Wednesday, May 18, 2011

Paul Krugman: Obama Should Call Republicans’ Bluff On Debt Ceiling

The Republicans held the country hostage over the extension of the Bush tax cuts at the end of 2010. The deal: extend them for the wealthy or no extension for the middle class and for unemployment benefits. Now they’re ready to hold the country hostage again over the need to raise the debt ceiling. Paul Krugman outlines the catastrophe that would take place if the ceiling isn’t raised: the government couldn’t pay a third of its bills, consumer spending would crash, businesses would slash payrolls and cancel investments, markets here and abroad would panic. Yet House Republicans are threatening not to raise the ceiling unless the president agrees to large spending cuts and rules out any tax increases. Krugman wonders “what, if anything, will get the president to say no”–and he advises Obama to finally call the Republicans’ bluff, lest he cede all his power. From “America Held Hostage”:

...this is a hostage situation. If the president and his allies operate on the principle that failure to raise the debt ceiling is an unthinkable outcome, to be avoided at all cost, then they have ceded all power to those willing to bring that outcome about. In effect, they will have ripped up the Constitution and given control over America’s government to a party that only controls one house of Congress, but claims to be willing to bring down the economy unless it gets what it wants.

Now, there are good reasons to believe that the G.O.P. isn’t nearly as willing to burn the house down as it claims. Business interests have made it clear that they’re horrified at the prospect of hitting the debt ceiling. Even the virulently anti-Obama U.S. Chamber of Commerce has urged Congress to raise the ceiling “as expeditiously as possible.” And a confrontation over spending would only highlight the fact that Republicans won big last year largely by promising to protect Medicare, then promptly voted to dismantle the program.

But the president can’t call the extortionists’ bluff unless he’s willing to confront them, and accept the associated risks.

According to Harry Reid, the Senate majority leader, Mr. Obama has told Democrats not to draw any “line in the sand” in debt negotiations. Well, count me among those who find this strategy completely baffling. At some point — and sooner rather than later — the president has to draw a line. Otherwise, he might as well move out of the White House, and hand the keys over to the Tea Party.


StationManager said...

As long as the republicans continue to avoid proposing anything that will lead to an increase of revenue, emblematic by their refusal to reduce subsidies to mega oil corporations, then they will never be taken seriously in this debate.

So rather than coming to logical grips with what government is actually supposed to do, i.e. to protect the interest of the American people, they have taken the untenable position of proposing to diminish medicare to a point beyond recognition as a social safety net.

Then IT happened; The N.Y. 26th Congressional District election. The writing on the wall for republicans nation wide, could not be more clear.

So now their only recourse is to band together and hold the U.S. debt ceiling (and every one of us) hostage, in hopes the democrats cower and join them in their “kill medicare fiasco. Oh sure, that will put them back into political viability alright; Then they will be able to say, “Look, THEY voted to kill medicare too!”

Face it; the republicans would rather have the elderly, sick dieing and homeless in the streets, and/or see they would like to preside over the total collapse of the world financial system rather than have Mr. Obama as president for four more years. Thus anyone that votes republican these days, deserves the world they will get as a result. Problem is, my family and I will have to live in that world too.

Jeff Tone said...

StationManager: Thank you for your excellent and insightful analysis. I believe the Republican strategy is as you stated. The elderly, the sick, the homeless are not the Republicans’ constituencies; however, the Chamber of Commerce and Wall Street are, so they might lessen the Republicans’ temptation to ruin world finances to prove a misguided point.

Krugman is proposing that Democrats call the Republicans’ bluff rather than be accused of collaborating in the destruction of Medicare. Will Obama lead in this? Too often he’s been willing to give in too quickly. We will see if this time he will draw a line in the sand.