You’d be very foolish indeed to put any store in Krugman’s analysis, he’s famously much more often wrong than he is right. But I think the real point here is that the deal is bad for Ed Milliband , not for Obama. The President can come out of this looking like a compromiser, once you tune out the bayings of his base (the people Rahm Emmanuel, his chief of staff, called insane). Milliband, on the other hand, with even the US led by a solid Democrat accepting some measure of austerity, now looks completely out of step with the rest of the world.

The President gave away everything. That’s not a compromise, it’s a surrender.

And it’s not just Krugman saying this.

Moreover, Miliband isn’t some kind of deficit denier, as the right-wing press and government spin, he’d just do thing differently. Like, you know, not engaging in job denial.

Obama is a Neo-liberal. Always has been. He had plenty of options that he decided to not use because this is exactly what he wants, plus he gets to play the great compromiser while having his cake and eating it. Result for him, kick in the teeth for the average Joe on the street.

The President gave away everything.

Don’t be ridiculous. If he’s “given away everything” then we would see cuts to Social Security, Medicare and Medicaid. Instead we are seeing a $1 trillion dollar cut over ten years, ie. $100 billion/year, with the US running deficits much, much bigger than that every year. Take a pill and have a lie down, for God’s sake.

Obama is a Neo-liberal. Always has been.

Nope. The reason Hard Leftists like yourself always end up accusing the likes of Obama with being a sell-out is that your expectations are completely unreasonable, and collide with the realities of what is actually possible when someone takes office. If you want to go around believing in fairytales then don’t be surprised if real life sometimes disappoints.

Let me get this right – so the liberal left is going to launch a candidate to challenge the President from the left and historically any President who faced a primary challenge lost the November election.

So the ultra-left is going back to the Bennite principles of “not compromising with the electorate” and therefore by default let the right wingers govern – And say have Romney or Bachman in the White House. Good job lefties –

The concept of adding stipulations to the debt ceiling is stupidity – and most American voters realise that and I think polls are wrong. Most independent voters would understand the President’s role well and that he had to marry ideals with pragmatism on what is best for the country. And the President probably secured his re-election tonight – and this President is the best campaigner I have seen except for Bill Clinton. So writing him off – Stiglitz and Tomasky don’t have that many followers.

He had to get a deal – without which not only the US economy but the enitre global economy and the foreign reserve currency would have seen armageddon.

There has been this tendency to talk about letting countries default – that is usually associated with 90% inflation – no food – barter system – poverty like you cannot imagine – and army having to quell food rioters. This happened in both Russia and Argentina – And those who propose that are not real lefties. They do not care about people’s lives but about their ideology. And that’s pathetic.

The exact same reason why the British electorate dumped Labour and Bennite principles and sadly was forced to choose Thatcher for three elections in a

But why am I not surprised? This guy ran the field operations for Ed Miliband campaign. The candidate who found it was “fit and proper” for a new MP to meet to plot the ouster of his own party’s leader and Prime Minister on the day terrorists tried to attack London again with bombs on 21/7.

Pathetic.

@5: “So the ultra-left is going back to the Bennite principles of “not compromising with the electorate” and therefore by default let the right wingers govern – And say have Romney or Bachman in the White House. Good job lefties -”

What’s new? This is a long-established tactic of leftists to make the inherent contradictions of capitalism more evident and by intensifying the misery of the poorest bring on the inevitable social revolution.

Obama is a Neo-liberal. Always has been. He had plenty of options that he decided to not use because this is exactly what he wants, plus he gets to play the great compromiser while having his cake and eating it.

Yep, just like with our own quislings more and more democrats are realising it doesn’t make sense to assume Obama’s motive.

The soft liberals here who love to declare that a tory policy is “failing” will catch on soon enough.

@4 – No, acceding to the other party’s demands of several months before, in-toto, isn’t a surrender. Oh, only if the other party’s on the right, I see.

@7 – No, that some are deliberately set up to fail is quite transparent.

i need some help with this, as a simple ex squaddie n private security contractor im not the sharpest knife when it comes to economic policy,but, surely when you are running an annual deficit in excess of a trillion dollars, how exactly can a plan that saves a trillion over ten years be seen as a serious attempt at economic responsibility? wonder how americas bank managers in beijing view the plan?

Shamit/5: So the ultra-left is going back to the Bennite principles of “not compromising with the electorate” and therefore by default let the right wingers govern – And say have Romney or Bachman in the White House. Good job lefties

One of the things the US “right wing” is not afraid of is sabotaging a few elections of its “own” moderates to bring the rest in to line. The Tea Party have the Republicans terrified of saying anything that’s not far-right or they end up facing a TP primary themselves. (Who then usually does go on to lose the general election, yes, but that’s not the point; it’s fine to be a few representatives or senators down if the rest don’t dare rebel)

Conversely the “left wing” is terrified of losing a single seat to the right anywhere for any length of time. So it puts up with candidates and elected members on the grounds that they may be David Cameron but at least they’re not Nick Griffin.

The net effect of this of course is to move the “centre ground” of politics significantly to the “right”, so that to be a “moderate, electable, left-wing” politician, you have to espouse policies that were a couple of decades ago further to the “right” than most of the “right-wing” party were saying. At that point it doesn’t matter who gets elected, because the “right-wing” get their policies either way.

(Also, do bear in mind that because of this the US political system is way to the right of the UK one on post issues, so the “ultra-left” you’re talking about would be woolly “centre-left” over here. It’s like saying that because Labour won’t let the Conservatives have their way, they’re risking letting the BNP in.)

If the Super Congress’s deficit reduction recommendations are not adopted then massive spending cuts in key areas like defence and Medicare (health coverage for low income citizens) will be automatically triggered. The idea is that a small group of Congressional centrists armed with a doomsday weapon can succeed where liberal Democrats and conservative Republicans alike have failed.

You’re missing an important part of the Doomsday trigger: if the recommendations aren’t adopted, Bush’s tax cuts for the rich won’t be renewed. That’s a significant part of where the Doomsday money comes from.

Milliband, on the other hand, with even the US led by a solid Democrat accepting some measure of austerity, now looks completely out of step with the rest of the world.

Because the world consists solely of the US and already-bankrupt Eurozone periphery countries?

surely when you are running an annual deficit in excess of a trillion dollars, how exactly can a plan that saves a trillion over ten years be seen as a serious attempt at economic responsibility? wonder how americas bank managers in beijing view the plan?

They’re fine with it, because *the US can still afford it*. The only people who’re actually worried about the US deficit are economically illiterate politicians and political commentators. But for the stupidity of the debt ceiling, it wouldn’t even be an issue.

Here’s something that fits with something I meant to write yesterday: the possible disconnect between the universal condemnation of liberal commentators and the response of the “average” American. See here:

http://www.economist.com/blogs/democracyinamerica/2011/08/debt-ceiling-deal-0?fsrc=rss

“The only people who’re actually worried about the US deficit are economically illiterate politicians and political commentators. But for the stupidity of the debt ceiling, it wouldn’t even be an issue.”

Quite. It’s worth noting that, with respect to the media discussion about the PIGS, you hear an awful lot about the bond yields. With respect to the US, you hear nothing. Why? Because they have hardly moved. So, despite the ravings of the ratings agencies and the deficit hawks, the markets themselves thought that the chance of default was precisely zero.

Those interested in preserving the status-quo have been very clever in manipulating the media from discussing banking and the world economic structure to obsessing about public debt.

@ Scooby

“Milliband, on the other hand, with even the US led by a solid Democrat accepting some measure of austerity, now looks completely out of step with the rest of the world.”

Why? There are certainly people on the left who argue that we shouldn’t make any cuts, but Miliband has never taken that line – any more than Cameron has taken the Tea Party line that we shouldn’t raise any taxes.

@13 – Two of the agencies have the US on the way down, and it’s unlike the US will retain AAA in their growth doesn’t pick up. We won’t be far behind, either.

@15 -Why should the US care about the ratings agencies? They have had Japan’s rating below Botswana’s in the recent past, which has had precisely zero effect on their bond yields. In this case, the markets (and not the agencies) are telling us what is meaningful.

@15 -Why should the US care about the ratings agencies? They have had Japan’s rating below Botswana’s in the recent past, which has had precisely zero effect on their bond yields. In this case, the markets (and not the agencies) are telling us what is meaningful.

Probably worth pointing out that Botswana is poor but very well governed – so its bonds might lack collatoral (although there is mineral wealth, and apparently some oil), but are seen as secure. Not the best African example there for your point…

It should be pointed out that Ratings Agency and the market-level bond yield are not measuring the same things though (indeed, bond yields are probably not strictly comparable as the considerations of individuals behind yields over time and distance are probably different – so although they still produce a market figure, that figure measures a unique set of considerations).

@1 “You’d be very foolish indeed to put any store in Krugman’s analysis” and “bad for Ed Miliband” – I fear we can’t find much common ground here. I trust Krugman’s judgement. I think the economics of the world at this time call for Keynesianism. I guess you don’t. Agree to differ?

@2 like your “job denier” line! Don’t agree it’s a “total surrender”. I think Obama could have got more (payroll tax holiday springs to mind) but it is on balance a really bad deal.

@3 not sure how Obama’s a “neoliberal” given his acheivements of classic liberal ambitions like healthcare reform (expansion of coverage to 34mn people!) and FinReg (reinstating the Volker rule no less).

@4 thanks Scooby!

@5 whoooa there! Not sure where I called for a primary challenge. I’m a big Obama supporter and have been since I first signed up on the campaign in November ’06. Not sure how my work for the ed campaign fits into this except that I admit to liking underdog candidates who fight for change.

@9 actually the Chinese are in favour of greater spending – both for good economic reasons (if you happen to believe in counter-cyclical spending) and what might be styled less altrustic power politics. Still, you can’t blame a country’s govt for practing enlightened self interest!

@10 good points. I’ll have a think about that.

@11 I doubt the Bush tax cuts will be renewed by any means. They’ll be decided on by the lame duck Congess of 2012 and they will just be left to lapse in the absence of a positive vote in both chambers signed by President Obama who will claim the deficit as his reason to let them die off. Good riddance too!

@12 good link – thanks!

@13 “Those interested in preserving the status-quo have been very clever in manipulating the media from discussing banking and the world economic structure to obsessing about public debt.” – bingo!

@14 yes – thank heavens our politics is more moderate (and more centre left)

@17 good distinction

@17 Botswana may be governed well, but is still not an economic “giant” like Japan. In what way is Japan not secure?

@7 – No, that some are deliberately set up to fail is quite transparent.

That’s the thing with transparent objects, they can be a pain in the arse to see.

I’d refer you to the words of Glenn Greenwald;

It appears to be true that the President wanted tax revenues to be part of this deal. But it is absolutely false that he did not want these brutal budget cuts and was simply forced — either by his own strategic “blunders” or the “weakness” of his office — into accepting them. The evidence is overwhelming that Obama has long wanted exactly what he got: these severe domestic budget cuts and even ones well beyond these, including Social Security and Medicare, which he is likely to get with the Super-Committee created by this bill (as Robert Reich described the bill: “No tax increases on rich yet almost certain cuts in Med[icare] and Social Security . . . . Ds can no longer campaign on R’s desire to Medicare and Soc Security, now that O has agreed it”).

http://www.salon.com/news/opinion/glenn_greenwald/2011/08/01/debt_ceiling/index.html

It appears that the Tea Party’s paranoia is rather mild in comparison to that afflicting the British left!

Some polling data on the deal:

http://www.washingtonpost.com/blogs/plum-line/post/republicans-winning-the-larger-argument-over-government/2011/03/03/gIQAnVtupI_blog.html

It appears that the Tea Party’s paranoia is rather mild in comparison to that afflicting the British left!

Nah, increasing numbers are realising there’s a line between malice and stupidity is all.

Matt Taibbi;

We probably need to start wondering why this keeps happening. Also, this: if the Democrats suck so bad at political combat, then how come they continue to be rewarded with such massive quantities of campaign contributions? When the final tally comes in for the 2012 presidential race, who among us wouldn’t bet that Barack Obama is going to beat his Republican opponent in the fundraising column very handily? At the very least, he won’t be out-funded, I can almost guarantee that.

And what does that mean? Who spends hundreds of millions of dollars for what looks, on the outside, like rank incompetence?

It strains the imagination to think that the country’s smartest businessmen keep paying top dollar for such lousy performance. Is it possible that by “surrendering” at the 11th hour and signing off on a deal that presages deep cuts in spending for the middle class, but avoids tax increases for the rich, Obama is doing exactly what was expected of him?

http://www.rollingstone.com/politics/blogs/taibblog/debt-ceiling-deal-the-democrats-take-a-dive-20110801