Paul Harris,
The Observer (Sunday edition of
The Guardian), 7/24/11
Talks to stave off a potentially catastrophic US default on debt payments were in crisis as Republicans and Democrats struggled to avert a disaster that could trigger a global economic crisis.
Both sides agree that the US needs to pass legislation to raise its debt limit above its current level of $14.3 trillion (£8.7tn). But negotiations collapsed in acrimony late on Friday over details of a package of spending cuts and tax rises that would help to pay for such a move.
A visibly angry President Barack Obama attacked the Republican Speaker of the House, John Boehner, for refusing to return his phone calls and then abandoning the negotiations.
(...)
The Republicans have shifted dramatically to the right on economic matters, especially taxation, in the wake of the rise of the Tea Party. The Republicans captured the House of Representatives last year with the help of a number of new members the Tea Party supported. Many Republicans have signed pledges never to agree to tax rises of any sort and fear a backlash from supporters if they agree to a debt deal that includes attempts to raise money from wealthy Americans and big corporations.
Instead they want a settlement that focuses on slashing programmes such as social security and health spending on the poor and elderly, as well as defence and other parts of the government. So far Obama has sought to accommodate Republican demands and offered more than $1.6tn in government spending cuts, but only in return for tax rises on the rich. That has not yet been enough to bring Republicans on board.
(...)
Obama is also coming under serious fire from Democrats, who accuse him of being a poor negotiator and too willing to meet Republican demands at the expense of the liberal wing of his own party. Many Democrats have been horrified at the concessions he has already made on cutting government spending on the poor, sick and elderly. They argue that the most vulnerable Americans would pay the bill for a crisis that began on Wall Street. Leading progressives have slammed Obama's tactics and fear that he may agree to even harsher cuts.
Progressive groups, like MoveOn, have sent out campaigning letters and urged phone call protests as a way of persuading Democrats not to back the cuts. "It is tragic what is happening right now," said Robert Greenwald, a Hollywood director turned progressive documentary filmmaker. Greenwald said ordinary Democrats felt betrayed by Obama. "If he agrees a deal that has these cuts, then the president has done a disservice to millions of people who worked for him to get him elected; who believed in him and who fought for him."
A CNN poll last week backed Greenwald's comments. The survey showed that Obama's approval rating among liberals has dropped to 71%, the lowest level of his presidency.
full:
http://www.guardian.co.uk/business/2011/jul/24/us-debt-crisis-risks-default-after-talks-fail
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