The Republican attempt to use the debt ceiling to extort concessions from the Democrats is a new phenomenon. When former President Bush added more than $4 trillion to the national debt, Krugman explains, Congress voted to raise the debt ceiling seven times "with little fanfare." But it should have been obvious when Obama gave in to the Republicans on extending the Bush tax cuts what was coming next, and it was remarkably short-sighted that the deal did not also include raising the debt limit, "so as to forestall another hostage situation."
Krugman explains that the failure to raise the debt limit would force the government to make "drastic, immediate spending cuts, on a scale that would dwarf the austerity currently being imposed on Greece." Nevertheless, "Obama must be prepared to face those consequences if he wants his presidency to survive."
It became even more obvious that the Republicans were using the "threat of a debt crisis to impose an ideological agenda" when they walked out of the negotiations after Democrats had the temerity to raise the issue of "limiting tax breaks for corporate jets and hedge-fund managers as well as slashing aid to the poor and unlucky." They expect Obama to cave since he caved previously over tax cuts, and they also believe "the public will blame the president for the economic crisis they’re threatening to create." In fact, as some Democrats have finally begun saying, and Krugman asserts, "it's hard to avoid the suspicion that G.O.P. leaders actually want the economy to perform badly."
Tragically, as Krugman pointed out on his blog, Obama's July 2nd radio address provided once again "the false government-family equivalence, the myth of expansionary austerity, and the confidence fairy, all in just two sentences," as follows:
Government has to start living within its means, just like families do. We have to cut the spending we can’t afford so we can put the economy on sounder footing, and give our businesses the confidence they need to grow and create jobs.So, it sure doesn't seem like Obama is not going to draw a line in the sand. Instead, "the great progressive hope," continues to "fall all over himself to endorse right-wing economic fallacies." It feels like a another cave is in the works.