The Attraction of the Abyss
Published in El Pais
(Spain) on 28 July 2011
by Lluís Bassets (link to original)
(Spain) on 28 July 2011
by Lluís Bassets (link to original)
Translated from
by Kate Wheeler.
Edited by Rica Asuncion-Reed.
The tables have turned. Western countries, primarily members of the European Union and the United States, used to be predictable, quiet and trustworthy. The less developed countries — actually the rest of the planet — always had to navigate through bumps and uncertainty. However, extreme wealth and political agendas have saturated political actors, who must now reassess the risk and frivolity. The 27 member countries of the European Union have given good evidence of this in the year-and-a-half of the agonizing and unresolved discussion about the Greek rescue, knowing that they are playing with the most important accomplishment of the E.U.: its single currency, the euro. Something similar is happening in the U.S., where lawmakers are ready to lead their country into default rather than renounce their respective political dogmas: refusing to raise taxes, for the Republicans, and feeling obliged to defend social spending, for the Democrats.
What will be affected by an administration without means of payment are supplies, military salaries, payments to pensioners and the disabled, as well as many people’s medical bills. But the consequences will not wait until August and have already been noted in the stock market, the price of raw materials and early warnings by ratings agencies. The latter will be the last straw in the crisis if the threats turn to reality and no agreement is reached quickly about the debt ceiling that would allow the administration to fulfill its obligations. Obama’s presidency will be permanently marked if, for the first time in America's history, it loses the highest classification of a AAA [credit rating], resulting in the predictable consequence of rising interest rates. The lawmakers not only suffer from the strange romantic attraction of the abyss but also a considerable commitment to the decline of the USA, which is what would happen if the [current] debt ceiling stays in place.
The problem that the White House and Congress have set out to solve is not fictitious. The level of debt is not sustainable and requires drastic cuts in spending, as drastic as those suggested by the International Monetary Fund. Moreover, no matter what the fundamentalists say, tax breaks for the highest earning income groups must be eliminated. The irony of history is that it wasn’t Obama who created this problem but his predecessor, George Bush, who arrived at the White House with a surplus of $1.2 billion and left with a debt of about $10 billion. His participation in the creation of the current $14.4 trillion debt pie is ridiculous: A $1.8 billion hole was created by tax cuts for the wealthy, $1.5 billion for the wars in Iraq and Afghanistan, in addition to increases in defense and almost a trillion for the stimulus packages to save the banks and other organizations linked to the crisis. The situation is so absurd that even the tea party has endorsed Obama, thanks to his rhetoric against government spending.
China is the principal banker, with a quarter of U.S. foreign debt in its hands. This gives us a picture of the situation, an authentic sketch of the progress of the world: The richest take out loans to pay for their expensive lifestyles, and who loans them the money? The less rich, those who work and save. The outcome of the story does not require any imagination on the part of writers; it is well known: The rich will decay and the poor will emerge as the new rich. The inaction and the actual fights about whether or not social programs should be cut or taxes raised are one more expression of the shift of power that is happening in the world. The Chinese don’t have problems of this type, or if they do, they don’t know it. The crisis is Western, the debt as well. It is because of inaction and the difficulties of governing due to fragmentation, in the case of the European Union, and polarization, in the case of the U.S.
Obama brings the human factor to this decline. His intelligence and persuasiveness are of little use employed in the background of this conflict. They may even be counterproductive. The Republicans are divided and still don’t have a clear presidential candidate. Even the craziest and most irresponsible can’t believe that the administration can survive without a means of payment. As the division within the Republican Party grows, it is more difficult to imagine who could lead them in the fight for the presidency, and Obama may win the position by default. They can lose as a party, but they are betting that Obama will lose as a president and as a candidate. At the moment, the Republicans prefer to take it to the abyss, even though the country will suffer. If they leave Obama badly wounded, it will be easier for one of their candidates without presidential appeal to become a serious presidential contender.
What will be affected by an administration without means of payment are supplies, military salaries, payments to pensioners and the disabled, as well as many people’s medical bills. But the consequences will not wait until August and have already been noted in the stock market, the price of raw materials and early warnings by ratings agencies. The latter will be the last straw in the crisis if the threats turn to reality and no agreement is reached quickly about the debt ceiling that would allow the administration to fulfill its obligations. Obama’s presidency will be permanently marked if, for the first time in America's history, it loses the highest classification of a AAA [credit rating], resulting in the predictable consequence of rising interest rates. The lawmakers not only suffer from the strange romantic attraction of the abyss but also a considerable commitment to the decline of the USA, which is what would happen if the [current] debt ceiling stays in place.
The problem that the White House and Congress have set out to solve is not fictitious. The level of debt is not sustainable and requires drastic cuts in spending, as drastic as those suggested by the International Monetary Fund. Moreover, no matter what the fundamentalists say, tax breaks for the highest earning income groups must be eliminated. The irony of history is that it wasn’t Obama who created this problem but his predecessor, George Bush, who arrived at the White House with a surplus of $1.2 billion and left with a debt of about $10 billion. His participation in the creation of the current $14.4 trillion debt pie is ridiculous: A $1.8 billion hole was created by tax cuts for the wealthy, $1.5 billion for the wars in Iraq and Afghanistan, in addition to increases in defense and almost a trillion for the stimulus packages to save the banks and other organizations linked to the crisis. The situation is so absurd that even the tea party has endorsed Obama, thanks to his rhetoric against government spending.
China is the principal banker, with a quarter of U.S. foreign debt in its hands. This gives us a picture of the situation, an authentic sketch of the progress of the world: The richest take out loans to pay for their expensive lifestyles, and who loans them the money? The less rich, those who work and save. The outcome of the story does not require any imagination on the part of writers; it is well known: The rich will decay and the poor will emerge as the new rich. The inaction and the actual fights about whether or not social programs should be cut or taxes raised are one more expression of the shift of power that is happening in the world. The Chinese don’t have problems of this type, or if they do, they don’t know it. The crisis is Western, the debt as well. It is because of inaction and the difficulties of governing due to fragmentation, in the case of the European Union, and polarization, in the case of the U.S.
Obama brings the human factor to this decline. His intelligence and persuasiveness are of little use employed in the background of this conflict. They may even be counterproductive. The Republicans are divided and still don’t have a clear presidential candidate. Even the craziest and most irresponsible can’t believe that the administration can survive without a means of payment. As the division within the Republican Party grows, it is more difficult to imagine who could lead them in the fight for the presidency, and Obama may win the position by default. They can lose as a party, but they are betting that Obama will lose as a president and as a candidate. At the moment, the Republicans prefer to take it to the abyss, even though the country will suffer. If they leave Obama badly wounded, it will be easier for one of their candidates without presidential appeal to become a serious presidential contender.