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The Rolling Crisis

Photo courtesy of USAToday

Reports of a deal between Democrats and Republicans to avert the so-called fiscal cliff finally surfaced a few hours before they all turned to pumpkins at midnight. I know I am not the only one who grew tired of hearing about the fiscal cliff, curb, or whatever metaphor you used to describe the crisis. Actually, I learned that I did not want anything to do with this when I sat down to write because the fiscal cliff negotiations were tiring, and frankly, rather annoying. Yet, in all of my annoyance, the outcomes of these negotiations had very tangible consequences for anyone receiving unemployment benefits, living on Medicare and Social Security, or relying on their payroll tax cut. Yet, the current deal only postpones sequester for two months, possibly setting up another conflict over long-term budget cuts.[1] This aspect of the deal is the most disconcerting. It means the 2012 fiscal cliff crisis signified just one event in what has become a rolling crisis—a series of failed negotiations and compromises that lead to more failed negotiations, weak compromises, and crises.

The prospect that some conservative Republicans see creating such a political state as a viable strategy is the most troubling. And Democrats have, by and large, backed into it.  Congressional Republicans have used impending deadlines to continue their war against the welfare state and to advance their supply-side tax agenda. Some conservatives have encouraged this behavior. According to Reuters, activist Gorver Norquist “predicted…that conservatives would wage repeated battles with President Barack Obama to demand budget savings every time the government needs a temporary funding bill or more borrowing capacity.”[2]

Norquist

Grover Norquist

The notion that the “fiscal cliff” was a preventable, yet manufactured, crisis was evident and what made this “controversy” so frustrating. Enter the Democrats. They are culpable because they may have been able prevent to the fiscal cliff debates since the debt ceiling negotiations in the summer of 2011 laid the foundation for the fiscal cliff. Remember that?

Let me I will refresh your memory:

The Democrats neglected to raise the debt ceiling in December 2010 when they possessed majorities in the House and the Senate. And they failed to do so even as members of the media speculated the possibility of a GOP-manufactured crisis.[3]

The Democrats’ failure provoked a stalemate between the two parties over raising the debt limit that summer. Ultimately, the President and House Speaker John Boehner agreed to raise the ceiling under the assumption that both parties devise a plan to reduce the nation’s long-term deficit. While the standoff ultimately made the Republicans look terribly uncompromising, Boehner’s and the Republicans’ attempts to pull a Newt Gingrich legitimized the tactic further and signaled to Americans that drastic cuts in social programs represented the only acceptable outcome in long-term deficit reduction. Ironically, austerity in the U.S. defense program emerged as an outcome, which forced the Republicans to put skin the game, so to speak. Interestingly enough, the agreement just forced the Democrats and the Republicans’ into a crisis regime (hopefully temporarily) where austerity (across the board), or the status quo as is, represented the bond in that held together the two parties (or really the Democrats and the Tea Partiers).

President Obama’s and Speaker Boehner’s agreement established the Joint Select Committee on Deficit Reduction, or the so-called “Supercommittee.” The federal government charged this bipartisan committee with hammering out a deficit reduction plan by that November. In the meantime, Congress passed, and Obama signed, the 2011 Budget Control Act which enacted drastic cuts in domestic and defense programs if the Supercommittee could not provide a framework for a bill to address the deficit. Of course, members of the Supercommittee could not reach an agreement by the deadline, thus inciting another showdown around deficit reduction on Capitol Hill before January 1, 2013.[4]  In other words, the previous failed negotiations and crises just reproduced another potential crisis.

Now some may think that I am holding Democrats responsible for Republican intransigence. I am not;

I am merely echoing the sentiments of Bill Clinton, Back to Worksome liberals such as economist James K. Galbraith and Robert Reich, and even leftist Lance Selfa—the Democrats may have been able to prevent the rolling crisis by raising the debt ceiling when they had the chance in late 2010.[5] Even President Bill Clinton criticizes President Obama and the Democrats for their failures to do so multiple times in his book, Back to Work:  Why We Need Smart Government for a Strong Economy.[6] What I do fear is a perpetuation of this process where Democrats and Republicans craft deals that could make certain benefits renewable on a yearly basis (like unemployment benefits or tuition assistance), thus setting up future battles around economic policies that many workers rely upon. It also looks like the Democrats’ and Republicans’ failure to raise the debt ceiling or to fund the government in the latest proposal will provoke further conflict in February when it is time to raise the debt ceiling (The U.S. reached its debt limit today) and in March when the federal government’s funding runs out. Even Tennessee Republican Senator Bob Corker said, “’the next line in the sand will be the debt ceiling.’” [7] Should we have the patience for this type of governance?

Economist Paul Krugman rightfully interprets the fiscal cliff crisis as political rather than financial. For Krugman, the fiscal cliff is symptomatic of the GOP’s “existential crisis,” and/or the decline of supply-side conservatism.[8] But this rolling crisis may be indicative of a deeper political crisis permeating the country. Many Americans have grown more cynical with the Congress and the political process. It is disheartening for anyone struggling in our anemic economy to watch Congress kick the can down the road even as the President signs an executive order raising their pay. And electoral politics, entrenched politicians in gerrymandered districts, and corporate money creates a circumstance where some politicians may have viewed going over the cliff temporarily as politically beneficial—some congressmen and women do not want to cast a vote that could come back to haunt them since they are preparing for primary challenges. No congressman or woman wants their constituents or donors, especially their corporate and wealthy donors, viewing them as responsible for raising their taxes. Of course, the primary question that members of the media and polling community asked leading up to New Year’s Eve reflected the cynicism surrounding the crisis—Who should be held most accountable if the U.S. goes over the fiscal cliff?—all while the crisis keeps rolling.

Unfortunately, our debates about addressing long-term deficits often neglect very important discussions about how to compose budgets more amendable to constructing a just economy and society.[9] Leftists, occupiers, and left-liberals like Robert Reich have argued that the federal budget should not just reflect corrosive supply-side economics and/or expensive imperialistic foreign policies that helped create the conditions for such budgetary shortfalls to develop in the first place. As many American leftists have declared, “Budgets are moral documents.” Yet, while we continue to participate in the political process, the actual budgets tend to reflect the underside of the democratic process—last minute, behind closed door political dealing, well beyond the reach of people who need the most help. And most regrettably, these periodic negotiations and weak compromises tend only tend to reproduce more crisis. Restoring the tax rates to year 2000 levels for a segment of the wealthy is a welcome step, but it only one step. It looks like we will have to muster the political power and will to craft and organize around long-term economic plans that reflect our values of economic fairness and justice in our future budgets.

debt-ceiling


[1]“Details emerge in fiscal cliff agreement,” CNN.com. December 31, 2012, http://politicalticker.blogs.cnn.com/2012/12/31/details-emerge-in-fiscal-cliff-agreement/?hpt=hp_t, accessed January 1, 2013.

[2] “Analysis:  After ‘fiscal cliff’ dive, more battles, new cliffs,” Reuters.com. December 29, 2012, http://www.reuters.com/article/2012/12/29/us-usa-fiscal-dive-idUSBRE8BS0CD20121229, accessed December 30, 2012.

[3] “What Happens If the GOP Refuses to Raise the Debt Ceiling?” The Atlantic.com, November 4, 2010, http://www.theatlantic.com/business/archive/2010/11/what-happens-if-the-gop-refuses-to-raise-the-debt-ceiling/66154/, accessed December 31, 2012.

The Democrats raised the debt ceiling in early 2010. We should not forget that President Ronald Reagan raised it eighteen times.

[4]“Debt ‘Supercommittee’:Statement from Co-Chairs of the Joint Select Committee on Deficit Reduction, November 21, 20011, http://articles.washingtonpost.com/2011-11-21/politics/35281360_1_technical-support-joint-select-committee-chairs, accessed January 1, 2013.

[5] James Galbraith argues that the fiscal cliff is really an instrument for Democrats and Republicans to enact cutbacks in Medicare, Medicaid, and Social Security. James K. Galbraith, “6 Reasons Fiscal Cliff is a Scam,” AlterNet. November 22, 2012, http://www.alternet.org/economy/6-reasons-fiscal-cliff-scam?page=0%2C0, accessed December 31, 2012; Leftist Lance Selfa builds upon Galbraith’s arguments in his article, “The ‘fiscal cliff’ fraud,” Socialistworker.org. December 10, 2012, http://socialistworker.org/2012/12/10/the-fiscal-cliff-fraud, accessed December 31, 2012. Paul Krugman also shares this argument.

[6] Bill Clinton, Back to Work:  Why We Need Smart Government for a Strong Economy (New York:  Alfred A Knopf, 2011), 8, 9, 119.

[7] “Analysis:  After ‘fiscal cliff’ dive, more battles, new cliffs,” Reuters.

[8] Paul Krugman, “The GOP’s Existential Crisis,” The New York Times, December 13, 2012, http://www.nytimes.com/2012/12/14/opinion/krugman-the-gops-existential-crisis.html?_r=0, accessed December 31, 2012.

[9] David Woolner of Next New Deal made this point better than I in his piece calling for Obama to “channel his inner FDR”:

The president has certainly made reference to this, and he has included a modest $50 billion in stimulus spending in his recent budget proposal to Congress, but for the most part the public discourse on how to avoid the “fiscal cliff” and fix our economy has been centered not on jobs or the vast structural inequality that now separates the top 1-2 percent from the rest of us, but on the deficit. This is unfortunate, for it means, in essence, that the country’s economic agenda is still very much in the hands of the conservative right; that we are still focused not on the cause of our economic woes—a collapsed economy brought on by the worst financial crisis since the Great Depression—but on the by-product: the vast fall-off in federal, state, and local revenue that naturally came about as a result of this collapse.

“Obama needs to channel his inner FDR on the ‘fiscal cliff,’ Salon.com, December 3, 2012, http://www.salon.com/2012/12/03/obama_needs_to_channel_fdr_on_the_fiscal_cliff/, accessed January 1, 2012. Selfa also quoted this passage in his essay as well.

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