So, who “won” the debt-ceiling standoff? President Barack Obama – for two reasons.
First, the tea party-influenced GOP stopped his job-killing bucket list: higher taxes, more “stimulus,” union card check, and cap and trade, among the items. Whatever the economy does going forward, it will be better than had Obama and the Dems not been whacked. The policies of the last two-and-a-half years – Obamacare, “stimulus,” bailouts, regulation, “green technology investments,” “quantitative easing” (or as normal people would say, printing money), taxing and threatening to raise taxes further – have failed. The debt-ceiling debate – plus the new Republican majority in the House and the Democrats’ loss of their Senate supermajority – changes the game for the rest of his presidency.
Even as the president’s policies harm the economy, there is an absolute boom in manufacturing excuses for the dismal results. One member of the administration’s economic team blamed the debt-ceiling debate: “(The problem) is the cloud of uncertainty that comes from the American public thinking that we are on the verge of default. And that has hurt confidence and hurt our economy over the last few months. No question.” Well, yeah, except the weak economic numbers long preceded the debt-ceiling debate.
The hysterical left says that only the tea party won. The “cuts” were not offset by “new revenue”! “Millionaires and billionaires” kept their current tax rates! The “corporate loopholes” for “oil companies” and “corporate jet owners” remain! The tea party-led GOP acted “like terrorists” who “held America hostage”! This “small band” of “extremists” and “hard-liners” managed to “impose their will on the rest of America” and fed us, according to one particularly unhappy Democratic congressman, a “Satan sandwich”!
Such moaning and whining over a potential slowdown – not even a reversal – of government spending! Under the deal, the real mechanism for controlling spending – a balanced budget amendment – is only promised a future vote. The spending continues. The debt grows bigger. Whether under the John Boehner, Harry Reid or cut/cap/balance plans – or the imaginary, unwritten “Obama plan” – spending continues to grow. Under the recently passed “cuts,” the national debt, currently at $14 trillion, could still double over the next 10 years – absent major surgery.
Second, Obama won this way. The drama put the bad gross domestic product numbers on the back page. It gave the major media the excuse to minimize the just-released, and hard to explain away, GDP numbers. The numbers were absolutely, positively, cover-your-eyes atrocious. Last quarter GDP grew at a feeble 1.3 percent. Worse, the Commerce Department revised the previous quarter’s GDP growth downward from 1.9 percent to a where’s-the-pulse 0.4 percent. Stunning!
For perspective, the economy needs GDP growth of around 5 percent to dent the 9.2 percent unemployment rate. A 2.5 percent growth just treads water, absorbing those entering the job market from high school and college offset by those leaving the market.
A 0.4 percent on the scorecard this far into the “recovery” – when by the same point into the Reagan recovery the economy was averaging nearly 7 percent GDP growth? Yikes! And for those among the estimated 20 percent unemployed or underemployed, “Yikes!!!!”
This sluggishness defies the historical pattern of recession-recovery. But the Obama tax/regulate/Obamacare/”stimulus”/”investment” reckless, irresponsible spending spree has no post-Great Depression parallel. Obama and the then-Democratically controlled Congress completely repudiated President Ronald Reagan’s approach to a weak early ’80s economy that saw even higher unemployment than this so-called Great Recession.
Reagan cut taxes. Obama increased them. Reagan slowed down the rate of domestic spending. Obama put it on steroids. Reagan continued to deregulate the economy. Obama imposed billions of dollars’ worth of new regulations on the back of the private sector.
Obama’s own deficit commission, most of whose recommendations he promptly ignored, described the growth of entitlements as unsustainable. Former President Bill Clinton, no fool, planned a massive overhaul of Social Security that included private investment accounts – until derailed by Monica Lewinsky and impeachment.
The federal government must stop spending and dramatically reform entitlements. Generations of promises made on layaway find us at the point where debt now equals GDP and where the federal government borrows 40 cents for every dollar of ours it spends. Government at all three levels – state, local and federal – now takes nearly half of Americans’ income, even more considering the price imposed on businesses and schools by unfunded state and federal mandates. Unsustainable!
Obama has been stopped from being Obama. The debt-ceiling debate and outcome dragged him, kicking and whining, from inflicting even more damage to the economy and, by extension, further damage to his presidency.
Someday, when he leaves office – quite possibly sooner rather than later – and reflects and writes his memoirs, he’ll see it. One can hope … and change.