Last Sunday evening the leaders of the Democrats and Republicans in Congress reached an agreement with President Obama to raise the debt ceiling. Almost exactly as I predicted in my previous letter. The deal has two sides.

On the one hand: Obama gets permission to make 2,400 billion dollar more debt. This is just enough for him to reach the end of his first term without the need to beg for still more money. During the negotiations it became clear Obama had only one bottom-line: the raise had to be high enough.

On the other hand: the Republicans succeeded for the first time to cut the federal expenditures without raising taxes. Obama bowed twice. Really? When Obama first spend 1600 billion to take 100 back later, who wins? Obama or the taxpayer?

Yesterday, Monday, the first nasty details started to leak. Here are the most important:

• The cut of about 900 billion over the next 10 years would only start in 2014. Plenty of time for Obama to finish his first term without being bothered by these cuts.
• Congress must still define the cut of another 1,500 billion over 10 years. The Republicans say the deal states this can only be done WITHOUT tax increases. The White House denied this already on Monday morning, and says new income through taxes can be included in finding the 1,500 billion.
• In case the Congress can’t agree on the 1,500 billion spending cuts over 10 years, automatically all federal budgets, including defense, will be cut across the board with a fixed percentage adding up to a total of 1,200 billion over 10 years. Some Republicans have a serious problem with this: is it wise to cut outlays for defense automatically without looking first at the situation in the world?
• The Republicans in the House only agreed on a previous proposal to raise the debt ceiling, under the condition a ‘Balanced Budget Amendment’ to the Constitution was approved in Senate and House. The new deal asks only for a vote on the subject. Since the Democrats control the Senate, everybody knows such amendment will not be approved.

The far left wing of the Democrat Party rejects the deal as well. They can’t accept taxes are not raised. They believe Obama caved, and swallowed all his strong words of the last weeks.

Since the most radical wing of both parties reject the agreement, the press and independent observers conclude the deal must be well balanced. Yesterday, Monday, the House agreed with the agreement on a bi-partisan basis. Both radical wings voted against the deal.

The agreement shows both parties don’t consider the debt situation as a serious matter. The huge yearly deficits of over 1 trillion will continue for years to come.

But, what else could we have expected?

Spending without limits is wired in the DNA of Democrats. It’s the way they buy elections. To be fair, under President Bush, a lot of Republicans in Congress weren’t any better. Hence, the revolt of the Tea Party cleaning up the Republican Party. The left believes businesses and individuals can be taxed ever more. Obama didn’t offer one serious proposal to cut spending. Large numbers of the American public reproach him for his lack of leadership in this matter.

The Democratic controlled Senate refuses to vote a budget for over two years now, a vote that is obliged by law! Only on Sunday afternoon the first bits of their proposal to cut spending emerged. The Democrats played the game masterly: let the opposition name their cuts first, so we can ridicule and attack all of them with the help of the regime press.

The Republican leaders in Congress were afraid to propose drastic cuts. They feared the blame for an eventual default. They knew Obama decides who to pay and who not to pay in case of such default, and they knew he would tell the victims “It’s all Republican’s fault!”

In my humble opinion, the Republicans erred three times during the negotiations. First, they should have been bolder and ask for 10 trillion cuts to end up with maybe 5 trillion. That would have been serious talk. Second, the Republican House should have negotiated with the Senate from the beginning months ago to define where to cut the 10 trillion. Last weeks the Republicans in the House were infighting about a meager 1 to 2 trillion in cuts. The Democrats and the press ridiculed the Republicans big time. Third: they gave Obama what he most wanted: enough money to finish his first term.

Conclusion: the USA is on its way to build up a national debt equal or larger than 140% of its GNP, and this in another 3 to 4 years. We are supposed to believe it is good to give more booze to the drunkard, that it is actually good for us, and the world, the country with the largest debt is allowed to dig an even deeper hole.