October 12, 2013


Rescuing Compromise (JONATHAN RAUCH, FALL 2013, Commentary)

A funny thing happened on the way to legislative gridlock and fiscal meltdown in the past few years. In paralyzed, polarized Washington, where Democrats refuse to reduce spending without revenue increases that Republicans peremptorily reject, Democrats have accepted spending cuts, Republicans have accepted tax increases, and deficits have come down.

It is true that all of that happened in an ugly, piecemeal fashion, with the two parties lurching from one self-created crisis to another. At one stage, Republicans seemed willing to default on the national debt rather than compromise; at another, an automatic "sequestration" cut spending in what everyone agreed was a nonsensical fashion. Instead of joining hands in the grand bargain so ardently desired by pundits and much of the public, Congress and President Obama fought their way through a series of stopgaps, each of them greeted as disappointing if not appalling.

Yet the results bear pondering. The cumulative effect of Washington's serial muddling has been to stabilize the national debt as a share of gross domestic product over the coming decade, according to Congressional Budget Office projections. The resulting level, by many accounts, is still too high, and more remains to be done about long-term increases in health-care spending and other entitlement costs. But the near-term debt emergency is over.

To get here, Congress cut spending by about $2.6 trillion over ten years, and raised taxes by about $700 billion (according to the Center on Budget and Policy Priorities). After adjusting for padding and assorted gimmicks on the spending side, that ratio of spending cuts to tax increases looks remarkably close to the ratio of between 2-to-1 and 3-to-1 recommended by many of the mainstream economists and pundits who called for a grand bargain.

And at least as important, all of that fiscal tightening happened at a pace that slowed but did not abort a delicate economic recovery. Too much deficit reduction would have caused a recession, aggravating the debt problem; too little would have left the underlying crisis untended. Unlike Europe, America seemed to have gotten both the pace and the magnitude of the fiscal adjustment about right.

In short, the system acquitted itself quite well, and better than any of the individual actors within it -- steering a course between hostile political factions and dangerous economic outcomes. 

Posted by at October 12, 2013 8:15 AM

blog comments powered by Disqus