American Arrogance, Global Reality

A broker in Pakistan watches the market meltdown. (Getty Images)
A broker in Pakistan watches the market meltdown. (Getty Images)

So the Tea Party got what it wanted. The holdouts against the debt-limit deal indicated they didn't care if the U.S. defaulted and couldn't pay its bills. They didn't believe Treasury Secretary Tim Geithner's warnings that a credit default would be disastrous. And they didn't want to give President Obama a victory. So they held firm until the last day, blackmailed Obama into a deal that really didn't address our deficit problem — and set off the stock market nosedive that foreshadows a new recession.


Right-wing Republicans have no right to be surprised that the Dow Jones industrial average index dropped 630 points Monday after Standard & Poor's downgraded the federal government's credit rating and set off a cascade of similar declines in Europe and Asia. But don't expect them to accept any of the blame for the disaster that took $7.8 trillion out of the accounts of investors in a single week. Even last Friday, when S&P issued its downgrade of the U.S. from AAA to AA+, Republican presidential candidates didn't hesitate to seek an advantage. Rep. Michele Bachmann was already spinning the credit downgrade as Obama's fault. Republican Presidential candidate Tim Pawlenty said, "It's a reflection of the failed leadership of President Obama. He really is inept when it comes to the economy."

Much has been written about the right wing's animosity toward President Obama, and we can speculate endlessly on whether its refusal to collaborate with the White House on anything at all has to do with race or just a particularly virulent form of partisan politics. Whatever the motive, the president's opponents seem to think they are just positioning themselves for 2012.

What they don't realize is that they are misbehaving in the global fishbowl. When you're the world's largest economy and living in a world of constant and instant communications, you can't pretend the foreigners aren't watching. In fact, TV screens from Beijing to Moscow featured the debt-default countdown clock that U.S. cable networks came up with. The negotiations over the debt limit were followed closely from Johannesburg to Kuala Lumpur, from Hong Kong to Frankfurt.

But much of the Tea Party doesn't believe in globalization or in global warming; foreign countries are just places from which the president probably came. On top of that, we have a crop of freshman Republicans in Congress now who don't seem to know anything about economics, either. In a couple of days, their actions have wiped out more stock market wealth than they granted the rich by refusing to raise their taxes. And they still fail to understand that our widening deficit is driven, not by government spending, but by the continuing recession.

The alarm overseas at our monkey business mounted steadily as the hours ticked off last week. Xinhua, China's official news agency, roundly criticized the "game of chicken." "Given the United States' status as the world's largest economy and the issuer of the dominant international reserve currency," the agency chided in a commentary, "such political brinkmanship in Washington is dangerously irresponsible, for it risks, among other consequences, strangling the still fragile economic recovery of not only the United States but also the world as a whole." Of course, China holds more of our debt than any other nation.

"The disastrously flawed ratings of these agencies were at the heart of the 2008 financial crisis," the paper said Monday, "and S&P's action threatens to cause mayhem again by creating uncertainty about the ability of the U.S. to function in its critical role in the financial system."


It appears that Republican leaders are anxious to outdo the bumblers at S&P. Even as the three major stock indexes sank between 5 percent and 7 percent yesterday — the Dow experiencing its worst drop in three years — the party's leaders were already signaling they had no interest in compromising with the president. House Majority Leader Eric Cantor (R-Va.) wrote in a memo to Republicans: "Over the next several months, there will be tremendous pressure on Congress to prove that S&P's analysis of the inability of the political parties to bridge our differences is wrong. In short, there will be pressure to compromise on tax increases. We will be told that there is no other way forward. I respectfully disagree."

Once again, you get the impression these guys are not looking beyond our borders and seeing the house of cards that has become the global financial system. The European Central Bank is pouring money into bonds from Italy and Spain out of fear that banks will stop lending and send the euro into a tailspin. Riots are spreading in London, triggered ostensibly by a shooting, but a fiery reminder of the growing alienation of the unseen masses who bear the brunt of "austerity measures" that the British Conservative government has implemented and that U.S. Republicans want to emulate.


We are probably lucky that civil unrest has not erupted this hot summer in the many U.S. communities with 15 to 20 percent unemployment rates. But then, Sen. Orrin Hatch (R-Utah) has said the poor need to do their share to solve our debt problems. "The poor need jobs! And they also need to share some of the responsibility." This is in line with a Heritage Foundation report last month that claims America's poor are not really that poor, stating that "the overwhelming majority of the poor have air conditioning, cable TV and a host of other modern amenities."

Trying to argue that the poor are not poor because they have cable TV is not that far, intellectually, from saying the debt crisis isn't a crisis, so Obama can go to hell — with the whole world watching.


Joel Dreyfuss is managing editor of The Root.