Sunday, August 07, 2011

Rant: The Republicans have gotten us into a fine mess!

I quote from Saturday's Washington Post:
Standard & Poor’s announced Friday night that it has downgraded the U.S. credit rating for the first time, dealing a symbolic blow to the world’s economic superpower in what was a sharply worded critique of the American political system.

Lowering the nation’s rating to one notch below AAA, the credit rating company said “political brinkmanship” in the debate over the debt had made the U.S. government’s ability to manage its finances “less stable, less effective and less predictable.” It said the bipartisan agreement reached this week to find at least $2.1 trillion in budget savings “fell short” of what was necessary to tame the nation’s debt over time and predicted that leaders would not be likely to achieve more savings in the future.
Seemingly, the Republicans, especially those of the Tea Party persuasion, do not think that their actions in the Congress have repercussions. It turns out that President Obama was right and that it would have been better to increase the taxes on the very rich to levels typical of past periods of economic progress in order to get greater reductions in the debt. The Republican refusal to compromise on a comprehensive debt reduction policy has cost us the loss of the AAA credit rating. That may cost us a lot more, notably by making a stall of the U.S. economic recovery more likely.

Republicans should also take note of the fact that economies of European nations, Asian nations and the United States are connected. Those of Europe and Japan are also on shaky grounds, especially due to the debt problems of Greece, Ireland, Spain and Italy. Economic downturns in some of these countries will decrease their imports and thus the exports of other nations, decreasing demand for their products, leading to unemployment, and so it goes.....

U.S. Unemployment Rate
Source: The Washington Post

This is only one case where the Obama administration has gotten it right, and the Republicans got it wrong forcing economy damaging compromises.

It is clearly the case that the George W. Bush eight years of bad policies got us into problems that will take more than a few years to repair, even with good policies. That administration got us into two wars that drag on and on, resulting in huge financial costs as well as costs in human lives. The Bush administration also as a result of tax cuts and spending increases created the debt crisis.

  • The Obama administration was correct in perceiving that its first priority was to stimulate the economy, and that required further deficit spending. Incidentally, the need for deficit funding to stimulate the economy when there is a recession (or worse a depression) is why a balanced budget amendment to the constitution is a bad idea, not to mention the need for deficit funding in other situations, such as when the United States is forced to fight "a good war" such as that of World War II.
  • The Obama administration was right in trying to end the "temporary" Bush administration tax breaks for the very rich, but also right in compromising with the Republicans in agreeing to a temporary extension of those breaks last year as the price of a compromise needed to further stimulate the economy.
  • The Obama administration is correct in perceiving that we need to wind down the wars in Iraq and Afghanistan, reducing the drains on our economy and on our military readiness to deal with other, more serious security threats that might arise.
  • The Obama administration was correct in its attempt to reform our health care law, importantly to reduce the rate of increase of costs for medicare and medicaid, but also to extend health insurance to more of the American public.
  • Incidentally, the Obama administration has also been right in reversing the Bush administration policies on stem cell research and on the military "don't ask, don't tell" policy. It has done a real service in strengthening the scientific leadership in the government, and putting scientific accuracy above political expediency (again reversing the Bush administration policy in areas such as the scientific basis of climate change policies and other environmental policies).

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