THE COSTS OF THE DEBT DEAL. The job-killing debt compromise signed by President Obama last week—raising the debt ceiling into 2013 in exchange for $2.5 trillion in dramatic spending cuts—was supposed to stave off economic calamity. At least that’s what we were told, as Tea Party–led Republican extremists were determined to hold the economy hostage to extort political “leverage.”
No sooner did President Obama sign the debt deal than markets in the US and across the globe tanked. Washington, DC, correspondent John Nichols rightly asks: “Wasn’t the Debt-Ceiling Deal Supposed to Avert a 512-Point Dow Collapse?” For all the talk about “full faith and credit” and “market confidence” in the midst of debt-ceiling negotiations, Thursday’s global sell-off followed by Friday’s dismal jobs report, and the first-ever downgrade of the US credit rating by Standard & Poor’s is continued proof that we’re not going to cut our way to growth.
This week, DC reporter George Zornick reminds us in “Is It Time to Downgrade the Rating Agencies?” that these same rating agencies—which gave their blessing to toxic financial products concocted by Wall Street—were complicit in the 2008 financial collapse. When will Washington learn to ignore them? The downgrade, however, reflects more than just pessimism about the economy. As John Nichols points out in “Downgrading Democracy,” the decision establishes these agencies as “arbiters of American politics” who cite Washington’s inability to resolve their differences as justification for the downgrade. “If S&P can set the parameters of the debate in the US,” writes Nichols, “then it is not just downgrading a credit rating. S&P is downgrading democracy.”
OUR DEMOCRACY DEFICIT. As I told NPR’s Diane Rehm last week, Washington’s preoccupation with a manufactured deficit crisis shows just how disconnected both parties are from the real economy and the struggles people are experiencing every day. Washington’s political gridlock and out-of-touch policy-making is taking its toll not just on the economy, but on the state of American democracy. As Media Matters’s Ilyse Hogue explains in “The Hidden Casualty of the Debt Deal,” irresponsible press coverage, coupled with unheeded expert warnings, disregarded citizen opinion and overlooked citizen action together create the conditions for disengagement from the political process at a time when it’s needed most. “When citizens don’t participate,” she writes, “democracy is in peril.” That’s why the work of groups like Take Back the American Dream, MoveOn and Campaign for America’s Future—who have organized hundreds of demonstrations at congressional offices nationwide—remains critical. As I wrote in the Washington Post last week: unlike the Tea Party, legislators in both parties may soon encounter a populist uprising that actually represents an American majority. Stay tuned for our upcoming issue this week, which examines the impact of deficit hysteria on the state of our democracy.