Pretty much as I predicted, Obama's failure to go over the fiscal cliff--instead "negotiating" and settling for a half-assed deal that hardly got rid of any of the stupidities of the Bush tax cuts--convinced the Republicans that they can play their brinkmanship game on the debt ceiling debate yet again and perhaps finally get the Democrats to undo their own most significant programs of the last 100 years--Social Security and Medicare.
What we ought to be doing is cutting the military/defense and corporate welfare budgets. And then increasing taxes--with (1) new layers of tax brackets and tax rates corresponding to our new levels of income inequality, so that multimillionaires are taxed at a higher rate than mere millionaires and billionaires are taxed higher than multimillionaires and (2), at the least, legislation to eliminate the farce of the so-called "carried interest: privileged compensation taxation for LBO managers, who get mostly preferential capital gains for their "services" in buying companies and loading them with debt that makes the managers but not the workers wealthy.
But the Democrats somehow still thought they would get some kind of credit, even from the staunchest of the right-wingers, for being "bipartisan" and working out a "deal" to avoid the "fiscal cliff." So they made the ridiculous Bush tax cuts permanent, except for those in the upper-upper crust making three times as much as anybody in the middle class. And they made the estate tax cut even larger than it was--with a $5.2 million exemption (double for a couple) and only a 40% rate. Inequality will continue to grow at accelerated rates. And they extended the litany of truly egregiously stupid corporate tax breaks, like the bonus depreciation/expensing provisions that ultimately permit corporate multinational giants a NEGATIVE effective tax rate (read Cary Brown on the way noneconomic frontloading of expensing amounts to nontaxation under time value of money principles).
The GOP however is currently running deranged. The party that purports to care about fiscal conservatism only wants to fund more military and make sure that vulnerable elderly don't get as much in their Social Security checks and have to pay even more for their health care. McConnell--the MINORITY leader in the Senate--has pronounced his party's views on the matter: "The tax issue is finished." Brian Knowlton, McConnell Takes Taxes Off the Table in New Talks, New York Times (Jan 6, 2013).
Folks, the stuff about the debt ceiling and the need to cut benefits under Social Security and Medicare is baloney. The US government isn't a family--it's a sovereign regime . We should learn from the Euro nations that are embroiled in a self-defeating austering regime that leaving citizens suffering while trying to toady to big business is a recipe for disaster.
President Obama had damn well better take Social Security and Medicare off the table as well as any corporate tax reductions. Get rid of corporate loopholes and let corporate tax revenues INCREASE. It is the only way left to try to re-balance an economy that is skewed in favor of the uber-rich and the multinational corporations and against ordinary Americans. Oh, it would also help to move to single-payer single-provider health care and get profit-making out of what should be an important human right.
And are we "spending way too much" anyway, as McConnell declares? Surely not, since we are only spending on things that the Congress has voted to spend on. If McConnell wants to spend less, let him propose a spending cut and put it to the vote. If it fails, then he should vote the taxes or borrowing needing to pay for the spending Congress has legislated.
So, just as my advice in the "fiscal cliff" debate was to go over the cliff, let the Bush tax cuts expire, and then put in place some decent cuts for the REAL middle class (those making less than $100,000 a year), my advice here is to go over the "sequester cliff" and let the across-the-board cuts, with the first real cuts to the military in decades, take place. We should damp down our military zeal and start to put our money where it will build good schools, good colleges, good public transportation, and ultimately good jobs.
As for the debt ceiling, the best thing would be for the Senate to eliminate the filibuster rule (or at least make the right-wingers do a physical filibuster) and eliminate the debt ceiling. It is an artifact of a different age, and is meaningless. Think about this.
1) we have spending bills that require us to spend X dollars
2) we have tax bills that only raise X-Y dollars.
3) we have a governmental obligation to pay the X dollars that we spend to those who provide the goods and services amounting to X dollars.
4) Therefore we have a governmental obligation to borrow the Y dollars that we don't raise with taxes.