Obama Caves In

Obama Makes Huge Concessions in the Debate to Raise the U.S. Debt Limit.

Tax cuts for the wealthy, deep cuts in the 2011 budget and now the debt limit. President Obama is apparently prepared to make big concessions to congressional Republicans, including cuts in major social programs.

The United States reached the statutory debt ceiling of $14.29 trillion in mid-May. According to Treasury Secretary Timothy Geithner, the country can pay its bills until August 2 by moving funds around internally. What happens after that date is unknown. Numerous experts have given draconian warnings up to and including a downgrading of the nation’s credit worthiness should the United States default on its debt. Hundreds of thousands of government employees would be furloughed without pay. To prevent such a scenario via the legislative process, an agreement to raise the federal debt ceiling must be reached in July.

In spite of that, conservatives have refused to make any concessions, demanding that the ceiling will not be raised unless deeper cuts are made in social programs. They categorically reject any form of tax increases for corporations and the wealthy.

Following a meeting of political leaders from both parties at the White House, Obama described the negotiations as “very constructive,” adding, “Everyone acknowledged that pain will be involved politically on all sides.” That applies to the liberal left-wing of the Democratic Party. The liberal leadership admitted they were prepared to support further compromises resulting in a ratio of 85 percent program cuts demanded by Republicans to 15 percent revenue increases favored by Democrats, which would be realized by closing tax loopholes for corporations as well as tax increases on the wealthy.

If Obama folds on this issue, there could be considerable risk for his party. Democrats scored points last spring by opposing the Ryan plan proposed in Congress. That plan would have balanced the budget by a combination of further tax cuts for the wealthy coupled with a privatization of the most popular social programs. Many conservative politicians experienced an immediate public backlash in so-called town hall meetings held in their districts.

Even traditionally conservative voting districts appeared to be open to Democratic Party gains, something many saw as the key to their party retaking congressional control in 2012. On Thursday, House Minority Leader Nancy Pelosi declared, “The three most important issues we should be talking about are Medicare, Medicare, and Medicare.” She added that House Democrats do not favor cuts to Medicare, Medicaid or Social Security. The fact that Obama now seems headed in the opposite direction and is positioning himself further to the right has disappointed many progressive Democrats, who feel that they may not only lose a powerful political weapon but may endanger important liberal programs dating back as far as the Roosevelt administration.