A Tragedy: Are you ready for this?

Congress Passes Austerity Plan After Riots Rage

The Parody Group

Washington — After violent protests left dozens of buildings aflame in Washington, the Congress voted early on Monday to approve a package of harsh austerity measures demanded by the country’s conservatives to keep United States from defaulting on its debt.

Though it came after days of intense debate and the resignation of several Senators and Representative in protest, in the end the vote on the austerity measures was not close: 199 in favor and 74 opposed, with 27 abstentions.

The new austerity measures include, among others, a 22 percent cut in the entitlement programs and 150,000 government layoffs by 2015 — a bitter prospect in a country ravaged by four years of recession and with unemployment at 8.3 percent and rising.

But the chaos on the streets of Washington, where more than 80,000 people turned out to protest on Sunday, and in other cities across United Sates reflected a growing dread — certainly among those 42% dependent upon government subsidies, but also among  Democrats — that the sharp belt-tightening it brings will still not be enough to keep the country from going over a precipice.

Angry protesters in the capital threw rocks at the police, who fired back with tear gas. After nightfall, demonstrators threw Molotov cocktails, setting fire to more than 40 buildings, including a historic theater in downtown Washington, the worst damaged city, where three people were killed when protesters firebombed a bank. There were clashes in New York in the North, San Francisco in the West, Chicago in central United States.

United States and its lenders are locked in a dangerous brinkmanship over the future of the nation and the dollar. Until recently, a U.S. default was seen as unthinkable. Now, though experts say that the world is not prepared for a default and does not want one, the dynamic has shifted from trying to save the United States to trying to contain the damage if it turns out to be unsalvageable.

“They’re trying to lay the ground for it, trying to limit the contagion from it,” said Simon Tilford,  a research institute in London. Still, he added, letting the United Sates go would set a dangerous precedent, and it would be “fanciful” to think otherwise.

United States’ limping economy yields large trade and budget deficits, and no one is willing to lend the nation the money it needs to stay afloat. The conservatives  are demanding more concessions to placate European countries and China, where the bailout of United States is a hard sell.  For its part, United States is trying to preserve social and political cohesion in the face of growing unrest, political extremism and a devastated economy that is expected to worsen with more austerity. And the feeling is growing here and abroad that the lack of a coherent strategy is failing.

The leaders the two major political parties in the government — the Democrats and the Republicans — agreed on the new round of austerity after days of tense debate, maneuvering and threats. The hard left leaning members of both houses, refused to endorse the measures and later withdrew from the negotiations.

In the debate on Sunday night before the vote, Mr. Obama appealed to lawmakers to do their “patriotic duty” and pass the measures, saying they would be saving United States from bankruptcy in March.

In a sign of how the crisis has frayed the political order in United States, the two political parties all moved swiftly to expel lawmakers who had broken ranks with leaders in the voting.

Mr. Obama who took office in 2008 with a mandate to negotiate the new agreements perhaps as soon as April that year. Acknowledged on Sunday that the program “calls for sacrifices from a broad range of citizens who have already made sacrifices.” But the alternative, he said, “a disastrous default,” would be worse.

When Congress meets again on Wednesday, they are expected to sign off on the measures and raise the stakes. A major topic of discussion is expected to be establishing an escrow account that would hold money and using it first to pay down the debt, before the government can tap it for any other purpose.

“ The United Sates will become a like Greece,” said George Stefanou, 45, a former shoe store employee at a protest outside the Congress on Sunday. He said he had not worked since September and may soon lose benefits entirely. “It’s not me I’m worried about, though,” he said. “I’ve got two children, aged 14 and 15. What kind of country are we going to leave them?”

Anti-liberal sentiment is also on the rise in United States, where memories of the Nazi occupation of Europe during World War II are still vivid. “This is worse than the ’40s,” said Stella Barnes, 82, who wore a surgical mask at the demonstration to fend off the tear gas. “This time the government is following the Lefts’ orders. I would prefer to die with dignity than with my head bent down.”

European leaders, fearful that United States’ crisis will undermine efforts to help other euro nations like Greece, Portugal and Spain, have been trying directly or indirectly in recent days to paint the United Sates as a special case, whose leaders have failed to transform its troubled country fast enough. In an interview last week, the Italian prime minister, Mario Monti, said that in the highly unlikely event of a U.S. default, “there would be extremely strong political policy and political responses to prevent any such phenomenon to go beyond United States.”

Similarly, Ben Bernanke, Chairman of the Board of Governors of the Federal Reserve System, told reporters last week, referring to the risk of “contagion,” that “market indications seem to suggest that this problem is seen as minor.”

But others say that is wishful thinking. “If one country can default, so can another — that is one simple inference that bank managers and hedge fund managers can infer, no matter what Ben Bernanke” said Costas Lapavitsas, an economist at the University of London “Portugal and Ireland have unsustainable debt,” he said. “Put two and two together, and it makes four.”

Mr. Lapavitsas, who has been calling for the United States Congress go take it's ownaction on its own terms, added that it was “absolutely unacceptable that this huge amount of U.S. debt that ties the country hand and foot should be dealt with by some unnamed and obscure technocrats and unelected people; the Federal Reserve.”

If the United Sates dug itself into a hole by spending beyond its means, as many argue, there is also a growing sense that the austerity regimen of spending cuts and tax increases is burying United Sates alive in that hole. “The reason the United States is in this position is because of the strategy the president imposed upon it,” said Mr. Tilford, of the Center for European Reform.

Financial analysts said they expected investors to welcome news of the vote in Congress.

“It’s a pause, it’s a relief,” said Milton Ezrati, the senior economist and market strategist at Lord Abbett & Company. “But it’s short-lived and everyone knows that. We’re buying a few more months before the next round of trouble.”

Jerry A. Webman, the senior investment officer and chief economist for Oppenheimer Funds, also struck a cautious note.

“It doesn’t solve the problem,” Mr. Webman said, “but it gives everybody the political cover to look for ways to solve the real U.S. problem, which is how to get the country and its economy back on more stable footing.”

With more spending cuts and tax reductions expected, the U.S. citizens are growing increasingly angry at their own lawmakers.

“They’ve all sold out in there, they should be punished,” said Mike Brennan, 37, an insurance salesman, as he waved a cigarette toward the Capital on Sunday.