Tuesday, July 26, 2011

Time to see if I was right

Over 3 months ago, I posted my predictions for the debt ceiling battle over the horizon. Well, judgment day is here. A recap of two essential points:

1. Republican intransigence was, and continues to be, unwarranted. The Republicans were always holding a weak hand, although it actually shocks me that apparently none of them figured this out. When they approached this debt ceiling issue as a battle, they set themselves up for defeat. At this very moment, the pressure is relentlessly building. The House is being inundated with angry phone calls from constituents. The IMF and credit agencies are warning of a downgrade and economic calamity. Obama is taking to the bully pulpit nightly to (rightly) berate the GOP for being uncompromising. And at the end of the day, the Tea Party isn't playing chicken with Obama. Rather, Boehner and powerful GOP backers are playing chicken with the 41 most liberal members of the senate, led by recently re-elected Harry Reid.

2. This in particular turned out to be true:

I absolutely believe that if Republicans put partisan battles aside, Democrats would join them and real progress on spending could be made. There are tons of low-hanging fruits that could be plucked to get real reductions in government spending.

Obama was offering Republicans a bill that cut the debt by FOUR TRILLION DOLLARS. It was something like 85% spending cuts, including cuts to entitlements. 85% is a very historically fair figure when looking at austerity situations. Democrats were furious at Obama for making such an offer, but luckily the GOP bailed them out by refusing Obama's deal. The Economist, a right-of-center newspaper, had a few good editorials about what a great deal the GOP passed up.

At this moment there is what, a week left before D-Day? I think the Democrats have the advantage at this moment. The Republicans WILL jump, but it remains to be seen whether the Democrats get scared and jump first.

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