After Months of Partisan Wrangling, Wall Street & Pentagon Emerge Victorious on Debt Deal

[Jefferson23]

From Democracy Now.


Guests:

William Hartung, director of the Arms and Security Project at the Center for International Policy. He is the author of the book Prophets of War: Lockheed Martin and the Making of the Military-Industrial Complex.
Michael Hudson, president of the Institute for the Study of Long-Term Economic Trends, Distinguished Research Professor of Economics at the University of Missouri, Kansas City, and author of Super Imperialism: The Economic Strategy of American Empire.


August 2, 2011


After months of a bitterly partisan stalemate, the U.S. House of Representatives has voted 269 to 161 in favor of raising the federal borrowing limit and avoiding a default on the national debt. The final count showed 174 Republican ayes, with Democrats split evenly—95 on each side. The vote came just hours before a Department of Treasury deadline that potentially would have seen the United States run out of cash and default for the first time in its history. The bill is expected to be approved by the Senate and signed into law by President Obama today.

The deal includes no new tax revenue from wealthy Americans, provides no additional stimulus for the lagging economy, and will cut more than $2.1 trillion in government spending over 10 years, while extending the borrowing authority of the Treasury Department. The debt deal was a victory of sorts for the Pentagon. Rather than cutting $400 billion in defense spending through 2023, as President Barack Obama had proposed in April, it trims just $350 billion through 2024, effectively giving the Pentagon $50 billion more than it had been expecting over the next decade. We speak with William Hartung, director of the Arms and Security Project at the Center for International Policy, and Michael Hudson, professor of economics at the University of Missouri, Kansas City.

Snip* We welcome you both to Democracy Now! Michael Hudson, what about this vote? What does it mean?

MICHAEL HUDSON: Well, it’s an anti-stimulus package, primarily. The feeling among the Democrats that I’ve spoken to, I’ve never seen them so depressed. And what depresses them so much is that the irony is it could probably only be passed under a Democratic administration. Yves Smith has called it a "Nixon goes to China moment in reverse." And that’s because only a Republican could have made an opening to a communist country and not be accused of communism. Only a Democratic president could have drawn along a Democratic Congress in supporting a law that is going to essentially ad tax deflation to the debt deflation we already have in the economy.

in full: http://www.democracynow.org/2011/8/2/after_months_of_partisan_wrangling_wall

[UrbScotty]

1. Pentagon won? Not according to Ezra Klein

http://www.washingtonpost.com/blogs/ezra-klein/post/will-the-defense-cuts-stick/2011/08/02/gIQAHVnAqI_blog.html?hpid=z2

[Jefferson23]

2. Are you sure that is confirming the Pentagon lost out? The OP seems to me

to be written by Brad Plumer, no?


and here: The way the bill treats defense is fairly confusing. The White House told Foreign Policy’s Josh Rogin that in the first round, there are roughly $420 billion in cuts over 10 years to “security” spending (which includes the Pentagon, Homeland Security, State Department, Veterans Affairs and USAID), compared with the baseline. Of that, $350 billion is supposed to come out of the Pentagon’s pockets. But as Rogin points out, the White House was reticent on the fact that that $350 billion number wasn’t a sure thing. It’s up to Congress, not written into the bill.

Take the near term. In fiscal 2011, the total security budget was $689 billion, of which $529 billion went to the Pentagon. Next year, under the debt deal, security spending gets capped at $684 billion. But there’s no guarantee that the Pentagon will absorb that $5 billion cut. In fact, if — as many hawks in Congress would prefer — the Pentagon’s budget grows next year, then agencies such as the State Department and Homeland Security will have to absorb even more in cuts. (end)

I don't see the support you seem to.