While it’s not uncommon for any negotiation to begin with a degree of doubt, it’s difficult to imagine any launched with as little optimism as accompanied the opening last week of federal budget talks. That President Barack Obama could possibly still be voicing any expectation of a “grand bargain” reaching far into the future suggests an outlook shared only by those who play multi-state lotteries and bet the pick six at the race track.
For all the derision and falling poll numbers that Congress, and particularly the Republicans, suffered during last month’s government shutdown and near-default that began with a desire to “defund” Obamacare but later spread to the overall budget and beyond, the party’s basic positions on tax and spending fundamentals look little changed. Many in Congress claim to want to reduce the deficit and eliminate the worst effects of sequestration, but they don’t appear inclined to move one iota from their two core beliefs.
For Republicans, it’s the desire not to raise tax revenue, even, apparently, if that means closing loopholes in the tax code that benefit the rich and corporate interests at the expense of ordinary Americans. For Democrats, it’s the willingness to make reductions in government programs that aid families, the poor and seniors only if those same groups Republicans are so intent on protecting, the rich and big business, pony up a fair share, too.
So where’s the opportunity for compromise by the conferees? It doesn’t take an experienced budget negotiator to recognize there isn’t much of one, not when the two sides are so polarized in their core beliefs. But that’s not necessarily as bad as it sounds – if negotiators are willing to set their sights on a more realistic, short-term deal instead of one that seeks to rewrite the tax code or substantially shrink the federal government.
For all the long-term fiscal woes potentially facing the United States, the short-term debt and deficit prospects are actually not so bad. In case Congress hasn’t noticed, the budget deficit has been dropping at a record pace – faster than in most of the developed world. Conversely, further budget cuts could make things worse.
What the U.S. needs most right now are jobs, and that requires economic growth. Cut government spending, and you decrease the gross domestic product and job-creation. Fiscal austerity has likely proved costly in terms of economic growth, which is down to 1.5 percent in recent months. That’s why the Federal Reserve last week voted to continue its stimulus policies – and why Congress would be foolish not to do the same.
Reform the tax code? A great idea, but it’s not going to happen anytime soon. Downsizing government? This is not the time to take money off the proverbial table. If Congressional negotiators accomplish nothing – that is if they maintain the status quo – that might be the best outcome people can realistically expect from Washington.
Indeed, if voters want to send one message to negotiators, it ought to be this: Don’t screw things up. Avoiding another government shutdown or assault on the U.S. credit rating by way of another debt ceiling face-off is what Congress ought to regard as its top goal in budget talks. That may not sound like much, but Americans would welcome some fiscal sanity and predictability right now.
Is that what we would do if we were suddenly in charge of the federal budget? Absolutely not. We’d be more inclined to invest in public works projects, close tax loopholes, look for ways to improve the fiscal health of entitlement programs like Social Security and Medicare and so on. Not to mention pass an actual budget and a long-term debt reduction plan. But that’s not going to happen as long as the House is controlled by the GOP’s Tea Party wing.
Get the U.S. through the remainder of the fiscal year on the same basic budgetary trajectory it is right now, perhaps even with more sensible spending choices than are represented in the sequester? That looks possible. Not today, necessarily. But perhaps in a couple of months when deadlines loom and some small compromises might actually be possible.