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Provided that the Senate and House follow through on the scenario now on the table, it looks like the game of chicken worked for the Democrats this time. We're off the hook on default and Government shutdown for now, and Washington village pundits are in full-throated cries of celebration.

Congress is off the hook too. They don't have to offer any solutions to real, rather than manufactured, problems.

The President is also off the hook, he won't, for now, need to exercise any of the options, like minting the coin, using consols, or premium bonds, or asset sales to the Fed, or others available to him to render the debt limit legislation impotent. So, he gets to preserve debt limit threats from the Republicans as a negotiating tool they can use to “force” him into entitlements cuts later on.

In fact, as I write Jay Carney is already talking about the President taking “a balanced approach” to future negotiations of fiscal policy so that the burdens of sacrifice will fall on everybody fairly. And, a bit later, there's Nancy Pelosi echoing the Administration line on future negotiations. That, of course is also the Pete Peterson, Bowles-Simpson, catfood line for justifying further victimization of food stamp recipients, seniors, children, and the people who have paid the price for the Crash of 2008 and the neoliberal period in American fiscal policy beginning in 1977.

However, the deal that looks like it will happen isn't a solution, but just kicking the can down the road including built-in pretty good possibilities for future Government shutdown and debt ceiling crises in just three – four months, if Congresspeople have the guts to subject the American people to this nonsense again in an election year. Here's  Annie Rose-Strasser's outline and analysis of the deal at Think Progress:

-- Government funded through January 15 at sequestration levels

-- Debt limit extended until February 7, subject to vote of Congressional disapproval, which Obama can veto

-- A budget conference established to come up with long-term spending plans by December 13

-- Income verification for recipients of subsidies under Obamacare’s newly-established exchanges

-- Backpay for furloughed workers

Also, notably, here are some of the demands that Republicans have made in the last few days, but that are NOT in the bill:

No repeal of the “extraordinary measures” provision that allows the Treasury to do accounting tricks to avoid default

No ‘Vitter Amendment‘ that would have taken away employer contributions from the health plans of Congressional staff

No provisions related to birth control access

No flexibility in how government agencies make budget cuts to their programs, as they are required to under sequestration

No repeal or delay of the medical device tax

No repeal or delay of the reinsurance tax

No repeal, replacement, or delay of any aspects of Obamacare’s exchanges or individual mandate

It might look like this is overall a good deal for Democrats given the number of things that Republicans aren’t getting. It is good: It reopens the government and lifts the debt ceiling without doing any major additional damage to existing programs.

The word “additional” is the key here, since enormous damage has already been done to people and programs due to the various compromises made to avoid shutdown and debt ceiling threats since August 2011. These deals have placed increasing fiscal drags on the American economy and, increasing Government austerity that is preventing full recovery from the Great Recession. The current “deal” already involved a pre-surrender by Democrats to Republican proposed CR spending levels. Annie Rose – Strasser recognizes this.
But it’s important to remember that the baseline for negotiations wasn’t exactly even: Democrats accepted the major budget cuts of sequestration (slated only to get worse on January 15, the same day their budget deal expires), and their only demand was actually the status quo: Keeping the government running and having the country fulfill its financial obligations. They didn’t request to restore the funding sequestration took away, they didn’t demand any new programs or initiatives that Democrats support. And if the previous budget conference is any indication, the one established under this deal has the potential to blow up in Democrats’ faces, leading to more cuts instead of an actual, long-term budget. In that sense, while it is the best, cleanest deal we can get, the Democratic party has been pulled slightly from center to right, not from left to center.

Meanwhile, Republicans threw everything but the kitchen sink into their negotiations. It’s no surprise they’re taking a lot of losses.

Yes, we will have the Government open and the debt ceiling temporarily raised to get us through a few months, and the President is saved from going outside his comfort zone and giving the teahadists an excuse to try to impeach him, but the fundamental problem of the gradual imposition of increasing levels of government austerity creating economic stagnation is not being addressed, and, in addition, the even more serious problem of having laws in place that give a small minority in Congress the possibility of holding both the US and world economies hostage to their ideology is also neither being addressed nor solved.

So this is no victory, and no cause for celebration. The conditions are still there supporting a Great Betrayal, and another slide into recession, along with the possibility of another Global Crash due to financial manipulations in the mortgage international derivative markets.

Meanwhile, what can we look forward to? A brief respite from budget battles and then a rush  through a manipulated membership budget conference designed to produce a Bowles-Simpson austerity “solution” to be completed by December 13, to be voted up or down, and with a good likelihood that this Conference will either fail to come up with a result, or that its results will be rejected by teahadists or fellow travellers who will never accept tax increases, and by progressives who will be unwilling to vote for entitlement cuts in the face of upcoming elections.

Meanwhile, the drag on the economy and the unhappiness of the 99% will continue with no real relief in sight because no in either party has the courage to repudiate the dogma that a sovereign fiat currency nation like the United States can have a long-term debt problem requiring a long-term deficit reduction solution. Truly, everyone in Congress needs to be replaced by people who understand the Modern Money Theory (MMT) approach to economics and who are willing to explain it to their constituents and to advocate for fiscal policies based on it.

(Cross-posted at New Economic Perspectives)

Originally posted to Money and Public Purpose on Wed Oct 16, 2013 at 11:26 AM PDT.

Also republished by Pushing back at the Grand Bargain.

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Comment Preferences

  •  So does this mean (1+ / 0-)
    Recommended by:
    Ian S
    -- Income verification for recipients of subsidies under Obamacare’s newly-established exchanges
    that people who've already completed the process will need to do it again?

    And how long will it take to get that code working? iirc they relaxed that requirement because it was difficult to get it to work.

  •  You know? (0+ / 0-)

    Your heart is in the right place. But it's a little early to be sweating "what will happen in February." We can't predict the future, for one thing. For another, there are presently signs, good ones, that the GOP is in a profoundly, disastrously weaker position than it's ever been, legislatively, in quite a long time.

    It's here they got the range/ and the machinery for change/ and it's here they got the spiritual thirst. --Leonard Cohen

    by karmsy on Wed Oct 16, 2013 at 11:39:20 AM PDT

    •  S/he is looking at the long game (0+ / 0-)

      or, well, the medium game, which started in Dec 2010 with the failure to repeal the Bush tax cuts, or to get clean debt ceiling legislation in exchange for not repealing them.  In many ways, Obama's game plan for cutting Social Security and Medicare and lowering taxes across the board/shrinking government is continuing apace.

      I really hope that Harry Reid is on the right side of this argument, and that he feels strong enough to flip off the President (privately and discreetly, of course).

      I tried to go online to find a similar bear head...but when I searched “Big Bear Head” it gave me a San Diego craigslist ad entitled “Big Bear needs some quick head now” and then I just decided to never go on the internet again.--Jenny Lawson

      by SouthernLiberalinMD on Wed Oct 16, 2013 at 11:45:14 AM PDT

      [ Parent ]

      •  So? (0+ / 0-)

        "Long game" forecasts are even tougher to make accurately in a situation like this than "short game" ones.

        I repeat, all bets are off.  

        It's here they got the range/ and the machinery for change/ and it's here they got the spiritual thirst. --Leonard Cohen

        by karmsy on Wed Oct 16, 2013 at 12:08:49 PM PDT

        [ Parent ]

  •  Shock Doctrine still in play (4+ / 0-)

    Imagine that.  Be very verrrrry afraid next time.  The Wall Street crowd would hang the republicans with rope fashioned from kickback records if they defaulted.  But it's all so very courageous of both sides to come to their senses.  So that the cat food commission's recommendations are implemented.  Yesterday somebody said we would be wasting crow if the grand bargain doesn't happen.  It's been happening each time this happens, drip drip drip.  By 2016 we will be loving in corporate dorms with suicide nets and these same idiots will tout the Obama miracle.  Hell I wonder if they took the red pill.  

    It puts the lotion on its skin

    by Nada Lemming on Wed Oct 16, 2013 at 11:40:44 AM PDT

  •  Reid doesn't like the sequester. Never has. (2+ / 0-)
    Recommended by:
    TheMomCat, allenjo

    The question is, does Obama still have Democratic legislators firmly under his thumb, or not. He apparently has Pelosi.

    I found it encouraging that Reid wants such a short CR. Because he knows that the current spending levels are crap.

    If they offer Social Security cuts after all this, look for all the gains they've made in the polls over the past few days to tank.

    I tried to go online to find a similar bear head...but when I searched “Big Bear Head” it gave me a San Diego craigslist ad entitled “Big Bear needs some quick head now” and then I just decided to never go on the internet again.--Jenny Lawson

    by SouthernLiberalinMD on Wed Oct 16, 2013 at 11:42:45 AM PDT

  •  Kicking the can down the road (4+ / 0-)

    to achieve this:

    Jay Carney is already talking about the President taking “a balanced approach” to future negotiations of fiscal policy so that the burdens of sacrifice will fall on everybody fairly. And, a bit later, there's Nancy Pelosi echoing the Administration line on future negotiations. That, of course is also the Pete Peterson, Bowles-Simpson, catfood line for justifying further victimization of food stamp recipients, seniors, children, and the people who have paid the price for the Crash of 2008 and the neoliberal period in American fiscal policy beginning in 1977.
    The price that the 99% has paid already is too high but the beatings will continue until moral impoves.

    What digby said:

    The day the Democratic Party votes for a bill that cuts, rather than raises, Social Security benefits is the day it will have sold off the last piece of its already tattered political soul. I'm fairly sure the Villagers and the political establishment don't think that matters, but the rest of us should.


    "Information is power. But like all power there are those who want to keep it for themselves" Aaron Swartz, 1986 - 2013
    TheStarsHollowGazette.com

    by TheMomCat on Wed Oct 16, 2013 at 11:44:55 AM PDT

  •  Debt limit as hostage is finished! (3+ / 0-)

    It will be raised again in the next budget agreement, and I wouldn't be surprised if it's forever taken care of with a permanent "McConnell rule" where the debt ceiling is automatically raised unless Congress blocks it BUT unless 2/3rds of congress block it the President could veto the block.  This basically means it will never be blocked, but puts some political heat on the President for having to raise it by veto - ie takes full ownership of it (not a big deal or one that plays politically at all anyways).  

    Regardless the frame has been established that using the debt ceiling for leverage is taking the economy hostage and that tactic was soundly rejected by the voters as reference by the polling.  

    Feb 7th is not a hard date either, since extraordinary measures were not blocked - it means Lew can borrow money from savings programs such as pensions and the like to pay the countries bills.  Lew can do this and extend the window 3-4 more months, meaning February becomes June/July 2014 which would be right in the middle of the 2014 general elections, a mere 3-4 months out from election day.  

    Glenn Greenwald promotes far-right fringe extremist group The Oath Keepers - https://twitter.com/ggreenwald/statuses/377787818619064320

    by Jacoby Jonze on Wed Oct 16, 2013 at 11:49:09 AM PDT

  •  It's still Empire or austerity. Empire is still (2+ / 0-)
    Recommended by:
    allenjo, lostinamerica

    winning.  And you're right, they can play this again and again now so Obama and the dems "holding their ground" did nothing but encourage the process.  The problem is the debt will continue to rise no matter what they do so this is really just the beginning stages of whatever they're after.

    "It is easier to pass through the eye of a needle then it is to be an honest politician."

    by BigAlinWashSt on Wed Oct 16, 2013 at 11:54:20 AM PDT

    •  exactly right... (1+ / 0-)
      Recommended by:
      BigAlinWashSt

      this move only affords our congresspeoples a nice holiday season from Halloween til New Years
      after which time it will be more of the same fucking bullshit again......wtf

      In a time of universal deceit - telling the truth is a revolutionary act.'' George Orwell

      by lostinamerica on Wed Oct 16, 2013 at 01:58:00 PM PDT

      [ Parent ]

    •  Oddly enough, on this occasion I agree (1+ / 0-)
      Recommended by:
      BigAlinWashSt

      with Jacoby Jonze rather than you. I think the debt limit thing is toast. The American people are extremely pissed about it. Doing it again next year would result in the highest levels of voter turnout I've seen in a midterm in my life. People are sick of it--the combination of people being locked out of their jobs with the threat of tanking the economy and going through another 2008, or worse, has pushed people to the edge.

      I tried to go online to find a similar bear head...but when I searched “Big Bear Head” it gave me a San Diego craigslist ad entitled “Big Bear needs some quick head now” and then I just decided to never go on the internet again.--Jenny Lawson

      by SouthernLiberalinMD on Wed Oct 16, 2013 at 03:26:25 PM PDT

      [ Parent ]

  •  I'm tired of sequester whining (0+ / 0-)

    I'm tired of those of us who whine about "losing" the sequester each and every time the status quo is continued.

    Face it, we lost on the sequester cuts way back in 2011 when they were first announced.  Supposedly the defense cuts were incentive to get the Republicans to avoid the sequester, but if you believed that you were a naive fool.

    I knew the moment the sequester deal was announced that there would be no budget deal to avoid the sequester and the sequester would kick in.  Defense cuts?  Maybe a few old school neo-con chickenhawks would care about that, but the Tea Party wing wouldn't care.  The 2010 freshemen wouldn't care.

    Face it, and move on.  We lost the fight on the sequester years ago.  Stop beating up on the President and congressional Democrats for "losing" this one each time they can't magically force the Republican majority in the House to undo it.

    Remember the number one rule of politics--pick fights you can WIN.  We're not going to be able to win a fight on the sequester until 2014.  In the meantime, deal with it and look elsewhere for things we can meaningfully achieve!

    •  What? (0+ / 0-)

      It sure seems like Harry Reid disagrees with you. He seems to think he can do something about these sequester levels of funding over the next few months.

      Anyway, people have every reason to be angry about the sequester, given that we never should have been in a position to have to make that deal in the first place, and the only reason we were is because we have a right-wing White House that pushed Congressional Democrats into acting against their own interests in 2010.

      Pick fights we can win? That was a fairly easy fight--we had the majorities, and we had the leverage (over the Bush tax cuts). We didn't repeal the Bush tax cuts, and we did put the debt ceiling into Boehner's hands, trusting that of course he wouldn't use it as a weapon, because that would be wrong! the Speaker of the House would never do that!

      That failure has plagued us ever since. It led to the budget and debt ceiling showdown of 2011, which led to the Supercommittee, which led to sequestration and the fiscal cliff and led us onward to this shutdown. It comes out of bad economic policy ideas and worse political ideas about what Republicans are likely to do if they get the chance.

      I'm glad the Democrats appear to be learning at least something from this process, in that they didn't fall all over themselves giving away the store this time. Good for them--and I mean it. But people have every reason to be angry, when they're continuing to get damaged by decisions so crappy nobody should have ever made them in the first place (and why were they made, anyway? Cui bono?)

      I tried to go online to find a similar bear head...but when I searched “Big Bear Head” it gave me a San Diego craigslist ad entitled “Big Bear needs some quick head now” and then I just decided to never go on the internet again.--Jenny Lawson

      by SouthernLiberalinMD on Wed Oct 16, 2013 at 03:18:15 PM PDT

      [ Parent ]

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