Wednesday, August 3, 2011

Counting The Costs

We're aware that you're tired of the debt ceiling talk - and frankly, after covering it extensively over the last six weeks, we are too. As we've often reminded you though, dear reader, anything worth doing is worth doing well. For us, that includes cleaning up a few questions and comments put forward by some of our readers.

One reader thought we should cut off the perks for our elected representatives and base their salaries and benefits on the economy, "so that when they screw up the economy for us, it will affect them in the same way." We wish that were true, but sadly, that would likely only cause more graft and favors to be sold on Capitol Hill, not less.

One reader asked one of our staff if we thought Tea Partiers are really terrorists. For that, we simply defer to our colleague at Slate, Dave Weigel, who said on Tuesday, "If you don't want your opponent to label you a hostage-taker, here's an idea: Don't take hostages."

The biggest question we've heard so far is: Who won?

There are a ton of different answers to that question, depending on how someone is trying to spin it - or what their perspective is. Short-term, long-term, left, right, or terrorist Tea Bagger, the list of winners and those claiming victory includes almost everyone.

Everyone except the continually shrinking middle and working classes. They lost - and that includes most of you, our readers.

Wall Street didn't find much to cheer about in the new law Tuesday, even though its passage staved off a fiscal catastrophe. The economic news at the end of last week was horrible, in large part because of state and local governments having to make draconian budget cuts over the last six months. With this deal, it looks like that will only get worse. Because local and state governments have been firing more local people (since they no longer have Federal stimulus dollars to cushion them), people are spending less. Even with lower gas prices in June, consumers kept their wallets in their pockets.

While two of the three major credit ratings agencies did NOT downgrade America's credit, they did put the country on a kind of fiscal probation, warning the kind of shenanigans caused by nearly a decade of immature budgetary irresponsibility, capped off by Tea Party antics, will not be tolerated again. In an unusual way, most Americans agree with the credit ratings agencies, that lawmakers have been acting like 'spoiled children', especially since the last election.

Meanwhile, what was missing from the new law was help for jobs and the unemployed - both things that would help the middle class.

What was also missing from this new law - at least in the short term - was higher taxes on the rich and the closure of tax loopholes for corporations. There is no need to argue either of these points. Tax rates are some of the lowest they've been in nearly sixty years, in large part thanks to the loopholes built in primarily for the rich. Further, corporations like G.E. and Amazon paid effective tax rates near zero last year. While those problems might be addressed by the Congressional Debt committee established by this new law, that won't help create more jobs in the short term for the people who need them now, not sometime down the road.

The fact is, there are a lot of things that could have and should have been done over the last eight to ten years on the subject of debt, and paying our debts - but none of them were done.

Now, the debt is due, and it must be paid - by ALL Americans, one way or another. While those who lost the most in this fight may be the middle class, we can tell you this much: there really weren't any winners in this war.

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