For the past week, Republicans have been putting a weird emphasis on a “balanced budget amendment” (Paul Ryan admitted that the balanced budget amendment is unrealistic), an amendment that was never even mentioned during the presidency of Bush 2. As Stephen Colbert satirically said last year, “Deficits don’t matter when a Republican is president, but they do when a Democrat is president”. Republican Senator Jim DeMint has proved especially helpful as he has promised to veto everything and would prefer default to a debt ceiling deal. Focus (by both the press and Democrats) has been on Wall Street’s reaction to the negotiations, but the value of the dollar is much more important to the average person, and after the vote on Thursday night failed, the dollar fell drastically.
We now know why the vote failed in the House on Thursday and (with the insertion of the amendment) passed on Friday, as more than110 “trade groups” (including Real Estate companies, the Chamber of Commerce, manufacturing groups, and even the National Beer Wholesalers Association) signed a letter supporting Speaker Boehner’s proposal. However, top Ronald Reagan advisors (the latest being his domestic policy advisor Bruce Bartlett) are calling for taxes to be raised on the wealthy (most importantly, the capital gains rate) and that the whole “trickle-down” economics theory is bunk.
56% of Americans still think a deal will be struck, and 68% of people think that there should be some kind of compromise and only 23 percent favor default over compromise. Even the majority of Republican voters favor a compromise (while the majority of self identifying “Tea Partiers” do not favor a compromise). Meanwhile, leaders of both parties are becoming even less popular (with Obama’s approval rating falling to 40%, and Harry Reid and Boehner’s ratings being even lower). Also, the job issue is considered much more important than government debt by most Americans.
Some commentators have correctly pointed out that lost in all this bogus debt ceiling talk (and the talk about the debt in particular, with even commentators like Fareed Zakari calling for major “reforms” in “entitlements”) is that unemployment is the bigger crisis. Perhaps even more lost in the shuffle is the even bigger crisis facing the American economy, income inequality. A recent Pew Study shows that the wealth gap has become even more lopsided between ethnic groups. The average white family’s wealth is 20 times that of the average Hispanic or black family. 31% of Hispanic families have zero or negative net worth, 35% of black families and 15% of white families suffer the same fate. So perhaps it could be correctly said that at the same time wealthy members of Congress debate where to make cuts in social programs, they have been stealing everyone’s money.