Taibbi on debt ceiling debate

Matt Taibbi:

The blindness of the DLC-era “Third Way” Democratic Party continues to be an astounding thing. For more than a decade now they have been clinging to the idea that the path to electoral success is social liberalism plus laissez-faire economics – in other words, get Wall Street and corporate America to fund your campaigns, and get minorities, pro-choice and gay marriage activists (who will always frightened into loyalty by the Tea Party/Christian loonies on the other side) to march at your rallies and vote every November. They’ve abandoned the unions-and-jobs platform that was the party’s anchor since Roosevelt, and the latest innovations all involve peeling back their own policy legacies from the 20th century. Obama’s new plan, for instance, might involve slashing Medicare and Social Security under “pressure” from the Republicans.

I simply don’t believe the Democrats would really be worse off with voters if they committed themselves to putting people back to work, policing Wall Street, throwing their weight behind a real public option in health care, making hedge fund managers pay the same tax rates as ordinary people, ending the pointless wars abroad, etc. That they won’t do these things because they’re afraid of public criticism, and “responding to pressure,” is an increasingly transparent lie. This “Please, Br’er Fox, don’t throw me into dat dere briar patch” deal isn’t going to work for much longer. Just about everybody knows now that they want to go into that briar patch.

Yes, exactly. With the noticeable exception of the Congressional Progressive Caucus and a small handful of liberal Democratic senators, basically everyone in DC has gone happily along with creating a debt ceiling crisis as a means of instituting painful austerity measures. This has been most obvious with President Obama, but as Taibbi says, it’s also the case with the entire Third Way cohort in both chambers and the administration.

The result is that we have two political parties with, at minimum, constituent parts of their party in power who share effectively the same goals. Republicans want to reduce the deficit entirely through cutting spending. The Democrats as lead by Obama share that goal, though they think a small portion of the deficit reduction should come through increased revenue. Mitch McConnell is floating a deal (which may not be that bad given where we are today) that will require 100% spending cuts for three tranches of debt ceiling increases. Given that the consequences of defaulting on our debt, here’s why McConnell’s offer may win out. It is vastly preferable to (a) hitting the debt ceiling & the consequences therein; (b) a $4 trillion “bargain” at 4-6:1 spending cuts to tax increases; (c) anything that cuts SS, Medicare, or Medicaid. The flip side of this is that it will be the President agreeing, as mentioned above, to the exact same all spending, no revenue deficit plans as the GOP. The sole difference is that he will have input as to what gets cut. And yes, Social Security, Medicaid and Medicare may end up on Obama’s cut list again.

This simply brings me back to the point that there was never any ideological difference between the GOP’s “all cuts” demands and the Obama administration’s “some taxes for rich people”. The difference is merely one of optics, they are functionally the same, especially if the cuts still end up including things like Head Start, Social Security, student loans, Medicare, and Medicaid.

We’ll see if McConnell’s solution goes through. Obviously I think there are fundamental upsides to it, namely not destroying the economy with default and not gutting three of the great programs ever produced in America. But we’re here largely because this was someplace that Obama wanted to be. More importantly, we’re here because the Obama administration pointedly choice, as Taibbi notes, not to pursue aggressive job creation, not to go after banksters, and not to make sure the rich were actually (not optically) being asked to pay their fair share. This is a sad and sorry place to be in as a party. But if we avoid another economic collapse without giving up the farm, I suppose that’s better than the alternative.

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