The combination of a Tea Party-driven Republican Party holding the country hostage and a president who once again declined to fight with all the tools at his disposal for Democratic priorities led to the current disastrous debt ceiling deal. This deal removes any last hope of needed government economic stimulus in favor of cuts that will hurt the vulnerable, while not adding any revenue from the wealthy beneficiaries of the Bush tax cuts. Indeed, past history tells us that, regarding the current deal, we've been there, done that–and it didn't work.
Commentators Joe Nocera and Paul Krugman provide perspectives that reinforce why the debt ceiling "solution" is exactly what America doesn't need. Nocera (left) correctly states that it will aggravate the unemployment problem–and looks back to the Roosevelt era for the lessons it provides:
America’s real crisis is not a debt crisis. It’s an unemployment crisis. Yet this agreement not only doesn’t address unemployment, it’s guaranteed to make it worse... Economic growth could have gone a long way toward shrinking the deficit, while helping put people to work. The spending cuts will shrink growth and raise the likelihood of pushing the country back into recession.
...We’ve all heard what happened in 1937 when Franklin Roosevelt, believing the Depression was over, tried to rein in federal spending. Cutting spending spiraled the country right back into the Great Depression, where it stayed until the arrival of the stimulus package known as World War II. That’s the path we’re now on. Our enemies could not have designed a better plan to weaken the American economy than this debt-ceiling deal.
Paul Krugman (left) also focuses on why this deal is the wrong economic prescription–and why its future terms can make a bad deal even worse:
The worst thing you can do in these circumstances is slash government spending, since that will depress the economy even further. Pay no attention to those who invoke the confidence fairy, claiming that tough action on the budget will reassure businesses and consumers, leading them to spend more. It doesn’t work that way, a fact confirmed by many studies of the historical record.
...And then there are the reported terms of the deal, which amount to an abject surrender on the part of the president. First, there will be big spending cuts, with no increase in revenue. Then a panel will make recommendations for further deficit reduction — and if these recommendations aren’t accepted, there will be more spending cuts.