The debt ceiling brinkmanship is a manufactured crisis where none needs to exist. It is becoming clear that for a small but determined group within the Republican party led by the Tea Partiers, the national debt and deficit financing, rather than being simply another option in a nation’s fiscal policy, has become an obsession, a dangerous ogre that must be slain now. They are adamant about not raising the debt ceiling, and seem to think that forcing the US to default could be a good thing, because it would create chaotic conditions that could lay the groundwork for their ultimate dream, a balanced budget constitutional amendment.
But what should not be forgotten is that despite the Tea Partiers, it was always clear to me that the debt ceiling would be increased because the oligarchy wanted it and the fact that there was until yesterday still no public agreement between the two parties’ leaderships and the White House suggested to me that this so-called crisis was a purely artificial one, manufactured to advance other goals.
Assuming that August 2 is a hard deadline for raising the debt ceiling, that placed some limits on what could be done by then. While raising the debt ceiling by itself would be a simple piece of routine legislation, tying it to complicated plans that involve a lot of major changes in budgetary policy (let alone the absurd idea of a constitutional amendment) would require elaborate legislation that would require quite a bit of time to work out. I simply could not see how it could be done in a few days, although this article discusses how Congress can work very fast if it has to.
What worried me is that crises are useful for the oligarchy because it can use them to rush through changes that, if there were time for the public to digest them, would cause an outcry. I suspected that plans (and the accompanying legislation) had already been prepared and were going to be sprung on us at the last minute as an emergency ‘must pass’ option to ‘prevent a catastrophe’, similar to the way that the bailouts of the Wall Street banksters was forced on the country in 2008. The Tea Party caucus that is determined to block any deal that raises the debt ceiling was playing right into the hands of the oligarchy by allowing the leadership of both parties and the White House cover to claim that we were headed for a crisis that required dramatic action.
Dean Baker, co-director of the Center for Economic and Policy Research, seems to share my concerns:
In this respect, the crisis over the debt ceiling is the answer to the prayers of many people in the business community. They desperately want to roll back the size of the country’s welfare state, but they know that there is almost no political support for this position. The crisis over the debt ceiling gives them an opportunity to impose cutbacks in the welfare state by getting the leadership of both political parties to sign on to the deal, leaving the opponents of cuts with no plausible political options.
To advance this agenda they will do everything in their power to advance the perception of crisis. This includes having the bond-rating agencies threaten to downgrade U.S. debt if there is not an agreement on major cuts to the welfare state.
This means that the battle over the debt ceiling is an elaborate charade that is threatening the country’s most important social welfare programs. There is no real issue of the country’s creditworthiness of its ability to finance its debt and deficits any time in the foreseeable future. Rather, this is about the business community in general, and the finance sector in particular, taking advantage of a crisis that they themselves created to scale back the country’s social welfare system. They may well succeed.
It looks like Baker is another economist joining Paul Craig Roberts and Jeffrey Sachs in the ranks of the shrill. The always shrill Glenn Greenwald and Matt Taibbi also see right through the Obama and the Democratic leadership’s game.
While preparing the first draft of this post yesterday (Sunday) afternoon, I wrote the following: “We need to watch out for a ‘grand compromise’ that emerges at the last minute in a ‘spirit of bipartisanship’ that ‘must pass’ for ‘the good of the country’ and will be immediately hailed by the Villagers and the Very Serious People as being a ‘courageous’ move that shows ‘statesmanship’, because such a deal will undoubtedly further enrich the oligarchy and undermine the social welfare system even more.”
I didn’t have to wait long. The Wall Street Journal reports this morning that Harry Reid used almost those exact words in announcing the deal that Obama and the Democratic and Republican leadership have agreed on: “I am relieved to say that leaders from both parties have come together for the sake of our economy to reach a historic, bipartisan compromise that ends this dangerous standoff.”
While details have yet to emerge, what seems to have been agreed upon is no new revenue increases (so much for Obama’s promise that he wanted a ‘balanced’ approach that included tax increases on the rich or the closing of loopholes that they benefit from) and immediate cuts in spending that will hurt ordinary people even more, followed by more such cuts in the coming year.
Oligarchic politics is so depressingly predictable because they make up the rules of the game and control the key players. Once you have figured that out, you see right through the fake crises and the phony drama.