Now get back to work on that grand bargain

  • Article by: CLIVE CROOK , Bloomberg News
  • Updated: January 2, 2013 - 8:52 PM

These phony crises solve nothing, but they do add up.


Treasury Secretary Timothy Geithner.

Photo: Chris Usher, Associated Press - Ap

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Let's hope they react with similar equanimity to the next pointless quarrel, over the debt ceiling. Treasury Secretary Timothy Geithner told Congress last week that the current limit on government borrowing was about to be reached. He said "extraordinary measures" (essentially, shuffling funds among government accounts) would be used to prevent the debt from breaking through the ceiling.

How long can that go on? Geithner wasn't sure. Maybe two months under normal circumstances, he said, but "given the significant uncertainty that now exists with regard to unresolved tax and spending policies for 2013, it is not possible to predict the effective duration of these measures."


Instead of dealing calmly with the problem, fiscal policy has settled into a mode of perpetual phony crisis. Phony doesn't mean harmless, however. The risk of a real fiscal crisis gradually builds. Meanwhile, the cumulative effects of simulated crisis might be almost as bad. It's the difference between an acute illness and a chronic wasting disease -- one that's beginning to look incurable.

Don't tell me the economy just had a lucky escape. Whatever happens next, it has been paying for the fiscal standoff for months. It's paying for what Congress might do with the next debt ceiling, and the one after that. The "significant uncertainty" that Geithner referred to has already held back the U.S. recovery. Another temporary fiscal patch isn't a remedy. It's just more of the same.

The economy needs a lasting fiscal compact that commands broad, bipartisan support. I can hear the groans. Not another call for compromise. Many Democrats and almost all Republicans find the idea disgusting. On Capitol Hill, it's no longer enough for one side to win; the other has to be seen to lose. That attitude is the growing burden the economy has to carry.

The remarkable thing is the passion of this mutual animosity, given how little divides the combatants. President Obama's health care law, don't forget, was built to a Republican blueprint. All Democrats have embraced the Bush tax cuts as they apply to 98 percent of taxpayers, and most acknowledge the need to contain entitlement spending, which the Republicans insist is essential.


This is hardly a clash of irreconcilable visions, as the two sides want to claim. Seen from beyond the Beltway, the budgetary gap isn't just bridgeable, it's trivial. Democrats and Republicans relish and exaggerate the differences. Their enmity is less about economics than about culture, values and class. That's what makes it so poisonous.

Obama offers the best hope for calming this conflict and passing broadly supported -- hence lasting -- fiscal reform. At the moment, it's hard to be optimistic, because the president has chosen since the election to strut more than conciliate, to be a partisan champion, not a one-nation leader seeking to build agreement.

Declaring victory this week won't serve his or the country's interests. A little magnanimity would go a long way. Nonetheless, count on the Republicans to make presidential aggression look reasonable.



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