No attention should be paid to anyone who talks about spending cuts. For as we shall find out, they do not exist in any meaningful sense.
The only interesting part of this story is how dreadful the eventual compromise turned out to be. Naturally, Republicans and Democrats will argue over which side won; what is clear is that the American people did not. Karl Denninger has the details:
What a flaming pile of excrement. The Republicans rejoinder will be that they could only do so much with so little power. This is an insult to the intelligence of anyone who understands how representative government works. Since the Republicans controlled the House they could have prevented the debt ceiling from being raised. It's possible Obama could have ignored the debt ceiling, thereby instigating a Constitutional crisis; but this doesn't negate the fact that the Republicans had power; they merely lacked the courage to use it.
Now it's true that the banks would have ensured that the market tanked and that the ratings agencies followed through on threats to downgrade the credit rating--itself a ridiculous farce--of the United States. In other words, refusing to raise the debt ceiling would have been politically painful. But that doesn't mean it would have been the wrong thing to do.
Republicans could have explained that a painful recession was the cost of our profligacy; going deeper and deeper into debt hasn't helped our economy, and it cannot, for sooner or later the piper must be paid. We can do the manly and honorable thing and endure a recession, or we can keep debasing the currency until the financial system collapses. Those are our two options.
The Democrats are insistent on pursuing plan number two. Bernanke will keep printing money until he collapses in tears, having realized that the logical end of Keynesianism is hyperinflation. At which point we'll have ourselves a nice recession anyway, albeit without a functioning currency.
The Republicans had a chance to explain the shortcomings of this plan; predictably, they punted. It's certainly possible, indeed, probable, that Americans would reject honesty from their elected officials. Alas, we may never know, because with one exception, Republicans continue to insist that the problem has gotten better because of this dreadful compromise. The party has sacrificed a chance, perhaps its last one, to be forthright, instead hoping that the electorate will continue to pull the lever for the lesser evil.
The Obama presidency has been little more than an embarrassing joke. He has done nothing to address the debt problem which, admittedly, he inherited from our previous charlatan in chief. But by exacerbating the crisis, he has made it his own. There is no Democrat in Washington who is concerned in the slightest about our debt woes. The party is far more concerned that somewhere, some bureaucrat may have to forgo a raise, or that the bankrupt entitlement system is meddled with in the slightest. So the American people will get no help from them.
But the Republicans have sold them out, too. They insist that once Obama is defeated, all will be well. Yet there is no evidence whatsoever that the Republicans will reduce spending even if they control Congress completely. As recently as the Bush administration, they did possess such control, whereupon they racked up record deficits.
It could be argued that the Republicans have learned their lessons from the Bush years. If so, I fail to see any evidence for this supposition. In fact, all the data points the other way. The Republican house dutifully kicked the can for Obama so that no one in Congress has to deal with the debt ceiling until after the next election. In exchange for this exercise in irresponsibility, the Republicans were bought off by non-existent cuts and slightly more meaningful ones at a much later date.
It will be well into 2013 until Congress will consider addressing our debt woes. They will have worsened by then, making it likely that Congress will simply kick the can again, as it always does.
At least the Republicans are being recognized for magnanimously giving Obama a nice deal, right? Oh, wait, Vice President Biden is castigating the tea partiers as terrorists. So in addition to gaining nothing for the American people, it's unclear what political capital was gained by Boehner's Faustian bargain.
During the next year and a half, I recommend stocking up on whiskey. For one, it makes a useful commodity in the case of a collapse in the nation's currency. For another, it is the only thing I have found that makes it possible to stomach the pusillanimity of our supposed representatives.