The country has lurched from one disaster to the next since 2007. Amid a rare lull, here's a modest plan of action for Congress and President Obama.
Politicians have stared down so many fiscal battles and economic near-calamities during the past six years that it's unclear if they still know how to operate when they're not approaching some sort of crisis.
That question hung over the capital the last two weeks, as Congress voted to temporarily suspend the debt ceiling and as Washington experienced a lull between fiscal battles.
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If we're not in a crisis, then, really, what are we supposed to do now?
The economic timeline since 2007 has conditioned us to think this way. We've become adrenaline junkies for the meltdowns and slap-dash solutions, from the credit crisis to the collapse of Lehman Brothers to the housing market dive to the recent battles over taxes and the budget.
Just look at the way policymakers cobbled together the stimulus package, or the Dodd-Frank financial-reform law, a reaction to the near-collapse of major financial institutions. Even the final agreement on the fiscal cliff came well after the 11th hour. Congress had to go all the way over the cliff and then work around the clock on New Year's Eve and the following day to get its act together and pass a bill to prevent a tax hike and spending cuts worth more than $500 billion.
That deal was yet another instance of an economic crisis averted--just barely, and that's become the norm on any type of economic or fiscal policy. "What is dysfunctional is that they haven't been making decisions until the very last-minute," says Keith Hennessey, a former senior economic adviser to President George W. Bush and a former policy aide for Republican Senate Majority Leader Trent Lott. "They've been doing ad hoc decisions for the past two years."
In part, these ad hoc decisions have been warranted, given the unprecedented threat and hangover from the Great Recession. It demanded responsive, nimble moves by government officials and politicians. The stimulus package and its influx of cash, for instance, was cooked up on a crazy deadline, but it's a well-documented fact that it boosted the country's economic output when it needed it and created more than 4 million jobs at the peak of 2010.
The question for 2013 is: Can politicians and policymakers wean themselves off the high of last-minute policy to create longer-term, less reactive plans to create jobs, or boost the housing market, or build better roads and bridges, or overhaul the tax code, or curb health care spending over the next two decades?
Well, actually, yeah. They certainly have the power. It's just not clear if there's the political will. "These guys know how to govern," says Sean West, a director at Eurasia Group, a consulting firm focused on political risk. "The lesson now is that economic fights can be done in parallel with other legislation."