In 2012, America's Greatest Economic Weakness Was Its Government

The dysfunction of our political system is now sapping confidence from businesses and families. It may be the single biggest hurdle standing in the way of our prosperity.

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(Reuters)

Barack Obama said it himself in his first post-election press conference. Speaking at the White House on November 14, Obama said conversations with families, workers and small business owners along the campaign trail had left him convinced that average Americans deserved more from Washington.

"When you talk to these folks," Obama said, "you say to yourself, 'Man, they deserve a better government than they've been getting.'"

Exactly.

As 2012 comes to a close, partisanship is slowing our economy, making our children unsafe and reducing our confidence in the future. In 2008, egregious behavior by bankers and regulators could be blamed for gutting the economy. In the 1970s, high union wages could be blamed for reducing the competitiveness of American industry. Today, our political dysfunction is our biggest economic and social liability.

Example one: the fiscal cliff. After two months of absurd political posturing, the country is four days away from a wholly preventable economic body-blow that will stall a fragile recovery. The same dynamic that occurred last summer during the debt-ceiling fiasco is repeating itself. The failure to compromise on fiscal policy is eroding consumer confidence and slowing the economy just as growth begins to take hold.

The problem is not that American companies and workers are uncompetitive. It is not that manufacturing jobs are flowing overseas. Those economic trends have largely played themselves out. It is a new dynamic: political deadlock handicapping our economy.

Michelle Meyer, senior U. S. economist at Bank of America Merrill Lynch, said this week that "fiscal cliff" gamesmanship is a drag on the economy. Even if the cliff is averted in the next few days or weeks, Meyer estimated that the U.S. economy will grow by just 1 percent in the first quarter of 2013, a third of the 3.1 percent posted in the third quarter of 2012.

"What's been missing in this recovery has been confidence," Meyer told the New York Times. "We'd see a healthy recovery if it weren't for this uncertainty and the potential shock from Washington."

A second example is compromising on rising gun violence. In the wake of the murder of two firefighters in Rochester, New York and 20 first-graders in Newtown, Connecticut, the debate over gun violence devolved into a familiar pattern. Liberal commentators blamed the National Rifle Association. The NRA blamed the news media.

In truth, seizing the 300 million guns that now circulate among America's 315 million people is unrealistic. So is placing armed guards in each of the country's roughly 100,000 public schools. Instead, polls show that most Americans support a mix of reforms.

A majority of Americans continue to oppose a ban on assault rifles, a divisive issue that has long been supported by liberals but vehemently opposed by conservatives, according to polls. At the same time, the vast majority of Americans support stricter control of handguns, more effective background checks at gun shows, and a ban on large-capacity ammunition clips that hold dozens of rounds. In the wake of Newtown, improving our identification and treatment of the mentally ill is also vital.

Presented by

David Rohde is an investigative reporter for Reuters and a contributing editor for The Atlantic. A two-time winner of the Pulitzer Prize, he is a former foreign correspondent for The New York Times and The Christian Science Monitor. His latest book, Beyond War: Reimagining American Influence in a New Middle East, was published in 2013. More

He is also the author of Endgame and, with Kristen Mulvihill, A Rope and a Prayer. He lives in New York City.

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