Sunday, July 31, 2011

Debt ceiling deal reached, catastrophe "averted"

Crossposted at MyDD.

Unless Boehner demands more (he is) of the everything he's already getting, it looks like the debt ceiling deal is in the bag. Voting expected in a few hours.

Brad DeLong and Yglesias forgo the not surprising -- if depressing -- details of the deal to ponder the biggest loser here: governance.
... whenever the desires of the president conflict with the desires of the speaker of the House, the president has little leverage. Any speaker who does not fear disaster can roll any president. In this future, any bill that a speaker insists is must-pass gets attached to a debt-ceiling increase, and--unless there are people in the Senate equally willing to risk disaster, which is unlikely because senators are status-quo players too--so becomes law.
It's like a parliamentary system, with the debt-ceiling votes filling the role of votes of confidence.
Ezra Klein says don't worry, Democrats.  You're the self-appointed losers again, but you could accidentally win as we're baking the welcome cakes for President Romney.
On Dec. 31, 2012, three weeks before the end of President Barack Obama’s current term in office, the Bush tax cuts expire. Income tax rates will return to their Clinton-era levels. That amounts to a $3.6 trillion tax increase over 10 years, three or four times the $800 billion to $1.2 trillion in revenue increases that Obama and Speaker John Boehner were kicking around. And all Democrats need to do to secure that deal is...nothing.
This scenario is the inverse of the current debt-ceiling debate, in which inaction will lead to an outcome -- a government default -- that Democrats can’t stomach and Republicans think they can. There is only one thing that could stand in the way of Democrats passing significant new revenues on the last day of 2012: the Obama administration.
Until then, brace yourself for increased state contraction thanks to all this Teanomic "compromise," and -- of course -- triggers:
Revenues, in other words, won't be forbidden by the deal, but will be an uphill climb. Some Democrats think they have added leverage because if Republicans pull such a trigger, it will provide them with a helpful message going into the next election: Republicans were so unwilling to end egregious tax loopholes and breaks for millionaires, that they triggered devastating cuts to domestic and defense programs. Levin doesn't really buy it.
Levin's a smart guy.

We have had a non-declining 9% plus unemployment very low interest rate economy for two years now. And the employment-to-population ratio has not moved. Something about the future must be different from the recent past in order to get it to move upward. Starting in 1994 it was the dot-com boom that pulled us out of that jobless recovery. Starting in 2004 it was the housing boom that pulled us out of that jobless recovery. What is going to pull us out of this jobless recovery? I don't see it yet.
In my view the chance that the unemployment rate will be 9% or higher at the end of 2012 has just crossed 50%, heading upward.
Yay compromise!

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