The scenario forecast by a Congressional staffer whose interview I linked near the end of last week's post seems to be coming true. The House Republicans have become more and more detached from reality and have refused to let their Speaker agree to any tax increases as part of a compromise. Nor does it seem at all likely that they will accept the McConnell plan to allow President Obama to raise the debt ceiling for the next 18 months while they scream helplessly from the sidelines. Unable to get what they want--massive spending cuts without any tax increases--they seem likely to force the United States into default. In an interesting generational milestone, Silent George Will in yesterday's Washington Post praised the Tea Party to the skies as a transformative, revolutionary force in American politics, while begging their handmaidens in Congress to compromise now, hold off until the next election, and complete their miraculous transformation of the country under a Republican President. Will's conversion to lunacy is certainly remarkable, but he was probably trying to head of catastrophe in the only way he could think of. It may not be necessary to actually reach default, simply because the news of the weekend may be enough to send world markets into a gigantic tailspin on Monday. If not, the tailspin will be delayed until we pass the August 2 deadline. I tend to assume that the tailspin will not produce a repeat of 2008, since the balance sheets of financial institutions are now accepted as sound, and that it will be corrected when some kind of a deal is struck within another week. But I cannot be sure of that. Meanwhile, it is clear that the right wing has unleashed a new propaganda offensive in cyberspace. Various indicators show that the circulation of the fraudulent email attributed to me comparing Obama to Hitler is spiking again. It will surely spike yet again a year from this fall.
The Obama Administration has essentially been the third Clinton Administration, and it seems to be counting on a replay of 1995-6, when the brief government shutdown saved the Clinton presidency and led to his re-election. President Obama has indeed positioned himself as the rational, mature, neutral elder statesman in the crisis, and he has won some points in public opinion surveys as a result. Yet there remains one overwhelming difference between 1996 and 2011. In 1996 we were in the early stages of an economic expansion that lasted the whole of the Clinton presidency. In 2011 we are sunk in something very like a depression and there is no sign of a real recovery. And I am increasingly fearful that that will do the Obama Administration in.
This table, from today's New York Times, tells a terrifying story. (For some reason it will not upload.)
It has been a fantasy both of liberals and political consultants like James Carville that Obama won in 2008 because of a profound demographic shift that would keep the Democrats in power for a long time. The new Millennial generation is very liberal socially and, they thought, politically. It gave Obama his biggest majority. But it turns out that their loyalty--surprise, surprise--depended on his response to the economic crisis, and that response has failed to reverse the economic decline. He has offered just as little way out of our crisis as Herbert Hoover, and it seems increasingly likely that he may pay the ultimate price for that no matter who the Republican candidate is.
Even in the best case--a deal, without a market crash--the country will continue going backwards. We need more spending and more taxes; we will get less of each. President Obama does in fact have one more card he could play. After the ceiling is raised--after, that is, it is raised beyond the next election--he could announce that he will not sign any bill extending the Bush tax cuts further. We need more revenue, he could say--perfectly truthfully--and this is evidently the only way to get it. That would be good policy and conceivably, good politics. Everything we have seen about him so far, however, suggests that that will not happen.
Welcome to the new Gilded Age. I'll have another post tomorrow.