Misdeal: Setting up the Next Showdown for January

Robert Borosage

With the ugly government shutdown headed into its third week, Senate leaders are said to be close to a deal that could avert the unimaginable – the default on U.S. debt that could easily drive the world economy into depression.

Even if senators reach a deal today, it is yet unclear whether House Speaker John Boehner will bring it to a vote in the House. Republicans may be plummeting in the polls, but the jihad faction of the Republican House remains unrepentant. Rep. Raul R. Labrador (R-Idaho) denounced Senate Republicans for “pussyfooting around” in the budget battle, scorning them for “always wanting to have a fight the next time.” With Tea Party members threatening a primary challenge for anyone who votes for the potential deal, Boehner will have to bring forth a measure likely to be opposed by a majority of his caucus and relying on Democratic votes to pass.

The House zealots are certifiable, but they set up the age-old good cop/bad cop routine for Senate Republicans. Republicans are plummeting in the polls. Anyone with a clue – which may barely reach a majority in the Republican caucus – knows that forcing a default on U.S. debts is utterly self-destructive folly. But Republican Senate leader Mitch McConnell uses the Tea Party’s fulminations to seek more concessions from Democrats.

So before hailing the rescue, it is worth considering what a sensible outcome to this contrived crisis would be.

First, a minimum requirement would be to end the hostage-taking that uses the threat of default to extort concessions. At the least, that would require lifting the debt ceiling to a level that would cover debts that Republicans have already voted for through the end of next year – and after the midterm elections, when voters can make their views known.

Second, a sensible agreement would reopen government for the year, funded at a level somewhere between that proposed by the Republican House and the Democratic Senate. The figure would be far below what is needed to get the economy going, but would at least keep the doors open.

Third, a sensible agreement would repeal the mindless across-the-board sequester cuts, the next round of which is scheduled to kick in mid-January. These cuts were designed to be abhorrent and are. They make no distinction between the programs we need to expand – like investments in education – and those that are pure pork or waste – like subsidies to Big Oil, the most profitable companies in the history of the world. They damage the economy and cost jobs. They do nothing to address America’s real long-term deficit concern, the rising costs of health care. Instead they add to what ails us –  declining deficits that are coming down too fast, faster than any time since the demobilization at the end of World War II – and are crippling the recovery.

Fourth, a sensible agreement would set up bipartisan negotiations to focus on the real challenges we face. These would include how to pay for the investments we need – in everything from rebuilding our decrepit infrastructure to providing every child with a world-class public education. That would necessarily include cutting waste like Big Oil subsidies and raising revenue, beginning by shutting down the loopholes that reward companies for shipping jobs or storing profits abroad. And then they should focus on further measures to get rising health care costs under control – beginning with ending the perversity of Americans paying higher prices for prescription drugs than any country in the world.

As reported, the proposed deal flunks all of these tests.

It would enable government to pay its bills only until February 7. That sets the date for America to be held hostage once more to the threat of blowing up the economy. That will embolden the zealots, keep markets nervous, and erode faith in the dollar. Families will pay the price in higher interest rates, slower growth and fewer jobs. And by January we will lurch back into another contrived crisis.

The deal would reopen government and fund it at current levels only until mid-January. Proponents say that would allow for negotiations for a real budget before the next sequester cuts kick in. But it means that Republicans will use the threat of the sequester to exact cuts in Medicare and Social Security benefits. It sets up the most vulnerable to pay the bill for the costs of Wall Street’s wilding.

And by setting a three-month deadline for the next invented crisis, the deal insures that negotiations will focus on short-term deficits, which are not a problem, and slight discussion of the fundamental reforms we need to make this economy work for working people. Republicans will rule tax hikes off the table. They’ll offer to trade the loathsome sequester cuts for structural changes that cut Medicare and Medicaid. And they’ll do that with the threat of another government shutdown and another default deadline in their pocket.

Democratic leaders believe that Republicans have been so chastened by their plummeting approval ratings that they won’t dare shut down the government and threaten default again. A sobered corporate lobby will likely bankroll those who vote to keep the government from defaulting. But Tea Party zealots will accuse them of betrayal. The Koch brothers and their deep-pocket allies will continue to fund Tea Party challengers. With so many districts gerrymandered, Republican incumbents are more worried about a primary challenge than the general election. Those who assume that they won’t continue to take America hostage could well be disappointed.

So folly continues. America is held hostage. A last-minute, peril-of-Pauline escape is in sight. Much damage has already been done, but the unimaginable may be avoided. But only for three months, when the next hostage crisis is scheduled to begin. No wonder Americans despair.

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