The World Looks on in Incredulity, Wonder, and Fear: The Global Meaning of America’s Budget Cutting and Gamesmanship

The spectacle of the recent 2011 Budget fight  resulted in an outcome $78.5 billion dollars lower than President Obama’s original proposal. This was accompanied with the initial ideological demands to eviscerate every possible program that helps our poor, our women, our young, our aged, our sick, and the average citizen who almost universally has fallen on hard times in this economic downturn.

It does nothing to solve a budget problem which has been blown out of any proportion by the Republicans in order to destroy the government’s efforts to get our economy back from its disastrous downturn. The agreement to force the District of Columbia, with a large Black population which has no voting representation in Congress, not to spend any money for abortions with its own money, was an example of the racial prejudice and ideological bent of many Republicans on the Hill. Other countries must wonder at the motivations behind such an act and wonder how it was permitted by the President.

One of the great disappointments of the “deal” was the cut of more than $8 billion from the Department of State and USAID’s foreign assistance program. This is a devastating cut. Yet also some $13 billion was cut from the Labor, Education and Health and Human Services departments.

What was not cut was the defense department which will get still an additional $5 billion over the next six months — verses a proposed $7 billion. Yet it is here that the big dollars reside in the discretionary account.

The total impact of these cuts will be move our economy downward and with the ending of the stimulus package funding, plus the rise in gas prices, Americans will find themselves in worse shape due to the Republican onslaught.

But only worse is to come. The first, and perhaps the most dangers fight, will be over the debt ceiling which will likely come due in June or July. Here America will face a major catastrophe which could destroy not only the American economy but have global implications of a massive economic tsunami that could spiral the world into a major depression.

Just on Monday the S&P, reacting perhaps to the idea that they might get regulated by the Obama administration and perhaps make less money due to their irresponsible grading of junk derivatives, and to give the Republican budget cutters a better hand, make it clear they can fight back.  They warned that they may have to downgrade American debt which sent the Dow down some 140 points.

Not increasing the debt ceiling would put American money in peril on global exchanges and force massive redemptions of U.S. bonds and loans from abroad. Both domestic and foreign holders of Treasuries would suffer. Here even the threat that already exists by the right-wing Republicans led by the House Speaker John Boehner and his Tea Party colleagues will have a negative impact on our financial and economic sectors and also our global leadership position.

If they can’t trust our sovereign debt, what else can they trust about America? The GOP will put us in the position of Ireland, Greece, and Portugal. The question is what will Boehner and Congressman Ryan and their gang propose to avert this horror? Boehner has said they would not agree to upping the debt ceiling “without something really big attached to it.” What will be the price? Gutting social security, medicare, medicaid, cutting support for education of our young, taking away funding for health reform, public television, Head Start, Pell grants? In short, every decent effort by our government to give a boast to the most vulnerable and least well off among us?

I suggest readers go to the article by Nobel Prize winner Joseph Stiglitz posted elsewhere on this blog for an idea of what disparity of wealth has already been created by so-called Republican “reforms,” like lowering the taxes on the super rich while cutting the safety net for the poor.

I suggest readers go to another Nobel economic prize winner Paul Krugman’s article in the New York Times April 11, 2011, with the title “The President is Missing,” for his take on the economic impact of the recent cuts and the monumental cuts to come. One point that he makes is the cuts already made “wipes out any positive economic effects…Mr. Obama supposedly won from last December’s deal, a temporary extension of his 2009 tax cuts for working Americans.”

The second GOP wished for “tsunami” against the American people and our economy will be the vote on the 2012 budget. Already the House proposed document contains disastrous cuts to programs that safeguard the lives and well being of many millions of Americans.

So the threat of a series of brinkmanship fights that destroy the American dollar and the economy and our position as the respected reserve global currency, and at the same time devastates the human and physical infrastructure that this county needs to compete in the world economy.  That fiscal and political irresponsibility strikes a blow to this county that no terrorist could hope for and only our enemies would approve.

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