US debt deal: how Washington lost the plot

Politicians and the media are obsessing on debt, deficit and cuts, but the real story is a stalled economy and rising unemployment

Dean Baker, Guardian.co.uk,
Monday 1 August 2011 16.30 BST

President Obama and the Republicans in Congress have finally worked out a deal over the debt ceiling. It appears as though the Republicans got most of what they wanted: big cuts to domestic spending and no tax increases.

On the plus side, social security and Medicaid appear to be largely intact, although the deal commits Congress to set up another one of those dreadful "bipartisan" commissions, and some cuts to Medicare are on the table. The main qualification for being chosen as a member or staffer for this commission will be that you were too ignorant of the economy to notice the $8tn housing bubble whose collapse brought on the current crisis. Fortunately, Washington has no shortage of policy wonks who fit this description.