The national disaster better known as the July deficit standoff was an eye opener to anyone whose natural sense of cynicism hasnít glued them permanently shut by now.
We all know the story: The U.S. government had been in a months-long race to raise its debt ceiling. Seems simple enough, but leave it to Washington to pen a Shakespeare-worthy comedy-of-errors tale. Failure to raise the debt ceiling, we were repeatedly told, would cause us to default on our national loans, which would cripple our economy with rising interest rates and a plummeting dollar. The national credit rating would be shot. Borrowing rates would skyrocket. Mortgages and student loans would become prohibitively expensive. There would be mass defaults, financial pestilence, locusts.
Democrats wanted new revenues. Republicans wanted spending cuts. It doesnít matter what side of the fence you were on: in the end, people with a lot more power and influence than you played Russian Roulette with your money for the chance to dig into the till boxes and politically grandstand for the coming election season. Itís the modern Pyrrhic victory. The biggest losers? Us.
First, thereís the fact that both options stunk. Senate Majority Leader Harry Reidís plan wanted to slash trillions from federal spending but didnít bother to account for how the government could bring in additional revenue. House Speaker John Boehnerís especially shortsighted plan allowed Congress to raise the debt ceiling only after cuts to programs like Social Security, Medicaid and Medicare. It shakes down the most vulnerable Americans while leaving the most privileged unscathed. Moreover, Boehnerís paltry plan didnít even offer enough to solve the deficit. Congress would have to vote on raising the debt ceiling again before the next election.
Second, thereís the fact that neither party seemed willing ó publicly, at least ó to consider proposals put forward by the other. Boehner seemed content to hold our very currency hostage and alienate members of his own constituency to appease a fringe group of American conservatives who are, for lack for a better word, insane. President Obama, on the other hand, was quick to sideline the Reid plan and throw programs American working families need to the sharks as early as preliminary talks. Both, predictably, then blamed the other for failing to negotiate with an objective of compromise in mind. We all need a strong dollar, thriving economy and vibrant private sector, but both parties seized the opportunity for a showboating chance at political sabotage.
The final problem is that both parties lied. Taxing the rich, while helpful, isnít the silver bullet the Obama administration claimed it to be (most economists estimate tax revenues on the rich would lower the federal deficit by about one percent). Conversely, repealing present tax preferences for the wealthiest Americans isnít a ďblank checkĒ when the deal comes with an exchange for massive federal spending cuts. Also, to kill a tired Tea Party line: raising the debt ceiling doesnít have anything to do with future spending. It is simply used to pay the tab for what the government already spent. Big difference.
Then thereís the hubris of it all. Thereís nothing wrong with asking wealthy Americans in 2011 to pay tax rates above their current 1950s rates. Moreover, to call Medicare and Social Security ďentitlementĒ programs is, on its face, insulting. The income disparity in this country has grown exponentially along race and class lines, with black households now earning 20 times less than white households and Hispanics coming in at a not-too-distant 18 percent, according to a new report compiled by the Pew Research Center. Then consider that the same leaders who put us into this mess are the ones who conveniently decide now is the time to cut the fat. If the very idea doesnít get you mad, I donít know what will.