A hammer can be useful
Published 12:01 am Thursday, August 4, 2011
It should surprise no one that the debt-ceiling/deficit-reduction deal approved by Congress and signed by the president this week didn’t placate financial markets.
Stocks fell steeply Tuesday, signaling investors’ recognition that the agreement doesn’t come close to matching the size of the
problem. Moody’s Investors Service, a key credit-rating agency, affirmed the nation’s triple-A rating, but lowered its outlook on U.S. debt to negative.
While the nation averted an unthinkable default, and projected spending was cut by $917 billion over the next decade, the United States still faces a calamitous fiscal future. Spending still far outpaces revenue, and pending demographic shifts have the Medicare program spinning toward insolvency. The recent fight over spending, taxes and debt revealed a political system woefully inadequate to the job of responsible fiscal reform.
Fortunately, those who negotiated this deal appear to agree. They included an enforcement provision that should be part of all deficit-cutting bills: If an additional $1.2 trillion to $1.5 trillion in deficit reduction isn’t enacted by Christmas, across-the-board cuts that Democrats and Republicans will both hate kick in. Defense and security spending would take half of that hit, programs that largely benefit the poor the other half.
Negotiators call the provision a trigger; Rep. Rick Larsen (D-Wash.) calls it a hammer. If a special joint committee of six Republicans and six Democrats won’t agree on additional deficit reduction by Nov. 23, or if Congress fails to approve its recommendations in an all-or-nothing vote by Dec. 23, the hammer comes down.
It’s a hefty counterbalance to ideological purity, an overused indulgence that has made rational compromise all but impossible. If the right sticks to its just-say-no stance to increasing tax revenues, or if the left refuses to budge on necessary reforms to entitlement programs, they’ll be blamed for draconian cuts their own supporters will hate.
Time and again, Congress has shown itself incapable of making the tough choices required to put the country on a sound fiscal path. Members apparently are just too susceptible to the pressure of special interests, and political threats from inside and outside their own party, to do what’s necessary but unpopular.
Much more work remains to reduce the deficit and put the federal budget on a sustainable footing. The inescapable reality is that the choices required will be painful and unpopular.
Creating alternatives that are even less palatable doesn’t guarantee responsible decisions. But if a hammer makes them more likely, then by all means, grab it.
