I’m not an economist, but the more I try to learn about economics by reading the work of those who are, the more I realize it is a field with wildly different interpretations of the facts and prescriptions for solving the country’s problems. When I read that a failure by the Federal government to increase the nation’s debt limit by August 2 will be disastrous to our economy, I’m not sure whether to believe it. Are these the same people who were oblivious to the housing bubble back in 2004-2007? If so, they don’t have a lot of credibility with me.
Still, common sense tells me that a failure to reach a deal on this – presumably some combination of cuts and revenue increases – will be a bad thing. There won’t be enough money to pay all of the country’s bills and so payments of the money that is available will have to be prioritized. What gets paid first: interest to bond holders or combat pay to a GI in Afghanistan? Where do folks relying on social security fit? It’s all unknown at this point.
What most people want, I suspect, if for the two parties to reach some type of timely compromise: some benefit cuts that the Democrats find unacceptable and some new revenue that Republicans likewise abhor. If no one is satisfied, it’s evidence of a pretty good deal. That’s how our system is designed to work and most often through our history that’s how it has worked. Matt Bai, the New York Times’ chief political analyst in a column this past Sunday, cited New Jersey governor Chris Christie and New York governor Andrew Cuomo, as the two most popular and most successful politicians in America today. Though they come from different political parties and have radically different philosophies of government, both worked with members of the other party to make the tough choices necessary to keep their respective governments working. According to Bai, Governor Cuomo summed it up pretty well when he said voters weren’t as interested in “more government or less” as they were with “effective government or ineffective.”
Because I fully agree with Governor Cuomo’s assessment, I was greatly encouraged last weekend with initial reports that President Obama and Speaker Boehner were close to an historic agreement that would have cut $4 trillion and made major reforms to our tax code and the way our government operates. I suspect I would have disagreed with many of the cuts, but any disappointment was washed away by the hope that the two parties would unite to craft a solution, one that everyone disliked but the best that could be obtained under the circumstances.
But then Speaker Boehner backed away from such a deal and today, Republican Senate leader Mitch McConnell unveiled this backup plan that was both bizarre and barely comprehensible. As I understand it, he says that it’s unacceptable to have the US government default but that his party will not raise the debt ceiling to do that. Instead, McConnell’s proposal cede’s that authority (granted by the Constitution exclusively to Congress) back to the President so that he could raise the debt ceiling, leaving Congressional Republicans to (1) claim they fought against raising the debt ceiling and (2) attack the President for doing what they know is necessary but for which they lack the political courage to do themselves. Here’s McConnell. Please watch it (excusing the ad at the beginning) and see if you understand what he’s talking about: