- In my last column, I suggested that an unintended outcome
of the debt ceiling impasse could be Congress' loss of the power of the
purse. In this column I suggest an intended outcome that the
ongoing political theater might be designed to produce.
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- President Obama has said that he will not resort to the
various powers open to him to keep the government running should Congress
fail to deliver a debt ceiling increase. This is a suspicious statement,
as it is not credible that a president would leave troops at war unpaid
and without supplies, Social Security checks unsent and stand aside while
the US dollar collapses and the credit rating of the US government is destroyed.
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- There are national security directives and executive
orders already on the books, as well as the 14th Amendment, that Obama
can invoke to set aside the debt ceiling. Congress would sigh with relief
that Obama had prevented the lawmakers from destroying the country.
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- So what might be going on?
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- One possibility is that the political theater is operating
to bring about otherwise politically impossible cuts in the social safety
net. If the drama continues to the absolute deadline without a deal, Obama,
who perhaps favors cutting the safety net as much as do the Republicans,
would have to accept the Republican package in order that the troops are
not cut off from supplies, Social Security checks can continue to go out,
and the dollar be saved. Having opposed the Republicans to the last minute,
Obama can say that he had no other recourse.
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- What American wants the troops deserted on the field
of battle and the elderly without groceries? Who other than the rich can
stand the higher prices from dollar devaluation?
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- It would be a perfectly orchestrated scenario for getting
rid of the New Deal and the Great Society that use up money that could
be spent on wars and bailouts and tax cuts for the rich.
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- If the American public is not sufficiently softened up
by August 2, the political theater can continue with temporary debt ceiling
increases until things really begin to crack. On July 15 S&P put all
AAA-rated insurance companies on CreditWatch citing ties to the US sovereign
credit rating. On July 25, the US dollar fell to a new low against the
Swiss franc, and gold reached a new high. Some more of this, and the public
will see benefit cuts as preferable to economic armageddon.
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- If Bush and Cheney were still in office, they would use
the debt ceiling impasse to seize more power from Congress. Obama, however,
might be so well aligned with financial interests that the opportunity
he sees is to cut Social Security, Medicare and education loose from the
federal budget. Then Wall Street can privatize them.
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- Whatever emerges from the debt ceiling impasse, it will
not be in the interest of the American people.
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