Republicans finally caved. In the third week of the government shutdown, on the eve of an unimaginable default on U.S. debts, the craven Republican leadership, for months cowed by Tea Party zealots, finally ended its destructive folly. Majorities in both the Senate and House – which were in place months ago – were finally allowed to vote on a measure to reopen the government and avoid default, at least for a couple of months. Five takeaways from this utterly contrived crisis.
1. The President held strong and won big.
This was a victory for President Obama and the country. He vowed that he would not negotiate over the good faith and credit of the United States – and he did not.
He vowed that he would not let a zealous minority of the Congress hold the country hostage to gain political ends – defunding or delaying Obamacare – and he did not.
This wasn’t easy. The pressure on him built as the damage caused by the Republican shutdown grew. Pundits urged him to negotiate; he should be “the adult in the room.” But the president learned from the mistake he made in 2010 when he allowed Republicans to use the threat of default to exact nearly $2 trillion in spending cuts through the Budget Control Act and the foul sequester process. He knew that giving in again would only encourage them to hold the country hostage over and over. He drew the line and he held it – with the regrettable exception of accepting a short-term extension.
2. Republican extremism was exposed.
Republicans plummeted to new lows in public approval as Americans got a clear look at how extreme that party has become. Tea Party zealots drive the party and are prepared to damage the country to get their way. Republican leaders and endangered “moderates” cower before the weight of the well-financed right-wing lobby groups and the threat of Tea Party primary opponents. The party of Ted Cruz wants only to dismantle, not to build.
3. The beatings haven’t stopped. They have only been suspended for two months.
The Republican wilding inflicted severe damage on the country. Federal employees were abused; the essential forced to work without pay. Many of the best will look to leave. Billions of dollars were subtracted from the economy. Thousands of scientists lost grants; many will look abroad for more secure work. Poor children got booted out of Head Start and were deprived of needed nutrition.
Confidence plummeted. Investors across the world began to question the safety of American notes and bonds. American families will pay the price in slower growth, fewer jobs, higher interest rates and greater insecurity. All this for nothing. House Speaker John Boehner says “We fought the good fight.” One wonders what he has been drinking.
Sadly, the deal sets the date for the next destructive contrived crisis. It allows the U.S. to cover its debts only until February 7. The government is funded only through mid-January. Bipartisan budget negotiations are instructed to find a long-term agreement by mid-December.
This saves the country from the unimaginable, but continues the self-inflicted damage. With Tea Party legislators vowing “to do this again,” financial markets will remain unsettled, Americans will remain pessimistic, investors will remain cautious.
4. The Tea Party is routed and unrepentant.
Tea Party Republicans lost big. But they continue to set the agenda. We’ve just spent months fighting against their monomaniacal assault on health care reform. The deal funds the government at Republican numbers, with the mindless and destructive sequester cuts intact. Their extortion has driven off the table any discussion of a program to create jobs, to make the investments we need to revive this economy, to begin to redress the extreme inequality that is destroying the broad middle class.
Austerity has been discredited in theory and in practice; yet continues to define national policy. Other alternatives are simply excluded from the debate. Democrats control the White House and the Senate. Republicans are defeated and discredited. But the right still drives the debate.
And the damaging crisis may well serve the Tea Party goal of “purifying” the Republican party. They vow to target the Republicans who supported the deal. Ted Cruz pocketed over $800,000 for his political operations in the last quarter alone. Mainstream Republicans remain terrorized.
The crisis damaged the Tea Party’s standing, but it undermined government as well. And when we head back into contentious negotiations a month from now, Americans are likely to grow more disgusted and disillusioned about the capacity of their government to function, much less to solve problems.
These crises damage an already weak recovery. They cost jobs and impede growth. In the 2014 elections, voters will have to decide whom to blame for what is likely to be a lousy economy. Republicans will campaign on the failure of Barack Obama in his sixth year as president. Democrats will have to show how destructive Republicans have been – even though they control only the House of Representatives – and can’t even agree among themselves. Democratic gains are far from guaranteed. More than ever, reality is contested terrain.
5. Seniors and the vulnerable are the target next time.
The deal sets up budget negotiations designed to replace the abhorrent sequester cuts with a longer-term deal to get our books in order. This sets up basic security programs – Medicare, Medicaid, and Social Security – for cuts.
The president goes into the talks calling for a package that balances cuts in those programs with some new revenue from progressive tax reforms. Republicans have consistently refused to consider any tax hikes or loophole closings that increase revenue.
Republicans will call for cuts that the president has previously indicated he would accept – cutting the inflation adjustment on Social Security (the so-called “chained” CPI) to lower benefits, means-testing Medicare, lifting the eligibility age for Medicare. The president will call for tax reforms, but has already accepted that corporate tax reforms could be “revenue neutral” – meaning corporations will not be asked to contribute one cent to long-term deficit reduction.
The entire debate focuses on what and how to cut – as if that would somehow help our economy.
What we need is a negotiation focused on how to get the economy going and put people to work – and what a long-term strategy is for rebuilding the middle class, and creating a widely shared prosperity that will over time put our books in order.
If we accept that the only discussion is how to balance the books, we are in essence saying that the economy has recovered and accept the new normal: More than 20 million people in need of full-time work. Stagnant wages. Families losing ground. Young people faced with the worst job market since the Great Depression.
And we are embracing the skewed notion that we need “shared sacrifice” to pay the bill for the costs of the Great Recession caused by Wall Street’s excesses. But shared sacrifice makes no sense when the benefits are not shared. The richest Americans are capturing all of the rewards of growth. Corporate profits are at record levels as a portion of the economy; wages are at record lows. They have rigged the rules to work for them. Changing that should be the focus of reform.
The Tea Party’s havoc has been routed. Now we will have to deal with the establishment’s dysfunction.