You must listen to Amy Goodman show this morning, if only for the news, at the beginning of the show. The Black Caucus and the Progressive Caucus have both denounced the deal at the top, Nancy Pelosi is pessimistic about passage and in her tone, and
Bernie Sanders wallops it in a short segment from his speech to the Senate, this morning. DN, Monday, 9 Am, kpfk 90.7 fm.
Ed
The President Surrenders
By Paul Krugman
NY Times Op-Ed: 2011-08-01
A deal to raise the federal debt ceiling is in the works. If it goes through, many commentators will declare that disaster was avoided. But they will be wrong.
Fred R. Conrad/The New York Times
Paul Krugman
Go to Columnist Page »
Blog: The Conscience of a Liberal
Related
· Obama and Leaders Reach Debt Deal (August 1, 2011)
· Times Topic: Federal Debt Ceiling
Related in Opinion
Ross Douthat: The Diminished President (August 1, 2011)
· Op-Ed Contributors: Our Unbalanced Democracy (August 1, 2011)
· Editorial: To Escape Chaos, a Terrible Deal (August 1, 2011)
Readers’ Comments
Share your thoughts.
For the deal itself, given the available information, is a disaster, and not just for President Obama and his party. It will damage an already depressed economy; it will probably make
Start with the economics. We currently have a deeply depressed economy. We will almost certainly continue to have a depressed economy all through next year. And we will probably have a depressed economy through 2013 as well, if not beyond.
The worst thing you can do in these circumstances is slash government spending, since that will depress the economy even further. Pay no attention to those who invoke the confidence fairy, claiming that tough action on the budget will reassure businesses and consumers, leading them to spend more. It doesn’t work that way, a fact confirmed by many studies of the historical record.
Indeed, slashing spending while the economy is depressed won’t even help the budget situation much, and might well make it worse. On one side, interest rates on federal borrowing are currently very low, so spending cuts now will do little to reduce future interest costs. On the other side, making the economy weaker now will also hurt its long-run prospects, which will in turn reduce future revenue. So those demanding spending cuts now are like medieval doctors who treated the sick by bleeding them, and thereby made them even sicker.
And then there are the reported terms of the deal, which amount to an abject surrender on the part of the president. First, there will be big spending cuts, with no increase in revenue. Then a panel will make recommendations for further deficit reduction — and if these recommendations aren’t accepted, there will be more spending cuts.
Republicans will supposedly have an incentive to make concessions the next time around, because defense spending will be among the areas cut. But the G.O.P. has just demonstrated its willingness to risk financial collapse unless it gets everything its most extreme members want. Why expect it to be more reasonable in the next round?
In fact, Republicans will surely be emboldened by the way Mr. Obama keeps folding in the face of their threats. He surrendered last December, extending all the Bush tax cuts; he surrendered in the spring when they threatened to shut down the government; and he has now surrendered on a grand scale to raw extortion over the debt ceiling. Maybe it’s just me, but I see a pattern here.
Did the president have any alternative this time around? Yes.
First of all, he could and should have demanded an increase in the debt ceiling back in December. When asked why he didn’t, he replied that he was sure that Republicans would act responsibly. Great call.
And even now, the Obama administration could have resorted to legal maneuvering to sidestep the debt ceiling, using any of several options. In ordinary circumstances, this might have been an extreme step. But faced with the reality of what is happening, namely raw extortion on the part of a party that, after all, only controls one house of Congress, it would have been totally justifiable.
At the very least, Mr. Obama could have used the possibility of a legal end run to strengthen his bargaining position. Instead, however, he ruled all such options out from the beginning.
But wouldn’t taking a tough stance have worried markets? Probably not. In fact, if I were an investor I would be reassured, not dismayed, by a demonstration that the president is willing and able to stand up to blackmail on the part of right-wing extremists. Instead, he has chosen to demonstrate the opposite.
Make no mistake about it, what we’re witnessing here is a catastrophe on multiple levels.
It is, of course, a political catastrophe for Democrats, who just a few weeks ago seemed to have Republicans on the run over their plan to dismantle Medicare; now Mr. Obama has thrown all that away. And the damage isn’t over: there will be more choke points where Republicans can threaten to create a crisis unless the president surrenders, and they can now act with the confident expectation that he will.
In the long run, however, Democrats won’t be the only losers. What Republicans have just gotten away with calls our whole system of government into question. After all, how can American democracy work if whichever party is most prepared to be ruthless, to threaten the nation’s economic security, gets to dictate policy? And the answer is, maybe it can’t.
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http://www.readersupportednews.org/opinion2/277-75/6820-focus--elizabeth-warren-a-farewell-note
A Farewell Note
By Elizabeth Warren,
Reader Supported News: 30 July, 2011
Elizabeth Warren, passed over by the White House in favor of a less controversial candidate to run the Consumer Financial Protection Bureau, is returning to life in
But, after hostile and dismissive questioning from Congress, former Ohio Attorney General Richard Cordray was nominated in her place.
Elizabeth Warren exits respected by some 500 of her staff in the agency, with a farewell note. -- CW/RSN
From: Warren, Elizabeth
Sent: Friday, July 29, 2011 1:18 PM
Subject: A new chapter
eam,
Four years ago, I submitted an article to Democracy Journal that argued for a new government agency called the Financial Product Safety Commission. I threw myself into that piece because I felt strongly that a new consumer agency would make the credit markets work better for American families and strengthen the economic security of the middle class.
In 2007 and 2008, I wrote about the new consumer agency in a number of places, and I talked about the idea with anyone who would listen.
And then in 2009, something amazing happened. In June of that year, the President invited a few hundred people to the White House as he unveiled his initial outline for financial reform. It was the first time I had ever been invited to something like this. Just before the President stepped out, aides passed around a summary of the proposed reforms. I grabbed a copy and started tearing through it. As I skimmed over derivatives and capital reserve requirements, I turned a page and saw it - a proposal for a consumer agency. Until that moment, I wasn't certain whether the new agency would be part of the reform package or not.
Under the leadership of Secretary Geithner, Michael Barr, Eric Stein, our own Peggy Twohig, and so many of our other colleagues, the Treasury Department began to refine and improve the initial idea, preparing a proposal to submit to Congress. With strong support from the President, early leadership from Barney Frank and Chris Dodd, and grassroots efforts launched by many consumer groups, the agency began to gather momentum. Despite repeated declarations from the financial services industry and some in Congress that the agency was "dead on arrival" or "going nowhere," the proposal moved through two nail-biting committee votes, four nail-biting floor votes, and one nail-biting conference committee. It was a hard fight, but the result was a strong and independent new Consumer Financial Protection Bureau with the tools needed to make a real difference for American families.
And then something even more amazing started to happen. Good people started turning the idea into a reality. With Wally Adeyemo as Chief of Staff to keep it all organized, we were underway. Smart people with a wide variety of backgrounds - banking, consumer advocacy, government, business, teaching - focused their energy and enthusiasm and creativity on building something new - something that would work for American consumers.
All along the way, the pieces came into place. We set critical priorities for the new agency, including streamlining mortgage disclosure and making credit cards easier to understand. We focused our efforts on the challenges facing military families. We organized the most aggressive and effective outreach effort anywhere in government to make sure that our goals were clear and we got as much input as possible from those who will be most affected by the agency's work. We designed a high-speed, effective HR system, and we figured out how to get in place necessary procurements to support our work. We developed legal concepts to guide our work and procedures to make sure we always honored the law. We created an innovative supervision program. We generated rules of the road to guide our enforcement and fair lending programs. We designed the systems necessary to meet our statutory deadlines and to complete ongoing rule-writing passed from other agencies. We organized an approach for connecting with consumers all across the country through our website, consumer response system, and more. And we did it all in full view, working with Congress and the media every step along the way to make sure the American people are engaged in our work and able to hold us accountable to our mission.
That is only a small summary of what we have accomplished together. We did it - and we did it well. And we have some independent verification of that: Two weeks ago, our inspectors general - a tough and independent pair of judges - wrote a glowing report about our stand-up period.
Whether you have been here for long months or only a few days, I want to thank you for choosing to be part of this agency. I know that every one of you had other options. I also know that we chose you because we believe you have something special to add. I am grateful that you came here to make a difference.
Today is my last day at the Bureau. I leave this agency, but not this fight. The issues we deal with - a middle class that has been squeezed and business models built on tricks and traps - are deeply personal to me, and they always will be.
I will cheer as you open a new chapter in our ongoing push for a strong and independent CFPB. You can realize the vision of a 21st century government that holds law-breakers accountable and that enforces basic rules that make markets work honestly. An honest market will give companies that provide fair value to their customers a chance to flourish, free from competition with cheaters. And an honest market will give American families better information, better prices, and better products - and a chance to achieve real economic security. Now it's up to you - and I couldn't be more hopeful about what lies ahead.
ew
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