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Debt Deal Sour Spot

Via Meadia has avoided the media frenzy over the debt talks.  Our central forecast has been and remains that there would most likely be an agreement, but that it wouldn’t do much for either the deficit or the economy.  That forecast appears to be on track.

The response to yesterday’s deal across financial markets parallels the typical response to the various EU fudges and compromises over the last 18 months:  a burst of initial excitement that quickly wears off as the world takes a deeper look at what was and wasn’t done.

President Obama’s instincts for compromise do him credit as a human being but do not seem to be helping him as a national leader.  He’s gone from a stimulus that the Keynesians said was too small and too poorly organized to an austerity drive that conservatives consider spendthrift and that the credit rating agencies say may not ward off a downgrade.

I’ve written about this President’s instinctive lunge for the ‘sour spot’: the compromise that satisfies nobody and doesn’t solve the problem.  That has defined his Middle East policy; it defined the health care bill.  He has now chosen it, twice, for his economic model.

We shall see.

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  • Eurydice

    I had written a long screed about how President Obama’s desire for compromise is at war with his desire to manipulate his political opponents into looking bad, but I finally decided that Obama is just a procrastinator – like students who wait until the last minute to write their term papers and say “Oh well, that’s the best I can do under the circumstances,” without acknowledging that they helped create the circumstances.

  • Luke Lea

    I haven’t read Spengler in a long time and know he can be nutty, but this piece certainly speaks to one of the recurrent themes on this site, including this post.

  • stan

    I’ve never seen any evidence that the president has any instincts for compromise. He clearly has no experience compromising. All I’ve ever seen from him is slander of those who oppose him.

    We should also not that genuine compromise requires that he have some coherent offer on the table to compare to the other side. Obama steadfastly avoids ever proposing anything concrete — healthcare, stimulus, financial reg, debt deal were all done in Congress. He’s never put a serious proposal on the table on anything.

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