Krugman: The Fatal Delusion (that Republicans will act reasonably)

[tpsbmam]

From Paul Krugman's blog titled "The Fatal Delusion" & Felix Salman's Reuters post titled " How we got into this fine mess." (Salmon is in block quote format)


Felix Salmon proposes an explanation for the Obama administration’s fecklessness on the debt ceiling:

<snip>

The lion’s share of the blame here belongs with the Republicans in general, the House Republicans in particular, and the Tea Party caucus within the House Republicans most of all. But it’s not like these people’s existence or intransigence was any great secret. And so the White House tactics over the course of the past few months look dangerously naive.

<snip>

The budget debate, of course, sets near-term taxation and spending. So seeking to make a virtue out of necessity, Treasury entered negotiations over the debt ceiling to do something longer-term: to put in place a decade-long “fiscal straitjacket” which would constrain future Democratic and Republican administrations alike. That would address the Krugman point, and help to cement — rather than weaken — America’s triple-A credit rating.

As things turned out, of course, Treasury’s bright idea backfired catastrophically. Far from putting the US on a course of long-term fiscal prudence, it put the country on a log raft with no paddle, careening straight towards a deathly waterfall. In hindsight, attempting to engage the House Republicans on long-term fiscal issues was a silly idea — these are people who think you can raise revenues by cutting taxes. A fiscal straitjacket, necessarily, involves some mechanism for raising taxes; since that was always going to be anathema to the Republicans, there was no point even trying to construct one.

The cost of Treasury’s tactical mistake is going to be enormous....And we’re all going to pay for it, dearly, in the years and decades to come.

The thing that strikes me is that this administration just keeps on making the same mistake. Again and again, policy is predicated on the notion that Republicans will act reasonably; again and again, they don’t. And yet Obama and company never seem to learn.

Is it too early to start drinking?

[izquierdista]

1. Pay?

That would require the transfer of monies. In this case, from the indebted to the bond holders. And who do you suppose those bond holders are, the ones who stand to gain if interest rates are pushed higher?

[Vincardog]

2. I am having a hard time not concluding that Obama and company WANT the radical right's plans

to succeed. Why else would they consistently start further to the right than necessary and give more that is asked?

Note to Obama this LIBERAL's vote is not a given

[nadinbrzezinski]

3. The same happened in 1858 and 1858

one side was being "reasonable" while the other was not... nor did it want to.

Civil wars are not nice, but all that is missing in Congress at this point are first to cuffs and canes.

[liberal4war]

4. Thank god Obama, his amdin, and Congressional Dems are keeping the GOP in line with

their courage and conviction. Just imagine if the GOP was parading around acting like crazies and radicals and taking America hostage over inane issues and placing party over principles. If that was happening, then the country would be in a wreck. Thank god its not.

As long as we don't cut too much money from protecting American and promoting freedom and liberty around the world, then I will be happy.

[damntexdem]

5. Obama is a dedicated spelunker:

he will always be caving.

[kenny blankenship]

6. Mistake? It's no mistake. Republicans are just an excuse. Why must we water HCR down? "Republicans."

Didn't get one Republican vote. Not one. Same thing with the Stimu-less, which was sabotaged out of the gate - whittled down to a level obviously inadequate to the task of filling in the projected GDP shortfall. Why sabotage your own proposal? "Republicans." Not ONE of whom voted for it in the end. But they "negotiated" AGAIN with Republicans for months, to gut the HCR and turn it into a gift to the insurance mafia and related industry lobbyists - Pharma, AMA, hospital corps.

That is no mistake, Sir. That is a METHOD.