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Grey is not a color that fits Barack Obama well, and especially not in combination with pastel color ties. When he does wear grey suits, which is not often and probably contrary to Michelle’s recommendations, it usually signifies he is unhappy with what he is about to talk about—as was the case with the debt ceiling bipartisan agreement announced Sunday.

The agreement did not earn him credits. On the contrary: in ‘The New Yorker’ (August 8, p.17) Hendrik Hertzberg’s elegant and very nasty verdict was “With compromises like these, who needs surrender?” and Jonathan Cohn in ‘The New Republic’ concluded already on his blog’s title “This is not leadership” (whereby the article is milder).

Many commentators among Liberals would have preferred had Obama made use of Section 4 of the Fourteenth Amendment of the Constitution to raise the debt ceiling unilaterally. He didn’t—for good reasons. That would have meant dragging the ideological war between Republicans and Democrats to the Supreme Court—never a good idea, even less so at present given the activist approach encouraged by Chief Justice Roberts.

The agreement’s merits are more procedural than substantive but should not be underestimated. Faced with a Gordian knot and having decided not to cut it, Obama turned his attention to setting the terms of reference for the future debate. At this stage, there was no way of putting an end to the dispute. The economic crisis is no longer an emergency but a condition; and Republicans are, in the meantime, hostage to the extremist views represented by the Tea Party and, consequently, negotiation-disabled.

A super committee will be set up to make recommendations on how to further reduce the national deficit. Failure to reach agreement will trigger automatic cuts across federal programs, except for Social Security and Medicaid. Cuts could thus target military and defense spending, Medicare, but also so-called discretionary measures, namely, all other federal funds flowing into state budgets and those of local governments.

This automatic trigger is expected to function as a major incentive for members of Congress to reach agreement on fiscal reform as the alternative would be to accept indiscriminate cuts on programs they favor. That could cost some re-election. The threat of indiscriminate cuts is already now serving as a wake-up call to local governments, lobbyists and civil society. In other words, and against the background of the pluralistic American political system, Obama’s deal has succeeded in enlarging the scope of participation in the debt ceiling debate. That, I would contend, is also its most remarkable achievement.

Two other ‘small things’ that are worth taking note of:

  • First, were the Bush tax cuts for the very rich to expire (as they should already have last year), the present debt ceiling crisis could have been averted.
  • Second, unlike at the federal level, most U.S. States are required to keep a balanced budget. This excludes contributions from the federal level. However, if these are reduced, states will either have to reduce services or increase taxes.

Watch out when Obama wears a grey suit. He is unhappy perhaps and his hair might be graying. But he hasn’t given up on his grey cells.

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