Slouching toward history’s first intentional Great Depression

We’ve been here before, back in the late ’20s and throughout the ’30s. But this time, we’re going to do it on purpose.

There’s blame to go around, in the long view. The Democrats did their bit leading us up to this point, but they’ve been offering compromises lately, and occasionally even making sense. Here in the home stretch, most of the “credit” for a crash will belong to the Republicans and their Kool-Aid-drinking — I mean Tea-drinking — friends.

Yesterday, the five Republican members of South Carolina’s congressional delegation “distinguished” themselves by being the most obstinate state bloc in the GOP caucus. Not that the Boehner plan was anything to write home about, or anything likely to get us toward a resolution. Today, I see that Boehner’s doing better among his caucus, but for all I know, our guys are still firing on Fort Sumter. (Anybody see an update on the SC part? I haven’t yet.)

But after all the tears and folderol in the House, whatever they pass will be DOA in the Senate, where Reid has a plan of his own. I fail to see how these two plans lead us to an actual solution before Tuesday.

And here’s the thing, folks — it’s not good enough to raise the debt limit. The ratings agencies will still probably downgrade the nation’s (AND South Carolina’s) credit rating, which will likely take our already staggering economy (did I mention that the newspaper company that laid me off two years ago just posted a 2nd-quarter loss of 32 percent?), and knock it right down onto the mat. UNLESS we take serious steps toward getting the deficits under control. And that’s WAY harder than just raising the ceiling.

You’d think — what with the fact that about the only thing our state’s leaders have had to brag about for the last 20 years has been our vaunted AAA rating — that the SC delegation would want to do something positive toward averting this disaster, wouldn’t you? Well, so far, you’d be wrong.

You know what happened in the U.K. after the Conservatives — the real conservatives, not these ruffians over here who take pride in throwing the Tories’ tea into the harbor — took over the government? They cut spending, and raised taxes. I was there when the taxes went up (see, “The terrible, awful, horrible day that the VAT went up,” Jan. 4) Far as I know, England is still there. Scotland, too. Maybe even Wales, and Northern Ireland.

Nobody wants to raise taxes at a time like this. It can have a cooling effect. Nor does a sensible person want to see drastic spending cuts, which can do the same. But the alternative to doing both looks considerably worse at the moment. And wanting to do one without the other — no, insisting upon doing one without the other, no matter what — is a form of madness.

Just something to think about, guys. Here at the last minute.

22 thoughts on “Slouching toward history’s first intentional Great Depression

  1. Brad

    This is kinda weird. Joe Wilson just put out this rambling statement that doesn’t get around to saying how he voted today…

    Wilson Votes to Hold Washington Accountable for Spending
    (Washington, DC) – Congressman Joe Wilson (SC-02) released the following statement after the House of Representatives passed the Budget Control Act:

    “Washington is broken and we need to stop its out-of-control spending. Due to the inaction of both Democrats in the Senate and the current Administration, our nation’s debt ceiling is now at a critical juncture. This past November, Americans made it clear they expect their elected leaders to make meaningful fiscal reforms today so as to not burden future generations with crushing deficits and debts tomorrow.

    “Holding Washington accountable for its spending is the solution I support. Last week, I praised Speaker John Boehner for passing the plan best suited for such a solution: the Cut, Cap, and Balance Act of 2011.”

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  2. Brad

    Did you hear about John McCain’s speech in which he referred to the “Tea Party Hobbits?” He was quoting from this piece in the WSJ. An excerpt:

    “The idea seems to be that if the House GOP refuses to raise the debt ceiling, a default crisis or gradual government shutdown will ensue, and the public will turn en masse against . . . Barack Obama. The Republican House that failed to raise the debt ceiling would somehow escape all blame. Then Democrats would have no choice but to pass a balanced-budget amendment and reform entitlements, and the tea-party Hobbits could return to Middle Earth having defeated Mordor.”

    Reply
  3. Ralph Hightower

    @doctorjeff on Twitter:
    al Qaeda? Determined to bring America down. And how is that different than the #Teaparty except that they were ELECTED to do it?

    Reply
  4. bud

    There’s blame to go around, in the long view. The Democrats did their bit leading us up to this point,…
    -Brad

    No,no,no. This is 100% the fault of a handful of stubborn fools in congress. That’s like suggesting there is blame to go around for Germany’s invasion of Poland. This one is entirely a failure by the GOP and the voters.

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  5. bud

    The national debt is a long-term problem that needs to be addressed. But not now. Let’s just work on the sluggish economy and in a year or two when unemployment is down to around 6% then we can revisit that problem. After all immediately after WW II our debt was far greater relative to GDP and we were able to thrive for half a century. Perhaps a bit of a tax hike on the wealthy to help shore up SS and Medicare but otherwise lets spend like drunken sailors to get things moving again.

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  6. Mark Stewart

    As a Republican in Joe Wilson’s district, I place the blame for this abdication of leadership squarely in the shoulders of the House Republicans – particularly the sane ones who do nothing to confront the “true believers”. I guess I’ll have to give Ol’ Joe a pass on that as he’s never given any indication that he possesses either the spine or the intellect to lead from the front.

    It’s a pretty sad display of South Carolina’s habit of poking with a sharp stick at all the most counter-productive moments.

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  7. Letter to Joe Wilson

    Unanswered letter to Joe Wilson

    What prompts this letter is the pending battle over the debt ceiling, and the implications that a default will have on my investments. I believe most of your constituents readily accept the need for a package of spending cuts and selective tax increases. People with investments are your natural constituency, and while votes that risk a default or target our Social Security or Medicare benefits may be politically fashionable, they nevertheless have extremely dangerous consequences.

    As you undoubtedly are aware, of the $14.3 trillion in national debt, $5.7 trillion is IOUs to the Social Security and Medicare programs, money that a succession of Congresses has stolen after your constituents have paid taxes into those programs. I would like to see some energy from you on that issue, beginning with an admission that your votes throughout your career have contributed to that situation, and culminating with your efforts to create a solution.

    I completely understand the need for some political cover in this day and age, but I want you to appreciate and comprehend that your lock-step Grover Norquist votes are forcing me away from you.

    Again, I urge you to work towards a compromise package of spending cuts and selective tax increases. Default will be an unforgiveable assault upon personal fortunes, and your continued rejection of a middle ground approach that strengthens rather than undermines our economy will be harshly judged by far more people than you may currently imagine.

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  8. Doug Ross

    @Bud

    Social Security has nothing to do with the debt limit. What part of that don’t you understand? Social Security is a self-funded program. The only reason we hear about it is because Congress has borrowed money from the surplus Social Security trust fund that is supposed to go to baby booomers down the road.

    And the unemployment rate won’t be near 6% for quite a long time as long as we run deficits. You gotta pay the piper some day and he’s warming up right now.

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  9. Steve Gordy

    Now we know what “Joe means Jobs” REALLY meant. It meant, “I’ll throw anyone or anything overboard if it means I get to keep my job.”

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  10. bud

    If SS is not a part of the debt limit then it shouldn’t even be a part of the discussion. I favor a clean bill to raise the debt ceiling. Then we can spend like crazy to get out of this unemployment mess.

    Once we move forward from the high unemployment rates that have resulted from huge cuts in government spending at the state and local levels then we can comfortably deal with the debt issue. I’d start by eliminating the cap on SS contributions. Next I’d raise the capital gains tax to about 40-50%. Then I’d cut military spending by about half. A few other cuts to wasteful programs like the I-73 project and presto, problem solved.

    Reply
  11. `Kathryn Fenner

    “the Republicans and their Kool-Aid-drinking — I mean Tea-drinking — friends.”

    There’s that scary-weird billboard on Gervais at Millwood of Rush Limbaugh as Paul Revere hawking some raspberry tea product–sort combines the tea and the Kool-Aid in one easy to swallow nostrum.

    Reply
  12. `Kathryn Fenner

    Raising taxes theoretically has a cooling effect, but realistically, the inelasticity of consumer demand is notable. Will some 6 figure earner postpone even buying a contemplated second home just b/c his/her taxes are going up even a thousand dollars? Was I not going to buy a new fridge to replace my dead one just b/c the economy was dodgy?

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  13. Karen McLeod

    @Letter to Joe Wilson. You phrased that much more courteously than I would have, were Mr. Wilson my non-representative. Well reasoned and nicely written.

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  14. tired old man

    Doug, I beg to differ.

    This may not be the greatest source, but it is a source for believing that Congressional pilfering of the SS program is very very much part of this issue.

    Major US creditors: China, Japan, pension funds
    July 17, 2011

    http://www.monstersandcritics.com/news/business/news/article_1651844.php/BACKGROUND-Major-US-creditors-China-Japan-pension-funds

    Washington – The US government owes 14.3 trillion dollars to creditors, including about a third to foreign countries and foreign investors, and nearly another third to US pension funds and investors.

    But it owes its largest debt to itself – about 5.7 trillion dollars – in the form of assets that have been borrowed from the Social Security pension scheme and the Medicare health system for the elderly.

    Reply
  15. `Kathryn Fenner

    I got a non-responsive response to my letter to Jim Demented. You gotta hand to him, he stays “on message.”

    No response from Lindsey G.

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  16. bud

    The main lesson that should be learned (or really re-learned) is that the GOP in general and the absolutely crazy tea party wing just cannot be deal with through compromise. They have to be bowled over. They ruined the health care system by constantly harping away at the president to the point that we ended up with a rather mediocre plan. Now this. The president really should just go away and invoke the 14th ammendment, raise the debt limit then fight it out in court. He may lose but that may happen anyway.

    Reply
  17. Doug Ross

    As Rand Paul said for him, compromise IS raising the debt ceiling. Combining it with cuts would be the true compromise position.

    Reply
  18. `Kathryn Fenner

    Our credit is already compromised–too much brinksmanship makes any sensible investor wonder about the next time….

    You know, sometimes things are never the same after something happens–the ship of state doesn’t always sail away smoothly into the sunset–and THAT’S NOT A BEAUTIFUL THING.

    Reply

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