The Good and Bad News in the Budget Deal
Obviously this is no way to run a railroad. Still - the train did not crash.
The deal to avert a government shutdown is a story of good news and bad news.
Good news:
The dealmakers in both parties have prevailed over the confrontationalists in both parties. Speaker John Boehner persuaded his Republican Congress to accept "yes" for an answer. President Obama resisted the temptation to entrap the Republicans in a shutdown that would almost certainly have hurt the GOP more than it would have hurt him.
Good news:
If Republicans and Democrats flinched from a government shutdown, they will certainly flinch from the much more catastrophic consequences of failing to raise the debt ceiling in May. We can reduce the worry level about a politically forced default on the national debt.
Good news:
Washington is beginning to think seriously about restraining the growth of the public debt. Notice I said "begin." We're going to need better answers than we have heard so far, but at least the answers are starting. Somebody tweeted this evening about the paradox of a liberal president hailing budget cuts. But even liberal presidents have to worry about excess debt - and the signs are there that Obama does worry.
Bad news:
The debate dramatizes how completely budget policy has displaced economic policy in Washington debate. Tonight's action may help stabilize federal finances. But even economists who support spending cuts will acknowledge that the immediate effect of cuts is to subtract demand from the economy. A strongly growing economy can sustain and benefit from this demand-subtraction. The US economy in 2011 is not a strongly growing economy. Yet how much time has the new Congress spent debating ideas to accelerate growth?
More bad news:
The 2011 budget was due in the spring of 2010. Despite control of both houses of Congress, the Democrats irresponsibly failed to enact a budget while they could. We will resume debating temporary funding of the government next week - and then seamlessly move into still fiercer battles over the budget for 2012. The most important and difficult decisions still await.