Thursday, January 3, 2013

The Next Armageddon

This morning's paper is filled with talk of the debt ceiling.  We lurch from one Armageddon to the next (which doesn't make sense because in the Book of Revelation there's only one grand battle that brings the end of the world).  Before the American Taxpayer Relief Act was even signed into law focus had already shifted to Obama's promise not to negotiate with House Republicans on the debt ceiling.  This is the way it is put in an unsigned editorial in the New York Times:
Mr. Obama sounded resolute on Tuesday night in vowing he will not submit to this blackmail. “I will not have another debate with this Congress over whether or not they should pay the bills that they’ve already racked up through the laws that they passed,” he said. But will he really keep this promise?

The White House won several victories in the fiscal-cliff package, but its eagerness for a deal disappointed many who believed the president’s promise to raise far more revenue. It is hard to see how he avoids giving in to Republican demands, as he was forced to do in 2011. 
Michael Shear and Jackie Calmes have a frontpage story which gives voice to a beltway skepticism of Obama's ability to hold the line:
Some people in both parties questioned why Mr. Obama would so emphatically vow not to negotiate over the debt limit, a promise he may ultimately be forced to break if necessary to avoid economic shock waves.

“It’s bizarre,” said one veteran Democratic senator who would not be named, citing the proven willingness of Republicans to force a fiscal crisis unless the president makes a deal for additional spending cuts.
I don't watch the markets like I used to; one thing I can say for sure is that the last time there was a standoff on the debt ceiling the Dow was badly shaken.  And since Obama has already agreed in theory to a chained CPI, why would a hard-to-control House Republican caucus accept anything less in exchange for raising the debt limit?  This debt-ceiling drama will play for a two-month run, which is the same amount of time the fiscal cliffhanger took.

Before rushing into the new Armageddon let's take a moment to appreciate what Obama has achieved.  Take a peek at this quote from David Leonhardt's think piece:
On average, the top 0.1 percent of earners — whose incomes start at $2.7 million and go much higher — will pay $444,000 more in taxes in 2013 than they otherwise would have, according to the Tax Policy Center. The increases stem from both the fiscal deal and the new taxes in the health care law.

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