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AFP: Obama Unfurls Deal To Avert Default

From his starry-eyed fans at the Agence France-Presse:

Obama unfurls 11th-hour deal to avert US default

by Olivier Knox And Shaun Tandon
August 1, 2011

WASHINGTON (AFP) – President Barack Obama announced an 11th-hour deal with Congress to avert an unprecedented default on US debt payments, which would have sown chaos across the global economy.

This headline and lead paragraph make it sound like it is all Mr. Obama’s plan, doesn’t it? Even though Obama has never offered a plan. But now he has unfurled one. He has magically solved everything.

With just two days left before the United States would run short of cash, Obama and his Republican foes said after round-the-clock negotiations that they had reached a framework for more than $2.4 trillion in spending cuts…

But the package still needs approval from Congress, which could vote as early as Monday. Leaders of the Democratic-held Senate and Republican-led House of Representatives were working to rally polarized lawmakers.

The votes in the House are scheduled to begin at 12 noon.

"To pass this settlement, we’ll need the support of Democrats and Republicans in both the House and Senate. There is no way either party — in either chamber — can do this alone," said Democratic Senate Majority Leader Harry Reid

Which is why Mr. Reid has been sweet-talking the Republicans so much lately.

But the plan faces opposition both from the conservative "Tea Party" movement, which favors sweeping spending cuts, and liberal Democrats who want taxes on the wealthy before any thought of cutting social welfare programs.

There are no thoughts of cuts in anything except defense and ‘Medicare providers.’ Soldiers and doctors. Mr. Obama’s welfare constituents are safe.

As described by Obama and congressional leaders, the deal would raise the country’s $14.3 trillion debt ceiling by at least $2.1 trillion. It would also make more than $2.4 trillion in spending cuts in two steps, including through a special new committee required to submit proposals by November 23.

The very real increase in debt will begin immediately. While the nebulous spending cuts will be be over ten years, if ever. And we have a new special committee to suggest more cuts in the distant future.

Asian markets cheered the deal, with the dollar climbing against the yen, crude oil prices surging and share prices in Tokyo, Hong Kong and Sydney all enjoying sharp gains in early trade…

All of which will turn out to be about a one percent change, if that.

Republicans crowed that the framework did not explicitly call for raising tax revenues — at least in the first wave of deficit cuts — despite Obama’s repeated calls for increasing revenues from the rich and wealthy corporations.

Yes, the Democrats have been kept from using the debt ceiling to raise taxes. (Something that nobody has even thought of before, much less done.) That is a pretty small victory.

The framework would also fulfill one of Obama’s top goals: Giving cash-strapped Washington the ability to borrow by enough to avoid another politically fraught debt battle before he faces re-election in November 2012.

In fact, it was probably Mr. Obama’s only goal. He doesn’t want his runaway spending to be an election issue. When in fact it should be the main issue of the 2012 campaign.

The package would cut military spending by at least $350 billion at a time that the United States is looking to exit Iraq and Afghanistan. A White House official hoped half of total cuts would come from defense, but leading Republicans have already cried foul.

The Pentagon’s budget has already been cut $400 billion in the last two years. No other government program has been cut by so much as one red cent. Any and all of the cuts in spending that come from this deal will be taken out of the hide of defense.

After all, we can be sure we won’t be needing the military over the next ten years.

Obama trumpeted that the cuts would bring annual domestic government spending to the lowest level in 60 years

There are some lies that are so preposterous it is frightening that anyone would tell them. Government spending is above 24% of our GDP, when it is normally around 19%. And, of course, it has often been far lower still.

[B]ut promised they would not come so "abruptly" as to be a "drag" on the fragile US economy, still struggling with stalled growth and 9.2 percent unemployment in the wake of the 2008 meltdown.

Nothing would help the economy more than cutting government spending so that more money could be freed up for the private sector. But socialists, who want to destroy capitalism, pretend otherwise.

And speaking of pretending socialists:

But Representative Raul Grijalva, a fellow Democrat and co-chair of the Congressional Progressive Caucus, rejected the framework in a blistering statement declaring: "This deal is a cure as bad as the disease. I reject it."

Democratic House Minority Leader Nancy Pelosi, who planned to present the framework to her rank-and-file on Monday, said "we all agree that our nation cannot default" but gave Obama’s announcement a chilly welcome…

The New York Times was sharply critical in an editorial, saying that the deal was "a nearly complete capitulation to the hostage-taking demands of Republican extremists."

This is the same newspaper that will not call Muslim terrorists extremists. But American citizens who want to reduce the increase in government spending, people who are trying to keep some of the money they have worked for – they are "extremists" in the eyes of the New York Times.

It was unclear whether the accord would be enough to placate ratings agencies that have warned Washington’s sterling Triple-A debt rating was in jeopardy — a downgrade that would lead to a painful spike in interest rates.

Leading asset manager BlackRock said in a statement it was "encouraged by momentum to raise US debt ceiling, but believes investors need to see real deficit reduction without delay."

The downgrade threats were never about default. They were always about the spending. The credit rating agencies want to see a commitment to at least $4 trillion dollars in real reductions.

And this deal does not even scratch the surface of the problem.

This article was posted by Steve on Monday, August 1st, 2011. Comments are currently closed.

8 Responses to “AFP: Obama Unfurls Deal To Avert Default”

  1. River0 says:

    So the debt junkies will get their fix, and they can keep dreaming about the day they’ll get clean, land a great job, and be a productive citizens again.

    It’s like the 550 pound guy who says, “Next year for sure I’m going to lose 300 pounds!”

    The ‘progressives’ are delusional. Nothing has been solved, their cancer is worsening, and it’s all being played out in public.

  2. Chinnubie says:

    We will still be downgraded because we all know there will be no real spending reductions. I mean how does raising the ceiling up to 16.4 trillion show us reducing any spending. There will NEVER be any substantial cuts over ten years and for the Times to be crying the way they are is simply ludicrous. How can Republicans by into this garbage of a commission to cut spending by November 23rd, what happens if they don’t oh yeah, automatic cuts over the next ten years that don’t make a dent in anything substantial. These people are an absolute JOKE!!! They need to be brought to thier knees then we’ll decide what stays and what goes, after all we are suppossed to be the government.

  3. BigOil says:

    What is most disheartening about this deal is not so much the outcome – since it is more of the same – with liberals advancing the ball toward the ruin of the republic. The disappointment comes from so-called conservatives denigrating those of us that opposed this sham.

    Apparently many on our side believe the political game is more important than preserving the republic. Krauthammer for instance, said he admired our principles but we were not perceptive because we opposed this ‘compromise bill’.

    Well…we were perceptive enough to understand the blank check would be extended past the next election. We knew the default propaganda was false. There would be no real cuts. There would be no Balanced Budget Ammendment.

    In the end, it wasn’t just the country that lost, but Republicans lost the political game as well. Where are all the stories lauding the Republicans for saving us from default? Hint – the media will never like you – so why bother. At least when we stand by our principles, we know we will go down fighting for what is right. Why not give it a try just once, a miracle might happen and we could actually win.

  4. untrainable says:

    Who will be held to account when the credit rating is lowered. If there is any sanity within the ratings agencies, we will and should be downgraded. Once that happens, and our interest rates necessarily shoot through the roof and actual inflation begins to crush the American people, who will be blamed?

    Watching the media’s mental gymnastics should be entertaining as they try to blame the people who wanted a balanced budget for the coming economic crash necessitated by overspending.

  5. eaglewingz08 says:

    Medicare has already been cut 50 billion a year under Obamacare, with increases of 30 million new beneficiaries. Does anyone believe that there will be more cuts to Medicare under the democrap regime? The reason for the 50 50 split, is because democraps know that they can regain their standing with seniors by having repubs inundated with angry phone calls and missives from seniors who are threatened with a fifty percent reduction for deficit reduction. The gains of the last three years for repubs with seniors would go up in smoke. And to offset the senior radicalization against repubs, the repubs opted to gut national security, which does not have the same vocal support from its supporters, that Medicare has. If push comes to shove, Medicare would be saved from cuts and almost all the cuts will come from defense/ national security, but the repub leadership calls this a win for conservative values. For shame.

  6. Petronius says:

    Excellent analysis, Steve.

    Surely it would be better simply to make a clean extension of the debt ceiling in an amount just sufficient to carry the issue to the voters in the 2012 election.

    It appears that S&P may cut the US bond rating in either case. And the proposal now being advanced runs great risk of an automatic cut of $500 billion more in defense.

  7. proreason says:

    It was crystal clear from the get-go that the ceiling would be lifted, there would be some pretend cuts in spending, and that there would be no new taxes. All the hand wringing about conservative principles wasn’t going to change that one iota.

    The only unknown was whether the Moron would have to take another bite of the apple or not. The way this is structured, he has to take the bite, but he gets to do it is a soundproof room. Since he gets to veto the Republicans vote against the next bite, there will be no battle like the current one, and therefore, it will be page 7 news. In other words, nobody will even know that it happens, other than people on the right who wouldn’t vote for him anyway.

    The only victory for conservatives is that they got to publicize that spending is the problem, but since they are too afraid of being called racists, and love spending themselves, nobody but committed conservatives knows that the entire spending problem is Obamy.

    All in all, a small victory for the Moron.

    But it could have been worse….a LOT worse.

    The major significance for conservatives is that the battle ballet has revealed that Boner and Mitchell are part of the problem, not part of the solution. They will be replaced with people who care more about the country than their sinecures after the 2012 election.

  8. Astravogel says:

    Defense cuts. Our new Navy will be one of the
    ‘greenest’ in the world, what with the new sail outfit,
    plus it will require much more crew to handle the lines,
    leading to a reduction in unemployment there. The new
    ‘green’ Air Force will have refueling stations in Washinton,
    DC to replenish the hot air in the balloons, and the Army’s
    new ‘green’ infantry will surely enjoy their new wool uniforms
    as they learn anew the 9-step loading process of their muskets.
    Let’s see how those Islamic Extremist like a volley from a Regimental
    Line! Always did admire the dark blue/light blue uniforms. Incidentally,
    their cavalry arm can use all those poor wild horses now eating up all
    that forage out in the Western Desert. Ah, what a sight it will be, when
    the forces parade in Washington on Armed Forces Day.

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