Sunday, July 31, 2011

GOP, Obama Reach $2 Trillion Debt Deal to Pre-Empt Obama's Planned Default

by JASmius

Boehner & McConnell didn't give him the crisis opening he wanted, and it really showed tonight:

Ending a perilous stalemate, President Barack Obama and congressional leaders announced a historic agreement Sunday night on emergency legislation to avert the nation's first-ever financial default.

The dramatic resolution lifted a cloud that had threatened the still-fragile economic recovery at home — and it instantly powered a rise in financial markets overseas.

The agreement would slice at least $2.2 trillion from federal spending over a decade, a steep price for many Democrats, too little for many Republicans. The Treasury's authority to borrow would be extended beyond the 2012 elections, a key objective for Obama, though the president had to give up his insistence on raising taxes on wealthy Americans to reduce deficits.

The deal, with scant time remaining before Tuesday's debt-limit deadline for paying government bills, "will allow us to avoid default and end the crisis that Washington imposed on the rest of America," the president said in an announcement at the White House.

Default "would have had a devastating effect on our economy," he said.

If I may translate: "My poll numbers are cratering as it is, which means I couldn't have ordered a default and escaped the blame for it like I did the 2008 financial panic that put me into power without the wingnuts caving, and that would have had a devastating effect on my re-election chances, so I'm ending the phony crisis that I wanted to impose on America."

Of course, the actual debt crisis, which is the size of the debt itself, is still imminent, and because the GOP didn't succumb to B.O.'s panicmongering, he won't be able to escape responsibility for it. That's the strategic political takeaway from Episode II of Debt Wars: By injecting steel into Republican spines, the Tea Party has forced a change in the direction of the fiscal debate and now has its first measurable results. Sure, the cuts are woefully inadequate. But in order to turn the tide, you have to stop it first. To, um, borrow a World War II metaphor, you can't get to Berlin without an El Alamein and Stalingrad first.

But leave it to Mary Tyler Less to ride to Red Barry's rescue:

"Someone has to say no. I will," said Representative Michele Bachmann, R-MN6, a contender for the 2012 Republican presidential nomination.

Mark my words, and mark them well: If House Tea Partiers follow this woman's advice and shoot down this deal, thereby pulling a comprehensive PR disaster from the jaws of a modest downpayment on eventual victory, they will be handing the Li'l President and his currently divided party both a unifying event and a propaganda bludgeon with which to turn 2012 into a reprise of 2008.

Take my advice, Michelle: Pocket your meager winnings and get ready for the next round. The Debt Wars have a looooong way to go.

[cross-posted at Hard Starboard]

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