In my column published on July 13, I wrote about negotiations over a grand bargain between the President and congressional Republicans, linking broad budget/social policy with an expansion of the debt ceiling. I stated that it was dangerous to make such a linkage and concluded that column by writing, “…I fear that we’ll get not only a bad grand bargain, but worse, lousy public policy.”
Let’s review. First, there was no grand bargain. Instead, we got no “bargain” at all, unless you think someone placing a gun to your head and letting you live in exchange for your money is a bargain. If that’s the case, then I guess the country did just fine.
Instead of the grand bargain, we ended up with the small compromise. We know it was a “compromise” because nobody was happy with it. In fact, we ended up with legislation that included no revenue enhancers (goodbye “fairness”) and budget reductions of just under $1 trillion.
Then it gets really interesting. This “compromise” provides for a “super committee” of both chambers of Congress to come up with a proposal to cut, at minimum, an additional $1.2 trillion. This committee would consist of three Democrats and three Republicans from each of the two chambers, making it a committee of 12 members, with six from each party. I hope there are no tie votes.
This committee is to report out a proposal to Congress by the end of November. In order to motivate the committee members to act like grownups and do their jobs, the penalty for not coming up with the proposal is automatic cuts to discretionary spending and dollar for dollar cuts from both the defense budget and Medicare. The thinking is that by putting the sacred cow of defense along with the sacred cow of Medicare in harm’s way, both Republicans and Democrats will behave responsibly. Really, they said that. Really, they did.
This compromise was hammered out with only days to go before the first default in American history. It was not only supposed to prevent a default, but also to preserve the unsullied AAA credit rating that this country has historically enjoyed.
How did that work out? The afternoon that the President signed this “compromise” into law, the stock market, which for days had been showing signs of concern over the possibility of default, dropped by 262 points. Two days later, last Thursday, the market tanked another 512 points, ensuring the loss of all the value accumulated in the market since the first of the year.
And last Friday evening, Standard and Poor’s lowered its AAA rating to AA-plus, due in part to the dysfunctional governing processes evidenced over the past month. Although this compromise was to instill an element of security in the markets, it has done anything but.
So who won and who lost? Try as he might to put the lipstick on the proverbial pig, the President lost big time. Although he banged the drum for a “balanced approach,” combining both revenue enhancements with significant reductions in expenditures, he got neither. All he got was a long-term deal that takes further discussion of the debt ceiling into 2013.
Boehner also lost big time. If Obama showed that he couldn’t negotiate, Boehner proved that he couldn’t control his caucus and, in turn, the House of Representatives. In short, he has become nothing more than the handmaiden of the Tea Party wing of his caucus.
The Senate leadership neither won nor lost, the reason being that not much is expected from either Harry Reid or Mitch McConnell. Reid hasn’t delivered much since becoming majority leader, and it surprises nobody that McConnell is a snake waiting to exploit a situation, often not of his making, to advance his narrow interests.
The big winners were the members of the Tea Party. These people were willing to stand by and watch the calamity of default in order to win the day. These people, with little to no grasp of economics, were able to extort their desired outcome from the most powerful man in the world. They avoided a tax increase while delivering cuts in programs for the poor. I invite you to go back and read the front-page story in last Saturday’s Providence Journal to understand what these cuts might mean.
The biggest losers were the American people. To begin with, the stock market has lost trillions over the past two weeks, much of it in the last seven days. Everyone with a stock portfolio or a 401k or some similar plan, lost money for their retirement. If a person is close to retirement, this is not a good outcome. As of this writing, I do not know what the markets will do on Monday, Aug. 8, but if the agreement enacted last Tuesday was to calm investors’ fears by eliminating uncertainty in the financial markets, I think it safe to conclude that it is an utter disaster with the American people paying the price.
Add to this is the functioning, or non-functioning, of government. The way the government has made decisions or developed policy over the past months, if not years, was a primary reason for Standard and Poor’s lowering of the country’s credit rating. We don’t yet know what the long-term effect of the lower credit rating will be, but if the other two rating agencies follow suit it is sure that the cost of credit for everything from credit cards to student loans to buying a house will cost more.
But more important is that the past weeks’ debate over taxes, budget cuts and debt ceilings have brought into clear relief what kind of country we want to be and imagine that we are. At its heart is the conflict between the protections of property rights for a few to the detriment of human rights for the neediest among us. Are we a collection of individuals, acting in our own selfish interests, or are we members of a broader community with a civic duty to commit to social justice?
We need to create jobs but we need to make the necessary investments in infrastructure and education to create the conditions for economic growth. The ethic of an individualism where it’s assumed that we have no responsibility to others in our communities will make those investments all but impossible. And when those who seek public office assert policies where individual interests trump those of the community, then we cease being what made us great since the founding of our country.
I recently finished reading A New American Tea Party written by John M. O’Hara. O’Hara asserts throughout that society needs to return to the individualism of our forebears. While that notion is politically seductive, especially at a time where life has become more complicated and challenging, it is also nonsense. For the truth is that nobody does anything alone. Each of us relies on someone else, in some capacity, in order to exist in today’s world. The image of the loner battling the elements and all challenges to live free by himself on his own terms, if it ever existed, no longer exists. Each of us is a member of a community, each with a responsibility to our neighbors and them toward us. Some, like O’Hara and others who make policy in Washington, mistakenly view that as a weakness. They’re wrong. It’s our greatest strength.
More than 150 years ago, Abraham Lincoln wrote the following in a letter to a friend, “The democracy of today holds the liberty of one man to be absolutely nothing, when in conflict with another man’s right of property. Republicans, on the contrary, are for both man and the dollar; but in cases of conflict, the man before the dollar.”
How far some congressional Republicans have strayed from their party’s founding principles.