Short of finalizing details and assuring enough bipartisan support, it's a done deal to slash Social Security, Medicare, Medicaid, and other social spending while leaving outsized military budgets and generous handouts to corporate favorites in place.
At the same time, the timeline to accomplish it is undetermined. Political posturing may extend the August 2 deadline until fall or beyond.
It's how corrupted Washington always works, notably since the 1980s under both parties. Obama was elected to assure continuity and accomplish by rhetorical duplicity what Republicans on their own can't do.
Notably after capitulating last December on tax cuts for America's super-rich, he proposed deep budget cuts, affecting disease prevention, children's and community healthcare, education, supplemental grants to poor women and children, community block grants for housing, energy efficiency and renewable energy, and other benefits for people most in need.
He's a charlatan, not a leader who cares. Earlier, he proposed hundreds of billions in Medicare cuts. It was step one ahead of incrementally ending entitlements and other social benefits altogether, including publicly funded pensions, returning America to dark age harshness.
Bipartisan duplicity supports it, including slashing healthcare, education, housing, virtually all social benefits incrementally, eliminating them all altogether. Obama and many Democrats tacitly agree. Timing is mostly at issue with an eye to 2012.
In principle, Obama and Speaker Boehner privately agreed to $4 trillion in Social Security, Medicare, and other social spending cuts, backtracking when word leaked prematurely to a more modest $2.4 trillion package, then resurrecting the $4 trillion one.
At a July 11 press conference, Obama again stressed "shared sacrifice," leaving unexplained he means working households sacrifice to let America's super-rich share.
Also unmentioned was his 2006 debt ceiling position, voting against raising it in the Senate saying:
"The fact that we are here today to debate raising America's debt limit is a sign of leadership failure. It is a sign that the US government can't pay its bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our government's reckless fiscal policies."
"Increasing America's debt weakens us domestically and internationally. Leadership means that 'the buck stops here.' Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better."
As President, Obama endorsed reckless fiscal policies, including:
-- trillions of bailout dollars to bankers;
-- generous handouts to other corporate favorites;
-- record high military spending for multiple illegal wars and proxy ones;
-- the same anti-labor tax workers, not the rich policies as Republicans;
-- wrecking Social Security, Medicare, Medicaid, and other social spending policies; and
-- rhetorically insisting the debt ceiling be raised before the August 2 deadline as part of a deal to please Wall Street at the expense of working households and seniors, dependent on vital entitlements they can't afford to lose or see weakened.
In fact, economist Michael Hudson accused Obama of governing to the right of George Bush, Sarah Palin, and Michele Bachmann, the Republican far right-wing extremist presidential candidate endorsing holy war on democratic values.
At the same time, he's triangulating more than Clinton to appear responsible. The budget debate is a charade. Republicans are playing bad cop. Obama plans selling out his constituency. Ahead is a nightmarish scenario comparable to Greece, impoverishing working households to pay bankers, starving states and cities of revenue, forcing them to sell public assets cheap, putting America on sale at fire sale prices, creating a dystopian Great Depression, wiping out generations of social progress.
Moreover, only a democrat could do this, especially a smooth talking charlatan like Obama - more duplicitous and pernicious than hardline Republicans saying, "(M)eaningful changes to Medicare, Social Security and Medicaid (plus other social spending policies must be made to) preserve the integrity of the programs and keep our sacred trust with our seniors (and other needy households), but make sure those programs were there not for just this generation, but for the next generation."
He lied. He wants them incrementally ended, perhaps over the next decade when another president will have to answer for his social destruction. His Wall Street and other corporate cronies demand it. They also want and will get the debt ceiling raised. It's why they funded his 2008 campaign, put him in the White House, and assure his reelection if he plays ball.
Chamber of Commerce president Thomas Donahue also weighed in, saying:
"An unprecedented default on the nation's bills would have dire consequences for our economy, our markets, and Main Street Americans."
The Washington Post gave PIMCO's Bill Gross (the nation's largest bond investor) July 13 op-ed space, saying:
"Don't mess with the debt ceiling. Raise it unencumbered if necessary. (Default) would....be a huge negative for the US and global financial markets, introducing fear and unnecessary volatility into the economy and global trade."
False! America won't default, but doing so is the road to recovery, forcing bondholders to take stiff haircuts, letting too-big-to-fail banks take pain, collapsing their Ponzi scheme speculating, or shutting them down altogether. Removing that cancer would facilitate recovery and growth.
Moreover, if post-2008 crash Fed created trillions went into the real economy, creating jobs and stimulating growth, they'd be no social spending cuts/debt ceiling debate because America again would be healthy.
Ignoring basic truths, a July 11 Washington Post editorial called Obama's entitlement slashing a "truly progressive position."
A June 1 New York Times editorial called congressional posturing "Playing With Matches on the Debt," endorsing corporate America's advocacy for raising it, slashing social spending to finagle it, and keeping the nation on a fast track to third world status, including workers transformed to serfs.
On July 13, Fed Chairman Bernanke (Wall Street's hired hand) said Washington's failure to service debt would cause "shock waves through the entire global financial system," omitting what he should have said: namely,
-- that Washington has no debt creation limit;
-- that quantitative easing buys all of it not absorbed by sovereign or private buyers;
-- that the Fed can issue whatever amount is needed to service it; and
-- most important that Congress can reassert money creation power, replacing Federal Reserve notes with Treasury ones interest and inflation free with no need to raise taxes if responsibly done.
Doing so would end the budget cutting/debt ceiling charade. Moreover, sustainable economic growth would follow because publicly controlled money would reignite it free from predatory bankers, wrecking the economy to buy assets cheap, complicit with corrupt politicians letting them.
A Final Comment
On July 12, economist Jack Rasmus tried "reading the debt ceiling tea leaves," predicting what he sees ahead, saying:
-- gutting Social Security and Medicare is planned;
-- the debt ceiling will be raised;
-- real negotiations will begin once it's done;
-- for starters, slashing $3 trillion in entitlements is a done deal;
-- October 1 is the next deadline, the start of FY 2012; at issue is passing next year's budget, including cuts;
-- expect the retirement age to be raised to 70 as well as sharply reduced disability benefits;
-- Medicare recipients will absorb all future cost increases, including Part B (raised to double the current level) and higher Part D deductibles; "(t)hat way Obama can say he never 'cut' Medicare," yet, in fact, slash "$200 - $400 billion a year for the next decade;"
-- Republicans will agree to token tax cuts, closing loopholes easily offset by agreeing to overhaul the tax code favoring corporations; specifically, the top corporate rate will be cut from 35% to 20%, though gaming the system lets many corporations pay minimal taxes or get rebates despite being profitable;
-- "lowering rates for foreign profits (will) placate multinational" firms;
-- what political Washington takes with one hand goes back twice over with the other, continuing "the decades long tax 'shell game;' "
It's why corporations' share of federal revenue dropped from 20% years ago to 10% now, and falling because of bipartisan deceit.
Obama and Congress now plan completing their financial coup d'etat, ending America's social contract, leaving retirees, working households, and impoverished millions on their own sink or swim.
Only revolutionary change, impeaching Obama, and routing bipartisan criminals can stop them. It's high time public anger demanded it.
Stephen Lendman lives in Chicago and can be reached at firstname.lastname@example.org.
Also visit his blog site at sjlendman.blogspot.com and listen to cutting-edge discussions with distinguished guests on the Progressive Radio News Hour on the Progressive Radio Network Thursdays at 10AM US Central time and Saturdays and Sundays at noon. All programs are archived for easy listening.