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Obama’s Artificial Debt Crisis
Barack Obama planned all along to make Social Security and Medicare cuts. In early 2009 he had a dinner with conservative commentators. David Brooks was there and a few days later said:
[H]e's clearly demonstrated this week that he's committed to tackling the big entitlement projects – Medicare, Social Security – that are the real fiscal disaster waiting to happen. So, it's not only short-term spending, but there's long-term fiscal balance, that's very much in his mind, which was not in his mind, or at least not talked about as much, during the campaign.
To be able to make those cuts Obama needed a crisis.
The debt ceiling could have been lifted earlier when the Democrats still held the House. Or the lifting could have been attached to a must-agree-on bill like the budget. Or the debt ceiling, which is anyway superficial as congress dictates the spending and the revenues in other laws, could just be ignored. But no. A fight over the debt ceiling is the Obama planned crisis that would allow for entitlement cuts.
The expectation was that the Republican would agree to the deal Obama would offer. He gave them some 50% of their points even before starting negotiations. He added another 40% since they started. The republican leadership in the House as well as Obama thought they had a deal. Both had miscalculated.
The tea party side of the Republican caucus is bigger then Boehner and Obama had thought and it wants 150%. Only cuts but not a penny revenue increases no matter of how much they are needed. Most Democrats are unlikely to be suicidal enough to agree to that.
While there still might be a last minute deal the small chances for a selective default, a temporary stop of interest payments, are increasing. That would trigger a downgrading of U.S. debt.
It would be very interesting to see how the financial markets would react to such an event. Many financial instruments and papers depend on the validity and the high rating of U.S. debt. If that is in doubt and things unravel I'd expect considerable chaos and some of the banksters to make huge profits from it. The White House is unlikely to be prepared for a default event. Some hectic unplanned moves from it that would likely worsen a default or downgrade situation.
Still a selective default, which in itself can and would be healed over pretty soon anyway, is not a big catastrophe. There is even a positive side to it. It would decrease the U.S. standing in the world and thereby lower its capabilities to wage more wars.
What the U.S. really needs is jobs and the programs to create them. Instead it gets austerity. Additionally it may now get a new chaotic debt crisis that would expand and extend the recession.
Whatever. The point is that there was no need, not one, to get into this situation. We all know who we have to thank for it.
I’ve been waiting for the Oligarchs to step in and lay down the program the R’s and D’s must implement.
I’ve been wondering how heavily the Wall Street Gang Banksters are in to betting against US Treasuries…. Nah, they couldn’t be in that deeply, to cover other losses, could they?
I figure right now the Oligarchs are not sure which party they want in the WH in 2013. They must be testing the winds, taking internal polls to see what might happen in the Congress before deciding whether to have Obama remain or install a Repub such as Romney.
I’ve been trying to read between the lines in how the MCMers (members of the Mainstream Coporate Media) are covering Obama. There has been an uptick of cricticms, restrained but there. However, it seems to be of such a nature that theycan turn on a dime and continue backing Obama. That’s why I figure the Oligarchs, Olis for short, have not come to any decision as to who will carry out their plans best starting in 2013. Obama has worked so well to neuter the Dems from acting on purported party principles that perhaps they want to keep Obama in place.
Early days, but decision time is getting close.
2008 was easier: It was clear any Dem would win, so the Money Men just had to get someone in position to knock off Hillary, who, I figure, they weren’t sure they could control. Women had turned out to not be the best team players in regulatory positions, so best to defeat her in the primary and put in someone they could manage better. Hence, Obama. Exactly when they began to fill his campaign chest I don’t know, but it was about now in ’07.
Michael Hudson has done some great coverage of what’s happening to US governance and its economy. See also his latest, at Naked Capitalism.
…. When governments are run by the rich, it is called oligarchy. Plato’s dialogues made clear that rather than viewing societies as democracies or oligarchies, it was best to view them in motion. Democracies tended to polarize economically (mainly between creditors and debtors) into oligarchies. These in turn tended to make themselves into hereditary aristocracies. In time, leading families would fight among themselves, and one group (such as Kleisthenes in Athens in 507 BC) would “take the people into his party” and create a democracy. And so the eternal political triangle would go on.
This is what is happening today. Instead of enjoying what the Progressive Era anticipated – an evolution into “socialism,” with government providing basic infrastructure and other needs on a subsidized basis – we are seeing a lapse back into neo-feudalism. The difference, of course, is that this time around society is not controlled by military grabbers of the land. Finance today achieves what military force did in times past. Instead of being tied to the land as under feudalism, families today may live wherever they want – as long as they take on a lifetime of debt to pay the mortgage on whatever home they buy.
And instead of society paying land rent and tribute to conquerors, we pay the bankers. Just as access to the land was a precondition for families to feed themselves under feudalism, one needs access to credit, to water, medical care, pensions or Social Security and other basic needs today – and must pay interest, fees and monopoly rent to the neo-feudal oligarchy that is now making its deft move from the United States to Ireland and Greece.
The whole piece is well worth reading.
Right now, it’s almost impossible to keep up with what is really going on, but David Dayen at Firedoglake notes that the Reid and Boehner plans are nearly identical. Both have the Super Congress of 12 Caesars approach to future cuts. Unnamed cuts, but the 12 Caesars, depending on who they are (any doubts they’ll be conservatives? Austerians?), can choose anything they want to cut for “savings.”
One article had the 12 Caesars acting for a vote before the end of 2011, another for early in 2012. But, Obama needs to rush through his attacks on the New Deal and Great Society programs before the “rubes” cotton on to just what he’s really doing to them.
Posted by: jawbone | Jul 27 2011 17:10 utc | 13
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