A Budget Deal but Exhale Slowly

01 August 2011 |permalink | email article

YOU have to wonder whether if President Obama had not been asleep at the switch and quietly raised the nation’s borrowing limit months ago, as previous presidents have done for 50 years, there would have been a peep. And the radical Tea Party, now in control of the Grand Old Party, would never have gained traction to make spending cuts, not jobs, the major political issue in the country.

Democratic and Republican leaders meet with their caucuses today, and expect to present a bill to the president for his signature before the midnight deadline tomorrow. While the Senate will pass a bill, serious questions remain about whether, even with heavy Democratic help, embattled House Leader John Boehner can deliver a bill. Angry wing nuts and progressive liberals are each dismayed by the budget deal but for very different reasons. Democrats got nothing except escaping default; Obama emerged as a greatly diminished leader while Vice President Joe Biden’s silence was stunning. 

“It’s the economy, stupid.” Bill Clinton’s Democratic strategist James Carville made the phrase famous in the 1992 presidential campaign. Obama’s 2012 reelection campaign slogan must be “It’s about jobs, stupid.” But the extreme right will push an old Gov. Reagan slogan in California: “cut, squeeze and trim.”   

Credit rating

The dominate conversation on Wall Street today will center on the near certainty that the U.S. will avoid default but whether the nation’s pristine AAA credit rating will remain intact. But serious damage has already been done even if some economists suggest that lowering the credit rating may have little effect. Standard & Poor’s warned it might downgrade the U.S. in the next three months, but Moody’s and Fitch indicated greater patience, suggesting paying down debts did not have to start immediately. But it raises, as the New York Times reports, the perception abroad that the global authority of the Age of Obama may give way to the Age of Austerity.

What they said

Democratic lawmakers worry that the Tea Party freshmen have already “neutered “the president, one told NYT columnist Maureen Dowd. A Democratic senator complained: “The president veers between talking like a peevish professor and a scolding parent.” 

“I cannot support legislation like the Reid proposal which balances the budget on the backs of struggling Americans while not requiring one penny of sacrifice from the wealthiest people in our country. That is not only grotesquely immoral, it is bad economic policy.” –Sen. Bernie Sanders, I.Vt.

“We all might not be able to support it – or none of us may be able to support it.” – Democratic Minority Leader Nancy Pelosi (D-Calif.)

“We were all hopeful in Wall Street and in Main Street that the president would come out and say a few things which had compromise. He came out and panicked the heck out of us…It took us all aback because we felt that he’d be a compromise leader.” – CNBC’s Jim Cramer on “Meet the Press.” 

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