In that case, however, what should Obama do? My answer is that despite all that, he must not let himself be blackmailed.
Partly that’s because once he gives in the first time, the blackmail will never stop. Once the crazies know that they can get whatever they want by threatening to blow up the economy, they’ll just keep demanding more and more. Obama just can’t let that dynamic get started without setting up an even worse crash down the road.
Plus, the hard right may claim that it’s worried about deficits, but it’s actually deeply fiscally irresponsible. Realistically, the Ryan plan would sharply increase the deficit — because its spending cuts are in many cases impossible, and its supposed revenue neutrality is a sham. So giving in to the right would be just as much a signal of banana-republic-hood as a temporary default.
This is going to be very ugly. But I don’t think there’s any way to avoid taking it all the way to the edge, and possibly over it.
And he's right. The Tea Party has made it clear that any Republican who votes for raising the debt ceiling for any reason will be the first up against the wall come primary season. I was convinced that the Powers That Be would never allow the Republicans to wreck the treasury bond market. But it looks like they're now more than happy to do so if it means finishing the transfer of the rest of the country's wealth to the top 1%.
And here's the problem: we are a banana republic. We have a higher instance of income inequality than two-thirds of the countries on earth, ranking us with Cameroon and Uganda. America has worse income inequality than countries like Greece, Ireland, or Spain. It's higher than India or Kenya. Hell, it's higher than Tunisia, Ivory Coast, or Egypt. Double hell, we have a far more unequal income distribution than Iran or China.
And now Republicans are convincing us that our economy is unsustainable. The only reason it is is because we refuse to make the wealthy pay taxes on their wealth OR their income. We lowered both on the wealthy almost ten years ago. What happened to our economy as a result? The Gini index for the US is higher now than it was during the Great Depression.
Think about that. We live in the New Gilded Age. The wealthiest Americans live lives we can't even dream of. The other 300 million of us? We exist to put money in their pockets. And now the Republicans are convincing us that the only solution is that we have to make crushing cuts to Medicare, Medicaid, and Social Security or else the country will collapse.
These are the same people who said cutting taxes would be a rising tide that lifted all boats. Instead we got the worst financial crisis in generations. So why would we believe the Republicans now? Because FOX News tells us to?
Think about that.