Inflection Point: A Good Bad Debt Ceiling Deal

Photo of joint session of CongressRepublicans and Democrats have been able to compromise on very few issues in Washington DC in the last few years.  The last few bouts of government shutdowns, or near shutdowns, have been particularly frustrating, as they show brinksmanship and last-minute forced cooperation at best, but with real costs to economic consistency and confidence in our governmental processes.

So, the proposed deal to put off debt ceiling challenges until we have a new President in 2017 is highly flawed, from both sides’ perspectives, but also good enough to make each side at least somewhat satisfied.  Pretty much the definition of a reasonable compromise.

Politically, the sense was that the last few debt ceiling standoffs did not play well for the Republicans.  At the same time, President Obama and the Democrats clearly didn’t relish these episodes, either, as they opened questions about American governance, even if their party might have gained some minor political points.

From the Republicans perspective, while the standoffs cost them politically, some believed it was the right stand to make, in terms of capping the federal debt and forcing present and future budget costs. The compromise, negotiated by outgoing John Boehner, allows new Speaker Paul Ryan to start with a fresh slate.

From the Democrats perspective, they did not want a ceiling at all, which they viewed as artificial, since Congress had already approved all of the spending that would then exceed an arbitrary limit.  But, this compromise takes a shutdown off the table through President Obama’s term in office.

The sequester process came out of prior standoffs, and was hoped to be so odious to both sides, that a better compromise would emerge.  One really never did, so the sequester cuts mostly kicked in, and now both sides basically agreed to kick the can down the road for 18 months.  The relatively minor changes in military and Social Security disability spending greased the wheels of compromise.

Categories: Commentary

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