A new urgency to change the system
Economists began preparing us even as the hours were closing in on the debt ceiling deadline: A congressional compromise was a step in the right direction — but it still might not be a big enough step to stave off a debt downgrade. Now we know for sure. We need to take a bigger step sooner than expected.
It’s reasonable to wonder why S&P felt the need to issue the downgrade now and worth noting that Moody’s maintained its AAA rating on the U.S. government, but the action at least demonstrates a lack of faith that Congress will act as assertively as necessary to address our budget problem. Indeed, as President Obama indicated in his address to the nation Monday, the downgrade and the stock market plunge in its wake send a resounding message to Congress: It’s time to cut the nonsense. U.S. budget policy must be open to the possibility of a combination of substantial spending cuts, entitlement reform and responsible revenue adjustments.
The president’s pointed complaint about “lines in the sand” seemed particularly intended for the tea party hard-liners who did so much to obstruct a solution to the debt ceiling crisis, but the remark must equally apply to that head-in-the-sand faction of Democrats who insist that action to address the federal deficit can be postponed.
In the meantime, the debt ceiling compromise provides a mechanism that can help right the financial ship — the so-called “super Congress,” which has two models from which to begin its work. The Simpson-Bowles commission and the bipartisan Gang of Six both lay out bold menus of tax, spending and entitlement policy changes to produce fundamental improvements in U.S. budgeting. Not just phew-we-survived-another-blow brinkmanship, but true systemic changes that demand participation from all sectors of the economy and that establish a disciplined monetary approach that reassures investors while meeting the needs of citizens.
There is room in both approaches for debate and modification, but make no mistake. The bold measures we need to adopt can’t affect “the other guy” only. The great shortcoming of political thinking so far has been that the drawers of lines in the sand insist that their own interests not be touched. Circumstances of the past week have clearly demonstrated the bankruptcy of such thinking.
As Obama indicated Monday, the American spirit gives its economy strengths that extend beyond the reach of any simple financial ratings organization. True enough. But the challenge to that spirit today is the stubborn short-sightedness of narrow political interests. It’s time now for the super Congress to sweep aside that obstacle, and for the president to demonstrate courageous and assertive leadership in helping it achieve a truly multi-faceted solution.