To be honest, I haven't been following the debt limit increase debate in very great detail for several reasons. The first reason is that the whole thing was political theatre, people storming out of meetings, being left at the alter, every man and his dog having his own plan. The second was the political pundits, and even more so people here on Daily Kos were going into hysterics at every leaked detail, crying shame, treachery, that's it, I cannot ever vote again etc etc etc.
All these theatrics are annoying and pointless.
It was up to the politicians to come up with a solution, and that will involve negotiation and compromise. And as an experienced negotiator, I know that sometimes you need to bluff ( about walking out for example), and sometimes you offer what the other guy wants, but attach a condition that he cannot accept (medicare cuts in exchange for tax increases) This is all normal business.
Over the squiggle are my main takeaways.
The first point is why on earth was this discussion taking place?
The US is trying to drag its sorry ass out of a depression that it caused by its own stupidity. When you have a depression you need to increase government spending in order to offset the loss in the private sector. This will result in higher expenditures and lower tax revenues, which means that the deficit will increase. When the economy is booming, you reverse the process and reduce the deficit, which is what happened during the Clinton years.
If you want to increase consumption without increasing the deficit, then the only alternative is to take money from those with a low propensity to consume (i.e.Rich folks) and give it to people with a high propensity to consume (i.e poor and unemployed people)
Reducing spending in a depression is like calling for a back hoe when you are in a hole.
All republicans and their almost non existent teabagger supporters are trying to use home economics instead of Keynesian economics. But to take their arguments further, the Bush presidency saw the US family take a voluntary pay cut, (tax cuts) and then increase their spending using their credit card. Now the US is upto its armpits in debt (but not over its head), and home economics would say get a better paid job, i.e increase your revenues, and cut back on unnecessary expenditure (like wars, or subsidies to oil companies and executive jets etc.) But the republicans idea is cut back on the food, home and utilities.
Why is the US Congress allowing its economic policy be driven by people who have zero knowledge of economics? Would you allow your plane be flown by someone who has never even had a flying lesson?
The second point is the outcome.
After a brief perusal of the press it seems to me that Obama obtained the following.
No immediate cuts, and to be honest and not really any serious cuts in the future. $2.1 trillion over 10 years is peanuts in comparison to the current level of spending TARP alone was $750 billion.
Medicare, Medicaid, Social Security untouched.
No commitment to maintain taxes at the same level, and the possibility for the supercommittee to increase them. If they don't come up with a solution, then Obama can veto any continuation of the Bush Tax cuts, before his present term expires (just), and then any future congress would have to reintroduce them, overcoming a fillibuster if necessary.
So did Obama negotiate with a hostage taker? Sure
But I think he may have paid them off counterfeit currency.
But the big question is how have the American people allowed their Government to descend to the level of an elementary school? Where have all the adults gone?