Devastating as Hurricane Sandy was to the Northeast last week, damage to the U.S. economy could be worse if the post-election lame-duck Congress does not steer the country away from the impending fiscal cliff.
Today’s election results undoubtedly will affect how Congress might disarm the multiple hammers due to hit the economy at the end of this year — but we hope that, regardless of the outcome, Congress will not treat the threat lamely, but rather will enact at least the framework for a long-term solution for the national debt.
It would be a gift to the next president to be inaugurated free of the prospect of a cliff-caused recession and with the debt off its present trajectory to double during the next 20 years. And it would redeem the reputation of the 112th Congress, which is in danger of going down as one of the least productive in modern times — and, very possibly, the most irresponsible.
This is a Congress so mired in partisanship that it enacted no budget resolutions, kept the government running on continuing resolutions rather than well-considered appropriations and, worst of all, kicked one can after another down the road loaded with fiscal high explosives, all set to slam into the economy just 55 days from today.
Most of us on Capitol Hill know the details of the looming disaster: Taxes will go up next year by $290 billion and spending on jobs measures, Medicare, defense and domestic programs will be cut by $190 billion — a net blow that the Congressional Budget Office estimates at 3.5 percent to an economy growing at only 2 percent. The CBO estimates that unemployment will rise to 9 percent next year. The National Association of Manufacturers puts it at 12 percent.
The crisis was systematically kept off the election agenda by both presidential campaigns, most Congressional candidates and much of the media, most publicly by the moderators of the presidential debates. But there are indications that the threat of recession is already affecting business decisions. There’s been limited polling on the question, but the bipartisan group Center Forward did one survey indicating that, when informed of the details, 88 percent of likely voters want both parties to work together to solve the problem.
This Congress’ tendency — given its record — will be to kick the crisis into 2013 with short-term extensions of current tax law and a defusing of the sequester time bomb that is set to automatically slash the defense budget by 10 percent and domestic spending by 8 percent next year.
We’d love to see better. Various bipartisan groups, including some Members of Congress, have been working on better ways to go, most of them built around the Simpson-Bowles debt commission’s recommendations for $3 in spending cuts to $1 in revenue increases, entitlement reform and tax reform.
We grant, it will be next to impossible to enact a detailed, comprehensive debt package before this Congress expires. But groups such as the Fix the Debt campaign have suggested framework solutions that would make progress on the problem.