Economy,  Stateside

Biden, the T-word and the debt deal

There is some dispute over whether Vice President Biden, in a meeting with Congressional Democrats on the awful agreement which ended the manufactured US debt-ceiling crisis, referred to the Tea Party movement as “terrorists.”

The ABC News blog Political Punch reported:

[M]eeting with anxious House Democrats yesterday, the Vice President heard from Rep. Mike Doyle, D-Penn., who said “the Tea Party acted like terrorists in threatening to blow up the economy.”

Doyle used the term several times. What happened next is in dispute. Several sources told Politico that the Vice President responded by saying, “they have acted like terrorists.”

Other sources told ABC News that the vice president said something along the lines of “if they have acted like terrorists, we’re taking the nuclear weapon away from them.”

The Vice President told CBS News’ Scott Pelley, “I did not use the terrorism word…What happened was there were some people who said they felt like they were being held hostage by terrorists. I never said that they were terrorists or weren’t terrorists, I just let them vent. I said, ‘Even if that were the case, what’s been happening when you now have taken and paid the debt and move that down so we can now discuss, the nuclear weapon’s been taken out of anyone’s hands.’”

Congressman Doyle was wrong to compare the Tea Party to terrorists. And if Biden did the same, he was also wrong. Congresswoman Michele Bachmann, who once said President Obama has “anti-American” views, was quite right to criticize this sort of overheated political rhetoric, with which she is quite familiar.

However, Doyle and Biden would be quite correct if they said:

–The Tea Party wing of the Republican party in Congress held a metaphorical gun to the metaphorical head of the American economy by threatening to throw the US government into default for the first time in history, with all kinds of unforeseeable consequences, unless the wealthiest Americans were protected from even modest tax increases.

–Rather than calling their bluff and risking economic catastrophe, President Obama agreed to a deal with lots of spending cuts but no tax increases. He instead should have invoked the Fourteenth Amendment to the Constitution, which says that public debts “shall not be questioned,” to raise the debt ceiling unilaterally. After all if Congress appropriates money for things which can’t be funded without borrowing money, it is in effect approving that borrowing.

–The main reason the US government is so deeply in debt is that President George W. Bush, with the support of Congressional Republicans, approved two hugely expensive wars and a hugely expensive prescription prescription drug program for senior citizens without raising taxes. Quite the contrary, they approved a huge tax cut, mostly benefiting the very rich.

–A sharp and immediate reduction in government spending is the last thing the US economy needs. While debt reduction is certainly required in the long term, what is needed now— at a time of weak economic growth and persistently high joblessness– is short-term government stimulus rather than contraction.

(By the way, for those who doubt the effectiveness of government stimulus, recall that the biggest government stimulus in history– namely World War II– reduced unemployment in the US from 14.6 percent in 1940 to 1.2 percent in 1944.)

–According to poll after poll, and despite what some Republicans seem to think, the Tea Party does not speak for the majority of Americans, who are far more concerned about jobs than they are about debt. Polling consistently showed that when it came to raising the debt ceiling, a big majority of Americans rejected the Tea Partiers’ cuts-only demands and favored a program of spending cuts and tax increases.

In an ideal world, there will be a political price to pay for this.