Down to the wire

Posted Tuesday, July 26, 2011 in Analysis

Down to the wire

President Obama and Speaker Boehner, during the debt ceiling negotiations.

by Gina Hamilton

WASHINGTON, D.C. — Monday night's speeches by President Obama and House Speaker John Boehner were long on rhetoric and blame-setting, and short on most anything else -- specifically, short on the 'c' word.

To be fair to Obama, he has compromised.  His plan called for three trillion dollars in spending cuts over ten years, and a trillion in tax code changes, closing loopholes for corporations and a few of the wealthiest taxpayers.  However, the GOP has a freshman class, mostly so-called 'tea partiers', that is threatening to withhold its support - to work against the reelection in fact -- of any member of their party who votes for any tax increase at all.

The genius of the American systm of government is compromise.  Compromise has made it possible to get the work of the American people done, sometimes with dark backroom deals that no one likes.

But better than than complete stagnation, which is what is currently happening in the District.

On Tuesday, the government will no longer be able to pay all of its debts without a debt ceiling increase.  If the government chooses to pay the interest on the debt first, as it is legally bound to do, it will not have enough in the coffers to pay Social Security, Medicare, Medicaid, Veterans' benefits, military pay, or to honor the contracts it has already made --- and Congress has appropriated for --- with businesses in every sector from construction to transportation to national defense to concessions for national parks.  States will lose support, leading to the loss of teaching staff (especially in special education), public service medical staff, possible crisis of unemployment payments, and infrastructure construction.

With that sort of chaos, the U.S.' prime AAA rating is expected to fall.  That will mean higher credit card rates, higher mortgage rates, higher car loan rates, higher business loan rates for every average American, causing the economy, which hasn't progressed much anyway since the recession was declared 'over' by many economists, to revert to recession again.

But this time, the government would be helpless to do anything, since it would be unable to do the most basic things to stimulate the economy.

Congress phone lines, websites swamped

During Obama's speech, he encouraged Americans to call their members of Congress to tell them to act.  Many websites, including Boehner's and Republican minority leader Mitch McConnell's, crashed. Telephones to Congress and to individual members' offices have been busy since the speech.

According to both Chellie Pingree's and Michael Michaud's offices, the tone of the calls and emails has been similar.

"People overwhelmingly want a balanced compromise, including spending cuts and tax increases for corporations and the wealthy," said Pingree spokesman Andrew Colvin. "We're still getting calls," he said.

Meanwhile, Boehner has called for a vote on his 'two step' debt ceiling increase (now and in six months' time) tied to a $3 trillion spending cut for Wednesday.  Even fellow Ohio conservative Jim Jordan says he doesn't have the votes to pass even the House, as many Republicans now oppose it.

And the International Monetary Fund weighed in on Tuesday as well, with new managing director Christine Lagarde warning that the consequences of inaction could be serious, not just for the U.S. economy, but for the struggling global economy as well.

“On the debt ceiling, the clock is ticking, and clearly the issue needs to be resolved immediately,” Lagarde said. “Indeed, an adverse fiscal shock in the United States could have serious spillovers on the rest of the world.”

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