Tuesday, August 2, 2011
Star Ledger Editorial
A SOUR BARGAIN
Jersey Republicans Provided Muscle for Tea Party
In the end, President Obama had no choice but to agree to this lopsided deal. House Republicans were prepared to wreck the economy with a default unless they got their way. They had a hostage, and they were prepared to shoot.
Americans should remember that in November. And it's not just the tea party that did this - mainstream Republicans, including the entire New Jersey delegation, stood firmly with the tea party and its extremist agenda.
The nation has, at least, avoided a catastrophic default. But remember that this was a fake crisis. The United States is not Greece. Investors consider U.S. Treasury bonds to be a safe investment, as reflected in the consistently low interest rates. This crisis was manufactured by Republicans who wanted to use it as leverage to force their agenda on the Senate and White House. And for them, it worked.
As for the nation, not so much. This is a small deal, a weak substitute for the grand bargain that could not be struck because Republicans refused to budge on taxes.
It is a puny answer to a big problem, one that shows how unready we are as a nation to face the hard choices.
It will reduce the growth of our national debt by less than $3 trillion, rather than $10 trillion. As Matt Miller of the Washington Post put it: "We've averted disaster only to double down on decline."
From the wealthy, this deal asks nothing. It does not rescind the Bush tax cuts for top earners, as Obama had hoped. It ends none of the special privileges that weigh down the nation's tax code. Hedge fund managers will still pay taxes at a lower rate than their secretaries, and subsidies for everything from corporate jets to ethanol are so far undisturbed.
Tax hikes are still possible. The first phase includes roughly $1 trillion in spending cuts and no tax hikes. But in the second phase, a bipartisan commission can recommend a more balanced approach to achieve $1.5 trillion more in savings.
If the commission stalemates, or if Congress rejects its plan, then a trigger would impose $1.5 trillion in spending cuts, half of which would land on the Pentagon. The hope is Republicans would find those defense cuts so distasteful, they might approve a bipartisan deal with tax increases instead.
Count us among the skeptics. It's possible Republicans might agree to close a few loopholes, but they are on fire with an ideology that regards tax hikes as poison, even though federal taxes are at a 60-year low. Until this ideology is defeated, there is no way to contain the nation's debt without stomping the life out of programs like Medicare and Social Security, and stripping the poor and unemployed of what little support they have left.
So don't celebrate today. Yes, Obama had to sign on. But the 14 million Americans who are unemployed soon will be joined by many more as the economy absorbs these cuts. History shows that's what happens when you cut spending during the middle of a slowdown. Note, too, that this deal does not extend unemployment insurance. Let them eat cake.
This was a blown opportunity. The agreement will deepen the divide in a nation that is already dangerously split between the rich and everyone else. It is not the balanced deal that Obama sought.
It is a clear victory for Republicans. Now, let's brace ourselves for the fallout.