US Debt Deal: Compromise or Surrender?Posted: August 5, 2011
Well, the jury has spoken on the debt deal. The US stock market dropped 512 points yesterday and all other stock markets are down, too. Yes, I know I’m not a politician, I am a lawyer but I’ve negotiated a lot of deals (cases) and I know what a “compromise” looks like and this “debt deal” was no compromise. It was a surrender. I’m not taking political sides here, let’s just look at this objectively (factually). When one party gets 98%, as stated by US House leader John Boehner, that’s a win, not a compromise. Does he not call it a “win” because he didn’t get 100%? Please explain, what is the 2% the other party got? Is it being saved from default? I guess it depends on how you define default.
Look, what was the real danger we faced? Default? Really, than why have more people bought US treasuries and why has the borrowing interest rate for the US gone down since the rating agency announced possible downgrading of the US credit rating back in April 2011? Are we to believe that investors would flee and tank the strongest market and economy in the world, especially when many foreign countries hold the largest share of US treasuries? Would it be in their best financial interest to “pull out the money and run”? Run, where? Yet, this was all we heard on the news, the threat of the “first default” in US history. Even that wasn’t entirely true, nine states defaulted in 1842.
No doubt, any deal initially could cause a short-term market loss and/or business slow down as investors and business get their legs, but real losses and instability will result in the absence of a fiscally responsible debt deal. Maybe, this “market meltdown” has nothing to do with the debt deal, but , rather Italy and Spain’s economic difficulties as some “experts” explain. Really, come on, a 512 point drop.
Even, the tactics used were deja vu. Weren’t we told by our “leaders” that we were on the “brink of financial disaster” when they approved the 700 billion dollar stimulus? How did that work out? Are you better off? To paraphrase, I think it was Einstein who said, “if you keep doing the same thing over and over again, you will get the same result”. Why not try a new negotiation strategy? How about no deal unless 50-50 or even 60-40% would be a vast improvement over 89%-2%? Really, how does work? You’d be out of business, bankrupt. Spending cuts without new revenue, how does that work? Or, in the past, didn’t we spend money to create jobs during the New Deal?
If our “leaders” represent us, and over 64% of those polled wanted the debt deal to include spending cuts and tax increases, why do we have a deal that doesn’t have what the majority of the people want?
Since the deal “talks” began, we have lost all the market gains of 2011. How’s that in our best interest? At what point, are our “leaders” negligent or even accountable?
However, you may like the debt deal. After all, there are no new taxes. But, your 401k is being drained. Your house is losing equity. Millions of US jobs have been lost and your job may be next. Really, if tax cuts created new jobs, where are the new jobs? Why do we have the largest income gap ever between the rich and the poor? Last week on CNN, it was reported that 113K is the median income for Caucasian families while 6K and 5K for Hispanics and African-American families, respectively. Hardly, “trickle-down” economics, its income hoarding.
I think the debt deal has done real damage, economic damage to our financial standing in the world, and to our retirement accounts. Maybe, it’s time to put the “super-congress”, to borrow a phrase, “in a plane now and not let them land until they come up with a (fiscally responsible) plan”. How about a plan with real structural reforms?
Our, maybe, it’s time our “leaders” had “skin in the game”, say, for instance, converting their pensions to self-directed 401k plans. Or, we could take California’s lead, no paycheck until they submit a fiscally responsible deal. And, by the way, why do they have lifetime pensions?
And, where are our “leaders” now while our 401k’s are being drained and while we are without a viable plan? They are on a 5 week vacation. It took a two-day media blitz for them to just now fund the FAA. How embarrassing to have the media point out to the world that they took their vacation while the US was losing millions each day for the last week and 4,000 US jobs were in jeopardy because they left town leaving the FAA unfunded. Maybe, just maybe, during their vacation, they will get a good “talking to” by their constituents or a well-appointed “time-out”. Please, uttering sound bites like “satan sandwiches”, “gone to the dark side” or “political terrorists” does nothing to promote compromise. Polarization, yes. Compromise, no. Where are the real negotiators? Or, even an adult in the room who can do what needs to be done in spite of the “political tantrums”?
This isn’t about winning. Or, even about who will win in the next election if the economy gets trashed, it’s about political courage. Got any?
Simply, my opinion, WHAT SAY YOU?