Obama is not “caving” to the Tea Party
Those accusations that Obama is a wimp getting pushed around by the right wing are false. It’s a bad-cop-good-cop game.
See this article by Jeff Cohen.
Independent Senator Bernie Sanders of Vermont — widely seen as “America’s Senator” — is so disgusted by recent White House actions that he called Friday for a challenge to Obama in Democratic primaries: “I think it would be a good idea if President Obama faced some primary opposition.
Also check out this article in Al-Jazeera by Dean Baker.
President Obama’s distortion preserved the idea of the deficit as a chronic problem, while also getting in an attack on the Republicans. It also allows him to avoid talking about the housing bubble. This is a topic that he seems anxious to avoid, since many large contributors to his re-election and to the Democratic Party profited enormously from the bubble.
[The] crisis over the debt ceiling is the answer to the prayers of many people in the business community. They desperately want to roll back the size of the country’s welfare state, but they know that there is almost no political support for this position. The crisis over the debt ceiling gives them an opportunity to impose cutbacks in the welfare state by getting the leadership of both political parties to sign on to the deal, leaving the opponents of cuts with no plausible political options.
To advance this agenda they will do everything in their power to advance the perception of crisis. This includes having the bond-rating agencies threaten to downgrade US debt if there is not an agreement on major cuts to the welfare state.
In principle, the bond rating agencies are only supposed to assess the likelihood that debt will be repaid. However, they showed an extraordinary willingness to allow profit to affect their ratings when they gave investment-grade ratings to hundreds of billions of dollars of mortgage-backed securities during the housing bubble. Given their track record, there is every reason in the world to assume that the bond rating agencies would use downgrades or the threat of downgrades for political purposes.
This means that the battle over the debt ceiling is an elaborate charade that is threatening the country’s most important social welfare programmes. There is no real issue of the country’s creditworthiness of its ability to finance its debt and deficits any time in the foreseeable future. Rather, this is about the business community in general, and the finance sector in particular, taking advantage of a crisis that they themselves created to scale back the country’s social welfare system. They may well succeed.
NEVER LET A GOOD CRISIS GO TO WASTE (paraphrasing Rahm Emanuel)