Debt Ceiling Thoughts

As I type this President Obama and House Republicans are playing yet another round of the will they or won’t they make a deal talks in hopes of getting an agreement on raising the debt ceiling by the August 2nd deadline. In the past this has been one of those occasions where it passed without comment and most Americans had no clue whatsoever what a debt ceiling was. However, with the threat of both the tea party wing of the Republicans in the House to let the country default as well as credit rating firms like Fitch and Moody’s threatening to lower the U.S.A.’s AAA rating, the debate has become more known than anyone would want to admit.

Personally, I think it will have to be raised when all is said and done. Wall Street and the financial industry, as vicious as they are towards anyone not in the top one percent, realize that if the US defaults they may take a big hit and investors will lose money. In addition, these people have their tentacles in both sides of our one party state that pretends to be a two party state (not to say there aren’t differences between the GOP and the Democrats, especially these days – but that they often have the same backers). The party leaders get this, as well as the possibility that if they let this happen they bulk of the cash flow may head towards the Democrats (this hasn’t been covered at all but let’s get real, anyone who figures out how American politics works can likely se this writing on the wall).

As for Obama’s talks of cuts on the big three (Medicare, Social Security), this is either dangerous politics or delicious irony. The dangerous politics lies in possibly aiming for independent voters by possibly further throwing the base under the bus and starting from compromised positions. The ironic part may be that Obama finally gets that no matter how much he tries to offer the GOP what they want, they still refuse it. This refusal to support something they once advocated the moment Obama picks it up has been probably one of the more humorous (in a sick way) traits of the Republicans since he took office over two and a half years ago.

On the GOP’s end people like Boehner and McConnell are having to handle what happens when decades of appealing to the far right that has currently become their base mixes with the idea of permanent campaigning. While the tea party faction of the Republicans in Congress seem more and more hell bent on making sure nothing gets accomplished than on actually doing their jobs. Part of this is the differences between Democrats and Republicans in attitudes towards their base in that the Dems usually have a barely concealed hatred for their base that they almost blatantly show any time other than when they want money or votes while the GOP has grown to fear a base that has managed to increasingly drive moderate voices from the room. While the media push of the tea party types must’ve seemed like good politics to them up until the 2010 midterm elections, their increasingly bully pulpit is getting in the way.

So what’s up ahead? Some say the “gang of six” proposal is gaining steam and might be a good compromise. However, so far the House Republicans are worshipping a trinity of Reagan (while overlooking his tax increases), Grover Norquist (of Americans for Tax Reform) and the latest pundit of the moment. The idea that no taxes can be raised whatsoever is becoming a problem that could hinder us much more than anyone expects. Even with this proposal offering a three to one ratio in terms of cuts versus revenues isn’t making friends. Add to it the fact it might not be doable before August 2nd and its future seems uncertain.

But what about the latest GOP proposal of “Cut, cap, and balance” you may ask? It passed the House. However, the supermajority required in the Senate these days makes it unlikely to pass even before Obama vetoes it. It’s more of a middle finger to the President than anything else.

So what will happen here is anyone’s guess? I do think the debt ceiling will likely be raised (even if Obama has to go for broke and do some sort of executive order to do it). Since that is the worst case scenario, I have a feeling that somehow the GOP will have it explained to them what will go down if they don’t vote for it, since even the top one percent will feel some heat if the U.S. defaults). I wish I knew if it would be a clean vote (most of the time the damn bill is one sentence, for crying out loud) but at this point it’s hard to say what form it will take (though sacrificing Medicare and Social Security is the political equivalent of Russian Roulette in this country).

As for the reasons for why the GOP has been acting like some kid on a playground who always threatens to hold his breath until he turns blue unless he gets everything he wants, several posts can be written regarding that.