I’m going to be away for a few weeks and it looks like all heck will be breaking loose in Washington while I’m away. Meanwhile, I’ve been trying to figure out President Obama’s options.
If Obama decides that the debt ceiling is so important that he has to give in to the House Republicans’ demands for cutbacks, that will plunge the economy into full scale depression. Some people have been making the point that deficit hawks convinced Roosevelt to cut back in 1937 and the economy hit bottom again after years of progress. The impact of government cutbacks is so large that it overwhelms anything the fed can do. All the efforts to put money in the hands of people that Republicans like to call investors have not resulted in their investing in the American economy because they can’t find buyers. Investors aren’t as stupid as the Republicans paint them – they do not throw money down endless holes just because they have it.
The Republicans won’t tell you that they want the economy to tank but they certainly are acting like it. If the safety net disappears and the economy tanks we’ll all be begging for wages that will have us living out of our cars. I suppose they think that’s good for the soul and a good way to bring up our kids – to be desperate.
I don’t think that’s a good option for President Obama. The alternative appears to be holding out for a better plan and letting the U.S. default. That will also do a lot of damage. It will suddenly become more expensive to borrow because our credit won’t be as good. So more money will flow into the pockets of friends of Republicans as interest on what they lend, but it will also flow out of the country to lenders like the Chinese. Plus there will be a great deal of disruption within the U.S.
I’m not sure which option does more damage to the economy, to the prospects of keeping our jobs, to the value of our 401(k)s and other pension holdings. In other words, as with all catastrophes, some folks will win big but more of us will hit bottom and real desperation, fast.
Boehner and his wild animals are giving President Obama and the rest of the country a horrible choice between catastrophe and disaster. I wish there were a way to speed up the elections for Congress because I can’t wait for a chance to help throw these bums out. They are wild boars let loose on the economy, who either don’t know what they are doing, or they do know and are doing it anyway, because, like Lenin in 1917, they think the best way to build their future is to destroy the country first. See, we really don’t need foreign terrorists to rip the country to shreds after all.
— This commentary was broadcast on WAMC Northeast Report, July 26, 2011.