Well, everything turned out just swell after all the drama over the debt ceiling debate, didn’t it? I mean, so long as you don’t mind that:
–the sorry spectacle of the political fight led one rating agency to drop America’s debt rating a notch below AAA anyway: it doesn’t doubt that the U.S. can pay its debts, but feels the political stalemate raised questions about the government’s willingness to pay its debts, and so lowered the rating as a warning to investors;
–taking the nation’s financial health hostage in a political negotiation was shown to be an effective tactic, so we can expect to see it used again in the future.
Among the lessons learned:
–the deal assumes the elimination of the so-called Bush tax cuts at the end of 2012, meaning Republicans gave up the very thing they fought so hard for a year ago.
Plucking flaccid compromise from obstinacy should not be mistaken for victory, just as the smell emanating from Washington after this deal shouldn’t be mistaken for success.
–82% of Americans are unhappy (disgusted?) with the performance of Congress on the debt issue, nearly half are unhappy with the president’s handling of the situation, and 40% view the Tea Party unfavorably.
More than four out of five people surveyed said that the recent debt-ceiling debate was more about gaining political advantage than about doing what is best for the country. Nearly three-quarters said that the debate had harmed the image of the United States in the world.
–the political system in Washington, D.C. is becoming more and more unproductive, and may not be able to help us with anything.
The president has tried reasonableness and he has failed. It has been astonishing to watch Obama’s sheer unwillingness to give up on his opponents after their refusal to work with him on the stimulus package, health care reform, or the extension of the Bush tax cuts last fall. A Congress dominated by mindless cannibals is now feasting on a supine president. But surely even he now realizes there’s no middle ground with antagonists whose only interest is in seeing him humiliated.
More real fun is going to come later in the year when a new federal fiscal commission tries to come up with a plan to solve the federal government’s money problems. If it’s anything like the most recent such commissions, it will find that cutting the budget just can’t produce enough savings to right the ship and it will also look for equitable ways to increase revenue. It could start by checking this week’s local paper: Ezra Klein outlines a plan for Democrats to boost revenue by negotiating like Republicans, and Charles Krauthammer offers a very rational outline for reforming and simplifying taxes so our representatives in Washington could have a fresh starting point on the coming negotiations on tax rates and entitlement reforms…and they are coming.