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Color of Money: Personal finance with Michelle Singletary

Color of Money: Personal finance with Michelle Singletary

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Michelle and food writer Mark Bittman took questions on eating better on a budget.

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Posted at 11:41 AM ET, 08/01/2011

The debt ceiling blues

All the headlines this morning are about who won, who lost. About triumph and surrender. We are obsessed with keeping score. You have to hunt for the material that discusses whether this debt deal was actually good or bad for America. Oh yeah, THAT.

But let’s not be naïve: From the beginning this was always about power. The Republicans made a power play. They took the good faith of the Treasury to meet its obligations and held it hostage to ideological interests. They used what had always been a fairly routine vote – the extension of the debt ceiling to stave off a national default – as an opportunity to score a political victory.

Several commenters, including Paul Krugman, tell us that Obama erred last December when he missed a chance to tie a debt-ceiling extension to the deal he made with the GOP to avert a government shut-down. But this misses the key point: The debt ceiling shouldn’t be negotiable.

Obama’s mistake was letting the debt limit become entangled in fiscal policy. The U.S. default on its debts? Never. Unthinkable. Of course we pay our debts. We’re the freakin’ United freakin’ States of freakin’ America! This should never have been up for discussion.

Obama should have said: We can have this debate over national priorities – spending and taxes – during the normal, irritating, frustrating process of producing appropriations bills. We can have the full-tilt head-butting showdown during the normal budgetary process. We can poke each other in the eye and knee each other in the groin and do all that other stuff that represents, in the modern era, “the legislative process. ”But we should never put default on the table. That’s dangling the baby over the balcony. That’s crazy.

You threaten default and I’m calling out the National Guard.

You threaten default and I’m opening trap doors all over the Capitol — leading to pools of sharks below.

So, back to whether this is good for the country. Republican who said they wouldn’t allow “job-killing taxes” can feel happy that they’ve pushed through job-killing spending cuts. Trimming spending over time (not right away given the economy’s condition) was surely necessary, but as Matt Miller notes today, the debt deal doesn’t do much long-term to get the debt under control. It doesn’t really solve any problems at all other than the one concocted by the Tea Party — the threat of default. Ezra Klein says it’s not much of a deal, that no one had to concede anything painful.

Which means that all this wrangling for all these weeks has been largely for nothing. The deal represents a missed opportunity for a Grand Bargain that could have combined spending cuts and new taxes and would have led to much smaller deficits (supposedly Boehner agreed to $800 billion in new revenue and the White House then upped the demand to $1.2 trillion, but it’s doubtful Boehner could have sold his caucus on any new revenue whatsoever).

There’s dysfunction in the air. Something here isn’t working.

I’ve always said you get the government you deserve. But this time I think we deserved better.

By  |  11:41 AM ET, 08/01/2011

 
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