The debt ceiling deal reached yesterday can only be described as total victory for the conservative strategy of “starving the beast,” i.e., depriving the government of tax revenues to force cuts in spending.
The White House is already spinning the impact of the deal, which includes a trillion dollars in immediate cuts, as a bipartisan victory, which is ironic considering the impact contractionary fiscal policy will have on Obama’s reelection chances. As Suzy Khimm reports this morning, the deal is likely to exacerbate the public sector job decline in the states, forcing them to enact policies that will further harm the economy. Yet the White House is hailing the deal as “A Win for the Economy and Budget Discipline.” They may not ever say so, but by election time they’ll be feeling differently. The deal doesn’t contain a single red cent in stimulus or increases in revenue.
The irony of the deal, of course, is that Republicans have forced massive concessions in exchange for not putting the U.S. into default. Not only has the debt ceiling never before been used to extract concessions of this sort, but the deficit is largely the result of Republican fiscal irresponsibility during the Bush years. It’s as if a teenager got his parents to agree to buy him a Porsche in exchange for cleaning his room. Perhaps this was the best deal Obama could have gotten. I doubt that, but even if it was that doesn’t change its likely impact on the long term economic picture or the effect that will have on Obama’s reelection chances.
For years, it seemed as though the “starve the beast” forces were losing. But that was mostly because Republicans put party loyalty over ideology, and didn’t have a problem with Republican presidents running up deficits. Not only has the GOP successfully secured its ransom through railing against a deficit problem they’re mostly responsible for, but the president himself is bragging about a deal that may ultimately complicate his reelection chances.
Substance and ideology aside, it’s hard not to admire results like that.