The Blog

Debt Ceiling Deal: Staving off Disaster With Disaster

We have stepped back from the debt ceiling ledge, averted our gaze from the pavement below, yet find ourselves staring at something hardly more comforting: a bleak future.
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Considering the unpalatable choices, the deal to raise the debt ceiling passes for good news, or at least better than the alternative: no deal, a likely downgrade to the nation's credit-rating, and then the once-unimaginable prospect of an American default that triggers global panic.

Yet the deal that staved off this catastrophe is itself a disaster. It comes with some $2.5 trillion in spending cuts over the next decade -- cuts that will weaken an already feeble economy. The deal is good news only in that we are happy to see that the guy who has been standing on the ledge and threatening to jump has instead gone back inside: He has not plunged to his end, yet the bitter circumstances that put him there have not changed.

In our case, stepping back from the ledge entails a cost that will only make our circumstances worse. The unemployment rate reached 9.2 percent in June, and anyone who sees evidence of significant improvement anytime soon is straining to tell a story that involves religious faith in the self-healing properties of markets -- the same sort of nonsense that delivered the financial crisis and economic downturn worthy of their collective moniker, the Great Recession.

Pulling back on spending relegates the nation to a longer stretch of lean times that will feel most punishing to the people who never even shared in the bounty of the boom times: people who pay their bills not with exotic investment returns but with paychecks; people who sometimes need public assistance for health care, housing or groceries, or an unemployment check while they scramble to get back into the workforce.

We are in a moment when the complex academic discipline of economics has become remarkably simple. For a quarter-century, the vast majority of working Americans have seen their wages stagnate while the cost of housing, health care and education have soared. We have contrived various schemes to work around this basic limitation on household finances. In the 1990s, much of the nation feasted on the effects of an unsustainable investment orgy in emerging technology, coupled with financial deregulation that allowed Wall Street to borrow against an infinitely bountiful future. Last decade, we papered over the fact that work did not cover the costs of ordinary life via exotic mortgages that allowed people to turn increased home values into cash.

But all good fantasies eventually succumb to reality, and that's where we are now: in dire need of a real economy, a genuine engine for growth, a plan to generate jobs by the millions. We have none of those things. Now, the ransom paid to the extremists who have hijacked the political process will only make it harder to recover.

Washington has squandered the opportunity that came with the pain of the recession, a chance to reorder our priorities and construct a solid future. The Republicans cynically concluded that further damaging the economy would boost their electoral prospects, while President Obama naively assumed that his oratorical gifts could transcend the partisan fratricide that passes for American politics, never mustering a fight for a viable fix.

The deal that emerged late Sunday reinforces that reality, eliminating with finality the possibility that our elected leaders might somehow find a way to invest in the future. Instead they have relegated us to more of the same -- an unwinding of traditional American economic expectations. This is a disservice to taxpayers and working people. This is a disservice to democracy, the most advanced form of governance known to humanity, now turned into a craven spectacle.

We have stepped back from the ledge, averted our gaze from the pavement below, yet find ourselves staring at something hardly more comforting: a bleak future.