When President Obama announced on Sunday night a tentative deal with Congressional leaders that would raise the U.S. debt ceiling and avoid a default, the key takeaway from this long-awaited announcement was his indication that it’s not the kind of deal he “would have preferred.”
That’s because the agreement appears to give Republicans all they sought without giving up anything. In other words, it’s a deal that will hurt Democrats and minorities in particular. Passed on Tuesday, the deal is official and was approved by both chambers of commerce, 74-26.
It involves a nearly $3 trillion in spending cuts, a two-step process that pushes the politically charged debt ceiling debate into next year and the deficit reduction will come at the expense of Social Security and Medicare programs rather than tax breaks for the wealthy. Still being discussed are military budget cuts, which Republicans are fighting against.
Even so, global markets cheered the deal because it removes the specter of default and uncertainty about the U.S. economy.
Liberals were furious, nonetheless, about what they saw as yet another capitulation by the president on economic policy. Not only will the deal slow growth and curb job creation, but it also threatens to further dampen enthusiasm among core Democratic voters a year before the president’s re-election bid.
Liberals point to Friday’s data on gross domestic product that showed U.S. economic growth is anemic at best. The GDP grew at 1.3 percent in the second quarter after a revised 0.4 percent for the first quarter, as consumer spending, which accounts for 70 percent of growth, fell drastically. With many people out of work and no new stimulus pending, there aren’t many economists forecasting job growth through next year.
The Congressional Black Caucus, meanwhile, was trying to decide whether to back the debt-reduction deal, since African-Americans are going to hurt the most. Rep. Emanuel Clever (D-Mo.) described it as a “sugar-coated Satan sandwich.”
To be sure, compromise is needed. And though the White House touts Sunday night’s agreement as “a victory for bipartisan compromise, for the economy and for the American people,” the degree of discontent on all sides underscores the fragility of this particular compromise.