Of course, if you are really concerned about injecting uncertainty into business decisions, you don’t have tax cuts set to expire, with no clear sense of what might happen after 10 years.
As a New York Times graph on Sunday displayed, parsing out the causes of our movement from 2000 surpluses to 2011 gaping deficits shows that the single largest component is the tax cuts, and if they are permanently extended, they will be a huge contributor to the debt crisis in the future.
Bush administration policies, many of which continue on, are responsible for about four-fifths of the current debt problem. The 2009 stimulus added to the debt, but its effect will dissipate. Given the history, a ratio of one part revenues to three parts spending cuts is a more than reasonable balance.
Of course, the two debt limit options on the table enable Republicans to avoid, for now, even that level of additional revenues.
That we are, at this late date, debating two wholly new plans is absurd, dangerous and irresponsible. That we are even considering kicking most of the items in the can down the road by six or eight months and going through this ridiculous fandango of chicken and blackmail again is the height of irresponsibility.
That’s particularly true as the second round would come at the height of the presidential nominating season, when candidates will be focused not on the national interest but on courting primary and caucus voters who represent a fringe of the electorate, and when most Members of Congress are in the middle of their own primary season, focused on an even smaller fringe element.
Senate Minority Leader Mitch McConnell (R-Ky.) said there was no economic reason to resolve this issue until election passions have cooled — after all, most debt limit increases have been seven months or so in duration. True, but those debt limit increases were straightforward — not tied, as this one is, to other policy demands that draw divisive partisan and ideological lines at the expense of the national interest.
If I were a decision-maker for Moody’s or a Chinese government official holding American debt watching the farce of the past few weeks and saw a resolution that meant we were going to do the same thing again at a more skewed, charged and dangerous time, I would immediately downgrade America’s credit rating by at least two notches. Extending the debt limit until after the election is the responsible path.
This is a defining moment for Speaker John Boehner (R-Ohio). He can go down in history as a statesman or as a weak and opportunistic pol. Right now, it doesn’t look good on the statesman front.
Norman Ornstein is a resident scholar at the American Enterprise Institute.