Well, at least one person in Washington DC is finally taking a sensible approach to the US’s massive debt and deficit crisis.
Unfortunately, neither political party is listening to him.
Instead, they’re just stuffing their fingers in their ears while the debt-ceiling deadline rolls ever closer (and sucking up to their “bases” to make sure they get re-elected.)
The Republicans, for example, continue to stick to their insistence that we fix our problems by slashing spending immediately and raising no additional revenue. That this position is, as the Economist said last week, “economically illiterate and disgracefully cynical,” not to mention hypocritical, doesn’t appear to bother them a bit.
The Democrats, meanwhile, insist that Medicare and Social Security are sacrosanct, even though these programs are clearly going to bankrupt the country unless they are modified. The Democrats’ “plan” to address the deficit, in other words, appears to be to shove their heads deep in the sand.
Photo: republicanconference via Flikr
Of the two parties, the Republican’s position seems the more selfish and obstructionist, especially as the debt ceiling looms: After eight years of massively increasing government spending and the deficit while in control of the White House, the Republicans are now taking such an extreme position that observers can be forgiven for thinking that they are trying to damage the economy, in the hopes of sweeping next year’s elections.(And if that’s what they’re doing, by the way, they should be fired and charged with treason. For those elected to lead the country, the country’s interests should come before any political considerations).
But at least one person in Washington is now talking sense. And, happily, he’s the most powerful person in the room.
Here, courtesy of the New York Times, is some of what President Obama had to say yesterday from his “bully pulpit”:
To the Republicans, who are suddenly so alarmed by the country’s financial situation that they are willing to force default to avoid compromise:
“I’ve been hearing from my Republican friends for quite some time that it is a moral imperative to tackle our debt and our deficit,” Mr. Obama said. “What I’ve said to them is, ‘let’s go.'”
(On this score, Obama’s White House has proposed a plan with an estimated $4 trillion in long-term savings, one built primarily on spending cuts. The Republicans are refusing to even engage with it because it includes closing some tax loopholes.)
To the members of both parties, who are putting their self-interests ahead of the country’s:
“American democracy works when people listen to each other, we are willing to give each other the benefit of the doubt, we assume the patriotism, good intentions of the other side, and we are willing to compromise.”
To the Democrats, who are refusing to even consider tinkering with Medicare and Social Security:
Grow up. [Not an exact quote].
To the Republicans, who are fighting compromise by saying that Obama wants to “raise taxes during a recession,” Obama points out that no taxes would go up until 2013:
“No one is talking about raising taxes right now… have bent over backwards to work with the Republicans that comes up with a formulation that doesn’t require them to vote sometime in the next month to increase taxes.”
And so on.
The truth about our financial situation is that it would be damn near impossible to dig ourselves out of our hole with spending cuts alone, even if they were politically feasible. And whatever we do–spending cuts AND tax increases–needs to be phased in slowly, so it doesn’t clobber an already weak recovery.To be clear about this: Over the long haul, spending does need to be cut, but slashing it now, suddenly, will deliver a hammer blow to an already frail economy. The country will plunge back into recession, unemployment will soar, and–importantly from a budget perspective–government revenues will drop. The latter outcome, which we’re seeing in Greece, the UK, and other countries that have tried “austerity” as a near-term solution, will defeat the whole purpose of trying to balance the budget by cutting spending. It will lead to a sharp reduction in government revenue, which will exacerbate the situation. (Translation: It sounds sensible and prudent, but it won’t work.)
Not that the Democrats’ “plan” is any better. The Democrats plan appears to be to ignore the crisis, keep their heads stuffed deep in the sand with respect to Medicare, Social Security, and other spending programs, and jack up taxes only on “the rich.” The latter element will have to be part of the solution to our woes, but it won’t solve the problem. Spending is going to have to be cut, and taxes are likely going to have to rise for everyone.
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