President Obama announces that an eleventh-hour debt deal has been reached

Out of curiosity, for those happy with the deal, what specifically are you happy about?

 

The fact that we are on this path:
1. cut spending
2. GDP drops due to cut spending
3. ????
4. GDP and job growth

 

Yeah, Sam, the devil is in the details of just how major an impact this has on GDP and job growth, and what's in those ????

 

Sure - the actual cuts that were put in place are the ones pushed by Biden weeks ago on Democratic terms. No programs for the needy were touched. The cuts built into the trigger are ones that Dems want and Obama has advocated long before this debt ceiling fight. And the primary stuff that the GOP got - votes on the BBA and a symbolic vote on the debt ceiling - are worthless. The trigger setup gives the Dems all the leverage in the upcoming negotiations for the actual contentious $1.5T in cuts/revenues.

So, again, what specifically don't you like?

 

Here's one analysis:

"a study finding that a 1 percent of GDP fiscal consolidation implies a 0.5 percent reduction in GDP after two years—or a reduction in the growth rate of 0.25 percent each year. That points to a hit to annual GDP growth of roughly 0.04 percentage points from the FY 12 changes in this plan—an effect that will be impossible to pick up amidst the noise."

http://www.nationalreview.com/agenda/273256/debt-ceiling-deal-less-meets-eye-josh-barro

 

Except that very little, if any, of the cuts are in the short term. The Boehner plan, which was similar to the Reid plan, had a whopping $1 billion in cuts over the coming fiscal year.

 

Yep, that is correct. If people would stay away from the unhinged Krugman and read people like Ezra Klein, that would be clear.

 

Spending cuts hurt the economy. Even worse in recession.

Would interest rates have risen if we just increased the debt limit with no spending cuts? Was all the ratings downgrade because of nasty politics and fear of NOT raising the debt limit? Or was it something more substantial.

Personally - I would have just raised the debt limit until we were out of the recession. Recession is not the time to mess with things like this.

 

What specific spending got cut over the next year?

 

I've yet to read the details. In a general way, what don't I like about this "deal?" I thought the thrust of Klugman's column, that slashing spending during a depressed economy is a terrible idea, was on target. He said some time back that the stimulous was not nearly large enough to get the economy back on track, and he was right. Job growth and GDP growth have been anemic. I see nothing in this that will boost job growth and the GDP in a significant way, and the last President who oversaw the economic boom, tremendous job growth, a large growth in the GDP, and a balanced budget was Bill Clinton, and his mantra was, "It's the economy, stupid." The President's mantra seems to be, at this point in time, to subject the country to the economic policies of a political party in the grip of extremists. Again, Krugman points this out well, and points out that there was no reason this issue had to be delayed to the last possible moment, as well has other actions (or lack of action) by the President. Given his track record, I have a tendency to believe him. I hope he's proven wrong, for the sake of the country, and that what I consider to be your wildly optimistic assessment is proven right. I'm not optimistic.

I just don't see it, just as I don't see Krugman as "regurgitating the party line." He was proven right, in my opinion, about the stimulus being far too small to do what it was intended to do, and, IMO, he is anything but a party hack. He didn't recieve a Nobel Prize in Economics for being "the leftist version of the tea party," a statement I find breathtaking. Do you seriously believe that? I know you can't stand political parties, at least you have made statements making that clear to me many times in the past, but they serve a vital function in our political system. They all have factions, and you frequently have derogatory things to say about both. You equate both. I suggest, and I've suggested this before, that you consider picking one and working within it to affect change, if you don't like them. That would be an activist response. Not a radical response, not an extreme response, but an intelligent, rational approach to nudging one of the political parties in a direction you prefer, instead of having an attitude, at least from where I sit, of "a plague on both your houses."

 

But again, no spending is being slashed during a depressed economy.

So you're upset that a deal that had nothing to do with job growth doesn't create job growth? Come on - this fight was never about job growth. If that was your expectation, then you were always going to be disappointed. It's like complaining that that the health care bill didn't help in the War in Afghanistan.

Yes, I do. He won a Nobel Prize for other stuff that he did not for his political economics columns in the NYT. Being a brilliant economist does not make him remotely competent on politics. He stated things that are completely untrue in his column, so it's hard to take what he says very seriously there. He's been on a 2+ year rant about Obama since the primaries, and this just is a continuation of that.

No, again, I equated a columnist on one side to actual party members on the other. Until you see the difference there, we'll continue to disagree.

Why? I *like* the strategy Obama is pursuing. I like the direction he's taking the country. I like the way the Dems are functioning as a party right now: they are actually getting stuff done, and doing it in moderate, rational fashion.

 

You know ... we're turning into Brazil. The difference, of course, being that most Americans are accustomed to a higher standard of living.

We'll never turn completely into Brazil, but the only reason for that is because Americans will become violent before the transformation is complete.

I hope things change before that point, but if things don't change ... then **** it.

 

I only wish we were turning into Brazil...

Brazil (Possibly Not Safe For Work):

Spoiler

USA (Probably Not Safe For Anything):

Spoiler

 

Iceland's economy didn't collapse when they defaulted....why are we more worried with banks than getting our spending under control?

DD

 

Here's a quote from Carla Fried column in CBS's Moneywatch.

One Manufactured Crisis Averted, One Real Crisis That Looms Larger Than Ever

Debt ceilings have been raised dozens of times over the years, with every imaginable permutation of parties in power. That’s to say, there was no need for this to be a crisis. Congress chose to make this a crisis. And in the process of tending to its own manufactured mess, it continued to ignore the real crisis that needs attention: the economy.

In case you were lucky enough to take a summer Friday last week, and smart enough to swear off the news over the weekend, you may have missed the horrid economic report we got. Not only was second quarter gross domestic product (GDP) growth even lower than already-lowered expectations, first quarter GDP growth was revised lower, too. And to be clear, the slowdown is a shift from way-too-slow, to yikes-we’re barely growing at-all. Moreover, the Bureau of Economic Analysis also revised its GDP data runs from during the Great Recession, delivering the news that it was even greater than we’d thought. That led one market watcher to suggest that this isn’t a job-less recovery, it’s a recovery-less recovery.

Yet there was no stimulus in the debt-ceiling/deficit plan. Nada. No extension of unemployment benefits through 2012. No payroll tax holiday extension through 2012. Nor a move to extend the program to include employers in the tax holiday. We may get them later, but given the horrid economic data and the fact that unemployment is at 9.2 percent two years after the official end to the recession (brace yourself for a new unemployment report this Friday), you’d think something would be on Washington’s radar. Just think if Congress put the same effort it exerted on this debt-ceiling exercise into thoughtful consideration on how to address the fact that we have 24 million Americans unemployed or underemployed, and little indication that things will be getting better soon for any of them.

http://moneywatch.bnet.com/economic...-and-losers/3228/?tag=contentMain;contentBody

I'm not so optimistic about the chances of Democrats making a comeback in the next election.

 

Now that the "Debt Crisis" has raised the price of most precious metals and other "investables", the insiders people responsible for this have made their money and there is no reason to let a US default happen. I feel like we have all just been scammed.

This is like the episode of the Simpsons where Bart runs through an audience at a political event hollering rumors about doubt and insecurity. The people hear his rumors coming from all over the place and begin to echo back the same sentiments.

The right hand doesn't know what the left hand is doing.

 

I agree with that. The economy is no doubt in bad shape. But not every bill is about the economy, and this one really wasn't. This was about long-term fiscal health. Without showing a real commitment to addressing budget issues, bond ratings were going down and that was going to exacerbate the economic problem. So all the alternative solutions like the 14th Amendment would have still hurt the economy.

So the Dems managed a deal where:

1. No spending on the poor was cut.
2. No spending in the next year was cut.
3. Close to 40% of the initial cuts were defense related - things they've been fighting for anyway. The rest were not negotiated under the gun - they were negotiated weeks ago when there was more a bipartisan process in place.
4. A trigger that entirely favors them and gives them all the leverage to raise taxes or force cuts on their terms.

They won on basically every detail and put themselves in a position of absolute strength both for the next $1.5T in deficit reduction and in the Bush tax cuts talks. It's the first time since early in Obama's Presidency that the Dems have the winning hand from a negotiating standpoint.

 

Did you just make that up? Their stock market was down 90%. Their currency went to hell. Their GDP crashed. What else do you want?

The only reason they managed to survive was that they were bailed out by the IMF and Europe. The world can't bail the US out in a similar situation - they wouldn't have the money and would be sucked into the same mess.

 

if only there we had a president who understood that real leadership does not come from behind.