Markets Crash as Lawmakers Clash
The Dow is dropping Monday, as Wall Street reacts to the news that the so-called congressional Super Committee will be unable to reach a debt reduction deal by Wednesday's deadline.
The Committee, made up of 6 Democrats and 6 Republicans, is deadlocked on how to cut $1.2 trillion from the debt.
While the mainstream media will no doubt try to spin this as "both sides are equally guilty", the reality is that the Republicans are the ones behaving more irresponsibly than the Democrats are. Democrats have offered a balanced approach to the debt reduction, offering up a mixture of spending cuts in social programs and tax increases (including eliminating Bush-era tax breaks for the rich).
Republicans insist that they will not increase taxes on the wealthy, and they are willing to let the Committee fail rather than raise taxes on millionaires by even one dollar. Does this seem like a reasonable position? I suppose if you get most of your political news from Rush Limbaugh, then perhaps it seems true. He has a way of
lying creatively telling stories that make truths seem false and vice versa.
Those of us in the real world can see that it is impossible, literally mathematically impossible, to really reduce the debt without raising taxes.
Yet, here we are, with one half of the Congress unwilling to do the simple math, make the difficult choice, and raise taxes on the wealthy. It isn't like it's an unpopular position. Polls from October, before the Occupy Wall Street Movement began to galvanize support for tax increases on the wealthy and against spending cuts, show as much.
One Bloomberg poll (not exactly a left-wing organization) showed that more than two of every three Americans favored higher taxes on the wealthy. Two thirds! An even larger number supported keeping Medicare and Social Security benefits as they exist. These numbers are even larger now.
Hell, even 53 percent of REPUBLICANS -- your neighbors, family, and friends, not the ones in Congress -- support raising taxes on those who make more than $250,000 a year. But the ones in the Super Committee? They don't care. Grover Norquist says no tax increases, and the Republicans in Congress bow, sacrifice a lamb, and bathe themselves in the blood of virgins -- anything to avoid dealing with reality.
In my view, this is all part of the plan. Failure was baked into the Super Committee, and NOT reaching a deal was exactly what both sides really wanted out of this circus. Think about it. Democrats can now run for re-election on one very simple premise: Republicans are willing to send the government deeper into debt rather than raise taxes on millionaires. In a populist, anti-rich environment, like we have now, this could resonate with voters.
Meanwhile, Republicans get to portray the Democrats as welfare-loving spenders who steal your tax dollars to support slackers. It doesn't matter that the characterization isn't true; it makes for nice commercials, and Sean Hannity will gleefully repeat it over and over and over and over.
Given the popularity of the Occupy movement, and the unpopularity of Congress (9% favorability at last check), it seems the Republicans are overplaying their hand here. They could lose the House, miss out on a golden opportunity to take the Senate, and almost certainly guarantee Barack Obama will be re-elected.
Thus, barring a last-minute Republican sensible moment, the Super Committee will do what it was intended to do all along: fail. The markets should adjust accordingly.
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