I really like rawstory.com. They usually do a good job on the synopsis (synopsi? synopsises?) – summaries – of the headlines of the day. But this morning, the sight of these two headlines, one right under the other is a bit much to take.
Attorney: Evidence Strauss-Kahn bruised maid’s vagina
Jon Stewart delighted by Halperin’s ‘dick’ remark
So, okay, fun over. A couple of economic stories from other sources.
Jane Hamsher at firedoglake points out a strange give-away to North Korea in her article about a little-discussed tendency of Obama’s to sign whatever free-trade agreement crosses his line of vision. The article is titled, “What Obama Fights for – Giving 9.55 B to North Korea to Spend on Nukes”. Yes, and he is also giving away a ton of US jobs with this deal.
Yesterday the White House took the last step to owning all three leftover Bush NAFTA-expansion deals with Korea, Colombia and Panama by announcing that they would send them to Congress imminently. The Economic Policy Institute estimates that we’ll lose 159,000 jobs with the Korea deal alone.
At a time of high unemployment, it’s difficult to fathom why the President would be fighting to increase our trade deficit and ship tens of thousands of jobs overseas.
Even more stunning, however, is the loophole in the Obama deal that will hand billions over to North Korea to spend on their nuclear weapons program (PDF)….
Krugman discusses the debt limit talks in his article, “To the Limit”. He points out:
In about a month, if nothing is done, the federal government will hit its legal debt limit. There will be dire consequences if this limit isn’t raised. At best, we’ll suffer an economic slowdown; at worst we’ll plunge back into the depths of the 2008-9 financial crisis.
So is a failure to raise the debt ceiling unthinkable? Not at all.
Many commentators remain complacent about the debt ceiling; the very gravity of the consequences if the ceiling isn’t raised, they say, ensures that in the end politicians will do what must be done. But this complacency misses two important facts about the situation: the extremism of the modern G.O.P., and the urgent need for President Obama to draw a line in the sand against further extortion.
Let’s talk about how we got here.
The federal debt limit is a strange quirk of U.S. budget law: since debt is the consequence of decisions about taxing and spending, and Congress already makes those taxing and spending decisions, why require an additional vote on debt? And traditionally the debt limit has been treated as a minor detail. During the administration of former President George W. Bush — who added more than $4 trillion to the national debt — Congress, with little fanfare, voted to raise the debt ceiling no less than seven times.
So the use of the debt ceiling to extort political concessions is something new in American politics. And it seems to have come as a complete surprise to Mr. Obama….
Now, Mr. Obama was right about the dangers of failing to raise the debt limit. In fact, he understated the case, by focusing only on financial confidence.
Not that the confidence issue is trivial. Failure to raise the debt limit — which would, among other things, disrupt payments on existing debt — could convince investors that the United States is no longer a serious, responsible country, with nasty consequences. Furthermore, nobody knows what a U.S. default would do to the world financial system, which is built on the presumption that U.S. government debt is the ultimate safe asset.
But confidence isn’t the only thing at stake. Failure to raise the debt limit would also force the U.S. government to make drastic, immediate spending cuts, on a scale that would dwarf the austerity currently being imposed on Greece. And don’t believe the nonsense about the benefits of spending cuts that has taken over much of our public discourse: slashing spending at a time when the economy is deeply depressed would destroy hundreds of thousands and quite possibly millions of jobs…
It surprises ME that it never occurs to Krugman that Obama may just be part and parcel of a plan to LET the government hit the ceiling and go into default. The public would get a taste of a few weeks of government shut-down, no social security checks sent to old people, temporary (with no pay) lay-offs of public workforce, Wall Street going bonkers, etc. and then an imposition of austerity measures the likes of which we can’t imagine to “end the crisis” and “come to an agreement”. There is, of course, always the original plan currently winding its way behind the scenes should actually going into default get too scary: agree to pre-emptively impose austerity measures in a bipartisan agreement with the Republicans.
House Democrats are trying to warn us that Oblahblah is going to cave to the Republicans, but we are reading about dicks and vaginas.
From The Hill, an article called, “House Democrats Feel Jilted by the President…”
…Partly to temper mounting discontent, Obama called House Democrats to the White House on June 2, a day after meeting with House Republicans, to hear their concerns about the debt negotiations.
It was a tense encounter, according to several accounts.
One Democrat who was there said Rep. Henry Waxman (D-Calif.) bluntly asked Obama whether he was willing to fight for Democratic priorities amid GOP calls for trillions of dollars in spending cuts.
In asking the question, Waxman said he’d asked several Republicans about their White House meeting the day before and had been concerned by their response.
“To a person, they said the president’s going to cave,” Waxman told Obama, according to his colleague’s account.
“If you’re not going to cave, eliminating that misunderstanding is very, very important to the negotiations,” the lawmaker said, retelling Waxman’s message. “And if you’re going to cave, tell us right now.”
Obama, however, “didn’t answer the question,” the Democrat added. “Obama got in a huff, and he said, ‘I’m the president of the United States, my words carry weight’ — which is not the answer,” the lawmaker said. “That’s not what anyone challenges. It’s whether he is doing this negotiation in the right way.”…
Make of it all what you will. I know what I make of it.