Debt Deal

The compromise debt deal plan currently being discussed is unacceptable.  It doesn’t resolve the debt limit issue.  We will be back to dealing with the politics of this before the next election.  Republicans have maintained that revenue increases are a poison pill in these negotiations.  It appears that the Democrats may have acceded to these demands.  If tax cuts are a poison pill, then spending cuts might as well be a poison pill, especially on health care and social security.  While there may have been some merit in using the debt ceiling as a budget negotiation, any benefit to that approach has evaporated.

There are two decent paths going forward.  Both paths involve Obama vetoing this compromise.  One path is for the House and Senate to authorize raising the debt ceiling on its own.  Or for that matter Obama could declare he has authority by virtue of the 14th Amendment to raise debt.  The other path is for Obama to move to a pay-as-you-go system until a budget compromise is reached.  This would mean delaying social security payments, federal employee payments, state aid, and all other spending until cash is available.  This would initially result in payment delays of weeks.  Were it to persist, you could see Social Security payments delayed upwards of 6 months given present budget conditions.  While this certainly would cause pain, hopefully such pain would be short lived.

Update:  Can’t argue with Bernie Sanders here:

The Republicans have been absolutely determined to make certain that the rich and large corporations not contribute one penny for deficit reduction, and that all of the sacrifice comes from the middle class and working families in terms of cuts in Social Security, Medicare, Medicaid, LIHEAP, community health centers, education, Head Start, nutrition, MILC, affordable housing and many other vitally important programs.

I cannot support legislation like the Reid proposal which balances the budget on the backs of struggling Americans while not requiring one penny of sacrifice from the wealthiest people in our country. That is not only grotesquely immoral, it is bad economic policy.