The Debt Ceiling: A Story of Bad Policy.

   Congress seems to have finally come to agreement on a deal to raise the debt ceiling and avoid an unprecedented default by the US government.  To no surprise the "deal" is composed of only spending cuts, with no new revenue.  Even closing tax loopholes were left out of the final agreement.  This "deal" once again ignores common sense and the history books and instead looks to just slash spending, and especially spending that hurts everyday Americans the most.  It rewards the Tea Party and Republican extremist who essentially defied the constitution to extract spending cuts on what should be a routine increase to the governments ability to borrow money that has already been authorized to be spent.
   As I have reflected on this so called crisis and pondered how we got to this place I am struck by how absolutely ridiculous this story is.    This so called crisis was not created over night.  Both parties are responsible for our budget deficit.  However, one party is completely dishonest about their role in running up our long term deficit.  George W. Bush cut taxes and dramatically increased our expenditures by passing the Medicare Prescription Drug bill, and then foolishly starting the war in Iraq while never actually putting the wars in the budget.  All this fiscal irresponsibility was done while times were good.  This was before the Great Recession.  This was a time where government should have been paying down our long-term deficit rather than running record deficits.
   These irresponsible budgets were coupled with a lack of interest in any kind of regulation of wall-street or big business.  Big banks lent money to anyone and everyone, whether they could afford it or not.  Investment firms and banks leveraged themselves to the extreme, and used credit default swaps and lies to create a huge bubble that ended up bursting leading to bailouts and long-term unemployment of almost 10%.  These policies have hurt everyday middle-class and lower class Americans.  And yet these same people will now bear the brunt of the burden as the government goes down this path of austerity.
   Income inequality continues to grow, class mobility continues to shrink, real income in every class except the upper class has stayed even or decreased over the last 30 years, and yet we continue to look to Republicans and their policies as answers to a question we have already missed over and over again.  Even the stimulus bill (which was too small to begin with)  was 1/3 tax cuts.  And yet here we are, looking at how we can slash spending in the midst of high long-term unemployment, and actually arguing that Dodd-Frank is regulating business too much , and that taxes are too high despite the fact that they are at their lowest point since the 50's.
  Not quite a year ago, Great Britain unveiled dramatic austerity measures in hopes of restoring confidence to the markets and resuming economic growth.  However, the exact opposite has occurred.  Business has continues to contract, contrary to what the conservative party predicted.  Hoover tried the same thing during The Great Depression.  We are now repeating the same story all over again.  Cutting spending at exactly the wrong time.  We should be raising spending, and raising taxes at the same time.
   Yes you herd me correctly we should be raising taxes on both high wage earners, hedge fund managers and those who get most of their income from investments and finally on businesses.  Contrary to Republican talking points raising taxes on business is actually good policy.  Higher taxes actually encourages businesses to reinvest profits into their business creating jobs, increasing consumer spending and leading to higher tax receipts.
   Simply cutting spending, though simple and straight forward and easy to sell to an uninformed public, is not good policy nor does it make economic sense at a time when the economic recovery continues to limp back at a pace not likely to reduce the employment rate.  And yet here we are.  President Obama continues to negotiate against himself, and allow Republicans who control only one house of congress to manufacture crisis after crisis and extract demand after demand from the president to the detriment of the country.  If we continue to reward the hostage takers they will continue to take hostages.