “change election,” although he wasn’t specific about who might get changed. You may have your own ideas.
In my more generous reading, I’m inclined to go with Woody Allen’s line from the movie “Bananas” to describe the situation: “It’s a travesty of a mockery of a sham of a mockery of a travesty of two mockeries of a sham.”
Unfortunately, that may actually be an understatement. While Republican leaders — hostage to their Tea Party contingent — pushed the country to the brink of default, the real problems remained stubbornly in place. Unemployment is still over 9 percent. The major economic trend numbers come in basically flat. The stock market lost a year of gains in about a week — thanks, folks — and when the Dow broke its losing streak Wednesday, it moved up all of 0.25 percent.
And because even many Republicans think it could be harmful to cut too much too soon during a weak economy, the cuts in the first year of the budget plan amount to only $21 billion, which isn’t exactly austerity.
The whole fight might have made sense if the recession and weak recovery had anything to do with debt. Sure, the debt is a big issue. Medical costs are an even bigger issue. Entitlement reform is a huge issue. But none of them caused the meltdown.
Maybe you remember. It wasn’t that long ago, and it was in all the papers. The real estate bubble burst, and the loans — hyped confidently then by the now suddenly sober credit rating agencies — went bad en masse. Mortgagees defaulted. Houses sunk underwater. Banks failed. Panic, bailouts and stimuli ensued.
And because things are still bad, President Obama’s programs are pronounced failures, as if everything would be better if only the government had stayed out of the way and let the markets correct themselves. I pause here for a knowing chuckle.
In any case, the debt ceiling fight wasn’t really about the debt ceiling at all. It was not even about the debt, which, with this deal, will continue to grow.
The fight was about beating Barack Obama, which the Tea Partyers did with remarkable ease. Liberals like to blame Obama’s negotiating skills, which seem to explain why he was a constitutional lawyer and not, say, a mergers and acquisition guy.
But as Jared Bernstein — an economist who worked in the Obama administration — argues, Obama’s defeat had little to do with negotiating skills. How exactly, Bernstein asks, do you explain whether taking $1 trillion from something called discretionary spending is a good thing or a harmful thing? You try it.
The Tea Partyer narrative is a little simpler: shrink government. That means take as many Grover Norquist pledges as you can. Don’t compromise, ever. If you have to, you can go the Michele Bachmann route and deny that default even means default.
The Tea Party success — which needed only a significant minority in one half of Congress — comes both from passionate belief and a lack of a counter-narrative. Democrats don’t have a narrative. Keynes is dead — really dead at this point — and all Democrats can hope is that the safety net survives. And Republican intellectual elites like George Will, who don’t have a narrative either, are suddenly volunteering to man the Tea Party barricades.
Conventional wisdom, meanwhile, doesn’t stand a chance. The Simpson-Bowles commission and the Rivlin-Domenici plan and the Gang o’ Six all called for entitlement reform and for increased revenues, mainly through reforming the tax code and eliminating deductions that are basically subsidies for the rich. They’ve all gone nowhere.
What we get instead is Senate Minority Leader Mitch McConnell saying that there is now a “new template” on passing debt ceilings. From now on, he says, there will be debates like the one we just had. Yes, he said that as if it were a good thing.
He makes this case even as the supercommittee is being formed to supposedly save the day, given the painful triggered cuts that would go into effect should it somehow fail. Not everyone trusts the triggers, particularly anyone who remembers the Gramm-Rudman act and how its triggers suddenly disappeared, D.B. Cooper style.
Of course that was long ago. Can a supercommittee — composed of six Democrats and six Republicans — do better? What do you think?
Contact Mike Littwin at mlittwin@denverpost.com.
