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Debt Ceilings and Grand Bargains: Yes to One, No to the Other

The logic of Barack Obama’s position regarding the debt ceiling is peculiar, to put it mildly. He and his people say it would be catastrophic not to raise the debt ceiling. Then he also says he wants to use the opportunity provided by the debt-ceiling showdown to make major changes in the country’s approach to the federal deficit. Obviously, if you want to avoid an imminent car crash, the thing to do is swerve; you don’t also attempt to re-engineer the engine while you’re driving it. I explore this theme in greater detail in today’s New York Post. You might call this the modest approach to the debt-ceiling issue, and while Obama has rejected a short-term deal, it’s preposterous to believe that faced with an imminent disaster, he wouldn’t sign one. The question is: Why the Grand Bargain? Why the Big Design?

It is increasingly clear that the upcoming election is going to be a national referendum on the future direction of the government and its relation to the economy, just as the 1980 and 1992 elections were; it’s what happens when incumbents are governing at times of economic uncertainty. (And while those elections saw the incumbent turned out, I’m not at all saying the same will happen to Barack Obama.) The parties have wildly divergent ideas about that, and the gap cannot be bridged without some more firm guidance from the electorate. This is not a time for wildly ambitious policy. You can see why Obama would want a deal that would give him the right to claim the mantle of fiscal prudence after his record over the past three years, but the reason Republicans cannot make that deal with him is that they were told without question by their voters last year not to do it.

Today, in the New York Times, my friend David Brooks writes the following: “The people in my group (you might call us conservatives) are more likely to embrace a low and steady approach to fiscal policy. Control debt. Control entitlements. Keep tax levels reasonable and the tax code simple. Work on the economic fundamentals: human capital, productivity, labor market flexibility, open trade, saving and investment….[W]e have been astonishingly passive during these budget negotiations. The tax cut brigades and the Medicare/Spending brigades are well organized. The people who believe in balance and the fundamentals sit piously on the sidelines. The tragedy is that in Barack Obama and John Boehner we have leaders who would like to do something big.”

They might like to. But the political system doesn’t want them to.



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