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OpEdNews Op Eds    H2'ed 4/17/11

U.S. Government Survives Shutdown Threat But Last Minute Deal Only Postpones More Series Economic Warfare

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Message Danny Schechter

The Capitol Hill battlefield is still for the moment as the Easter holidays approach and the combatants get a break from the heated polemics and overnight bargaining sessions. In a last minute deal, milked by both sides for maximum drama and political advantage, the government will not shut down -- at least not now -- even as its budget has taken a major whack. 

Each side can posture to supporters as a victor. The President, who managed the process from the shadows, posed for photos in the White House after his great compromise of 2011 was announced. It was a media moment to be relished, as media columnist Howard Kurtz explained on the Daily Beast, 

"The White House escaped most of the blame. Once the spotlight shifted from the political gamesmanship to the human impact of a shutdown -- soldiers in Iraq and Afghanistan not getting checks, passport offices closed, national parks off limits -- everyone knew an angry public would start pointing fingers. But blame-shifting is a high art in Washington; now both sides can argue about who brought the country back from the brink." 

Oh, the games the politicians play in the fight for public perception. But in the reality sphere, what can't be denied is the actual money involved and who will be hurt. The Washington Post's Ezra Klein cut through the bull to look for the bone. "The substance of this deal is bad," he writes, "But the way Democrats are selling it makes it much, much worse." 

The final compromise was $38.5 billion below 2010's funding levels. That's $78.5 billion below President Obama's original budget proposal, which would've added $40 billion to 2010's funding levels, and $6.5 billion below John Boehner's original counter offer, which would've subtracted $32 billion from 2010's budget totals ... Obama bragged about "making the largest annual spending cut in our history." 

Harry Reid joined him, repeatedly calling the cuts "historic." ... You would never have known that Democrats had spent months resisting these "historic" cuts, warning that they'd cost jobs and slow the recovery." The Democrats believe it's good to look like a winner, even if you've lost. But they're sacrificing more than they let on.

Take a breath because this budget fight is only a minor blip in a deeper and protracted war that is just cranking up. As Business Insider notes,

"The fight over whether to shut down the government for a few days is chicken-scratch. It's low-stakes poker compared to the fight over the debt ceiling, which must be resolved by May 8, in just over a month. 

"The consequences are way more severe, potentially, than the shutdown of government. At the most extreme, it could lead to default. And if you figure that the market goes into a tizzy at the suggestion of, say, Greece defaulting, then the impact of the US should be easy to comprehend. 

There's no doubt that Boehner doesn't want a disastrous outcome, but his challenge is in getting his more radical compatriots to come along with him." 

Some like the American Dream blog fear a collapse of the economy in the absence of more fundamental change: 

"It is being projected that U.S. government debt will rise to about 400 percent of GDP by the year 2050. Of course that will never happen because we will have a complete and total financial collapse in this country long before then if nothing changes." 

So the game of attrition and denial continues. In the wings is a proposal from Republican budget maven, Congressman Paul Ryan to cut TRILLIONS in federal spending for various forms of health care. Nobel Prize winning economist and New York Times columnist Paul Krugman calls it senseless and cruel. 

The myth is that these cutbacks will create new jobs. There is little evidence of that. Many of those hardest hit by joblessness get little attention including minorities and the young. Reports economist Max Wolff, "People under 35 years old are not getting the new jobs we create. Employment, home ownership, and wage increases are bypassing younger Americans. As state and local budgets are cut, education and services for the young are contracting especially sharply. 

While this high stakes political battle catches the headlines, the sclerosis in the private economy is downplayed with deceptive gains on the job front. 

As for housing, the retirement dreams are being destroyed by the fall in housing value reports Bloomberg news? "Even if the housing market starts to improve throughout the country in the next few months, and actually begins an upward trend, the damage done to middle class home-ownership can't be estimated even by using the most sophisticated algorithms. As a result of changing business models, many Americans looked to the equity in their home as their 401K plans and the foundation for retirement. For many homeowners, equity equaled net worth. With that equity evaporating, and an inability to sell a home even at drastically reduced prices, lives have been so dramatically impacted financially, that a housing recovery, if and when it happens, may not really matter." 

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News Dissector Danny Schechter is blogger in chief at Mediachannel.Org He is the author of PLUNDER: Investigating Our Economic Calamity (Cosimo Books) available at Amazon.com. See Newsdisssector.org/store.htm.
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