While the debt ceiling debacle continues, the fact that the economy is tanking comes into clearer view. Today's reports:

Gross domestic product rose at a 1.3 percent annual rate following a 0.4 percent gain in the prior quarter that was less than previously estimated, Commerce Department figures showed today in Washington. The median forecast of economists surveyed by Bloomberg News called for a 1.8 percent increase. Household purchases, about 70 percent of the economy, climbed 0.1 percent.

More of the same with budget talks. Votes delayed.

Dominique Strauss-Kahn accuser's lawyer is still in desperation mode, holding press conferences, trying to save the case. I'm more convinced than ever the DA has already decided to drop the charges.... otherwise someone would have muzzled this accuser and her lawyer. It's the most inexcusable, unacceptable behavior by a lawyer and client (who is a prospective witness and not a party) in a pending criminal case I've seen yet. We can expect the filing of the accuser's civil lawsuit shortly. But of course, this was never about money.

More interesting: Roy Black on why those accused of rape need more legal protections, including not having their names dragged through the mud while the accuser retains anonymity.

New season of Project Runway starts tonight, and it's eviction night on Big Brother.

This is an open thread, all topics welcome.

Bob Bradley Fired.

Geithner soon, I hope.

Boehner does not have the votes yet. If he is having problems now, how is he going to survive a compromise bill? Tea Party won't take yes for an answer. If nothing passes today, I think the markets take a big hit tomorrow.

Open Thread.

Robert Kuttner:

This may sound churlish at such a moment, but in addition to blaming the recklessness of today’s Republican party, the man who deserves substantial blame for this impending economic doomsday is Barack Obama. For two and a half years, he has been all but training the Republicans, Pavlov fashion, to keep rejecting compromise. He has done this by rewarding them with a treat every time they up the ante or move the goal posts. [. . ] if the Republicans, like Europe’s leaders of 1914, miscalculate and create disaster, the responsibility will partly be theirs but also partly our overly eager-to-please president.

His words, not mine. I will say this, now is not the time for Obama to get tough. The failure to raise the debt ceiling would be catastrophic. But Obama's failures in December are very much a cause of today's debt ceiling crisis.

Ezra predicts:

[W]e’re looking at [a debt ceiling] deal with no new revenue, significant new spending cuts, a spending-cut based enforcement mechanism for further deficit reduction, a series of debt-ceiling votes designed to embarrass Democrats, and a vote on a balanced budget amendment that’s also designed to embarrass Democrats. It’s a pretty good deal for Republicans, but it’s also a deal that observers expect a substantial number of Democrats could vote for.

That's a win for the GOP. And it is a loss for the President. Why? It helps the President not at all politically (no voter gives a crap about the debt ceiling) and is not good for the economy in the short and medium term (and thus not good in the long term either.)

It is an amazing thing that in the middle of the worst economic times since the Depression, this is what our federal government is doing. This is a bigger failure of our ruling elites than the Iraq Debacle.

Speaking for me only

Ta-Nehisi Coates:

Obama has been much praised for the magnanimity he shows his opposition. But such empathy, unburdened by actual expectations, comes easy. More challenging is the work of coping with those who have the disagreeable habit of taking the president, and his talk of “fundamentally transforming the United States of America” seriously. In that business, Obama would do well to understand that while democracy depends on intelligent compromise, it also depends on the ill-tempered gripers and groaners out in the street.

Coates references Eric Foner's great book The Fiery Trial, which I wrote about here:

Once the country is saved from debt ceiling kabuki, what happens to the economy? New jobless claims are down this week:

First-time claims for state unemployment benefits fell more than expected last week, dropping below the important 400,000 level for the first time since April, according to a government report on Thursday. Jobless claims dropped 24,000, to a seasonally adjusted 398,000, the Labor Department said. [. . .] The prior week’s figure was revised to 422,000 from 418,000.

But this is a stalled economy which has not been creating jobs in a meaningful way:

The government is expected to report on Friday that the economy grew at a 1.8 percent annual rate, according to a Reuters survey, after a tepid 1.9 percent pace in the first three months of the year. On Wednesday, the Federal Reserve said growth had slowed in much of the country in June and early July.

And there is no reason to expect improvement. After the President enjoys the debt ceiling fight's result - while he is not trusted on the debt ceiling, the GOP is even less trusted - will he realize that no one is going to give a crap about that next November?

Open Thread.

Reading the apologias for the bad bargaining by Democrats, I've come to the point that I can see only two alternatives: (1) either Bill Clinton was the greatest political bargainer in recent memory, or (2) a lot of people do not understand bargaining. Consider this Matt Yglesias post:

I’ve been in a few conversations with various people this week citing one strategy or another that they claim could have produced a “clean” debt ceiling increase and avoided the current legislative crisis. I basically agree with all these theories. Obama could have gotten a debt ceiling increase built into the December 2010 tax deal [. . .] But I’m not sure this is a case of bad negotiating strategy or good negotiating strategy.

We’ve seen so much mockery of “11-dimensional chess” that I think people have gotten unduly reluctant to credit the idea that there’s a bit of regular old chess happening here where you have to think one or two moves ahead. [. . . R]easonable people can disagree as to whether having the fight now is better than having the fight then, but I don’t think it’s by any means crazy for the White House to suppose that the current timing is more favorable to the progressive side or crazy to believe that they did, in fact, see two moves ahead and decide they preferred this outcome.

I do not know how a reasonable person could see it Yglesias' way. Not raising the debt ceiling is the most dramatic doomsday point that could be imagined. Failure to raise the debt ceiling would be catastrophic in the short and medium term and likely the long term. Indeed, the President will end up by caving at the end, and rightly so. This is not the moment for brinksmanship. More . . .

Via Dean Baker, a hill of beans:

Look at the chart - AAA S&P rated Australia's 10 year bonds are yielding 4.9%. A- S&P rated Malaysia's 10 year bonds are yielding 3.9%. AA- rated Japan's 10 year bonds, and currently holding a negative watch from S&P, are paying 1.1%. AA- China's 10 year bonds, currently S&P rated stable, are yielding 4.1%.

While as a general matter, the countries S&P has chosen to rate AAA face lower interest rates than countries with lower ratings, there is so much randomness that it is difficult to attribute any cause to S&P ratings. I think no one seems to pay attention to S&P on sovereign debt ratings. More . . .

Krugman writes:

There’s actually a simple way to resolve the debt ceiling crisis: non-crazy Republican leaders could support something like the Reid plan — which is, let’s be clear, a huge victory for the right and defeat for progressives — and pass it with limited GOP support and overwhelming Democratic support. Situation resolved. This would, however, probably be the end of these Republicans’ political careers. And the answer is, so? [. . . T]ak[ing] the action I’ve just described means that they are risking America’s future rather than pay a price in their personal political careers. That’s cowardice on an epic scale, even if it’s the kind of behavior we take for granted nowadays.

This is kind of silly from Krugman. Pols have always acted first and foremost in their own political interests. The key for the electorate is to make them act in ways that are beneficial to the Nation. There are 2 ways out of this mess now - (1) carve a solution that allows pols, politically, to act to raise the debt ceiling; or (2) make not raising the debt ceiling the worst political choice.

I think not even the Tea Partiers really care about raising the debt ceiling, even when the President is a Democrat. This is the biggest political paper tiger of all time. But Boehner thinks he needs one more concession. And he'll get it - they will break up the Reid Plan into 2 votes, so that Boehner can claim a win. This is all very predictable imo.

Speaking for me only

Busy day again for me. Here's an open thread for you, all topics welcome.

Digby:

The activist base and elite liberals are the tip of the spear. Being honest about what we see still has a purpose: to keep liberalism alive, motivate the base for other elections, build the progressive movement. And the activist base and liberal elites will have a hand in determining the president's legacy. Once he's done catering to these alleged Independents who want nothing more than to slash government to the bone, he's going to start thinking about that.

I'm thinking the more important lesson from the Clinton Era remains 'it's the economy, stupid':