Fiscal Cliffs, Forever: The U.S. Is Hopelessly Addicted to Crisis

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Why can't Washington govern except at the precipice of disaster?

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Reuters

So we did not fall off the cliff. But the reaction to the news of the deal suggests that we've become a culture addicted to crisis, because barely had the vote been taken when the spin from politicians, from the mainstream media, and from the cacophonous web was angry, sullen, and negative.

The problem is said to be, in no particular order: Washington, partisanship, Tea Party ideologues, tax-and-spend Democrats, unions, rich people, America, unemployment, underemployment, the shafting of the middle class, the end of the American dream, the untenable deficit, unfunded mandates, and unreasonable expectations. But maybe the problem is none of those; maybe it's a deepening love affair with crisis. The perverse lure of descent and an inability to break out of the cycle is threatening to overcome us.

What did the deal actually accomplish? Taxes went up significantly for the wealthy and modestly for most, yet the core of lower rates for the vast majority of Americans was retained. Financial markets reacted giddily and made up some lost ground. And for all of the legitimate carping about the dysfunction and polarization of Washington, the deal was actually bipartisan. An overwhelming majority of both Republicans and Democrats backed it in the Senate, while in the House the deal fractured the Republican caucus. The party split its vote and was then joined by a majority of Democrats.

After weeks of decrying the sorry state of Washington and assuming that gridlock and ideology would prevent any accord, Americans were left with an actual deal to confront. Yet rather than conceding that something had been done, and that this something was in this case a far cry better than nothing, reaction has followed the adage (often scornfully ascribed to economists): "Don't let facts get in the way of a good theory."

The theory in this case is that America is broken, and that the fiscal cliff debacle is further proof. The most common refrain was that "the deal is a disaster." So said Peter Huntsman, head of the multi-billion-dollar chemical company and brother of the former presidential candidate John Huntsman. And so did countless others.

In fact, if you do a Google search of "fiscal cliff disaster," you get two sets of results: from just after the deal and from the weeks before. Before, people were saying that if Congress failed to do a deal, it would be a disaster. After, people are saying that the deal Congress did is a disaster.

You might think that news of the deal - however imperfect (and let it be stipulated that, indeed, it is that) - would be greeted with a measure of relief and a degree of satisfaction that worst-case fears did not come to pass. But no. Instead, we get a chorus of criticisms combined with darker intonations that even worse lies ahead, with the looming debt ceiling debate in Congress, austerity in the form of new taxes, and general economic malaise being unaddressed.

Greg Valliere of the Potomac Group concluded:

While the markets...may breathe a sigh of relief for a few days, excuse us for not celebrating. We have consistently warned that the [debt ceiling] brawl represents a far greater threat to the markets - talk of default will grow by February, accompanied by concerns over a credit rating downgrade.

In a similar vein, longtime Washington insider David Rothkopf concluded: "The 'fiscal cliff' debate and the last-minute deal it produced have so far resolved nothing except to show that our system is profoundly broken and that radical changes are needed to fix it."

If these reactions were simply part of a spectrum, you could argue that it's just the healthy noise of a democracy in action. But what a narrow spectrum it is, marked by disengagement, disillusionment and disdain on one end, and rage, fear and despair on the other. That's not healthy noise; it's a chorus of pessimism.

Taking a step back, is the situation in the United States really so dire? So the fiscal cliff deal is incomplete and imperfect, leaving the entire question of future spending unresolved. So America has work to do. But is it in dire shape? Syria is dire, with civil war now and the prospect of an even bloodier one to come. Iran is dire, with a clerical regime mired in corruption and zealotry and a citizenry thoroughly disgusted. North Korea, Somalia, Afghanistan - those deserve some serious hand wringing, rage and passion. In South Africa, where old Mandela-inspired hopes are crashing against sclerotic bureaucracies and corruption, there is real reason for concern. Greece, with no end in sight to contraction and austerity; Spain, with a lost generation and a rigid labor market; Venezuela, after years of the not-so-benign caudillismo of Hugo Chavez - those countries face unenviable problems. The Democratic Republic of Congo is a jungle of death. There are real calamities in the world, embodied by governments and states; the United States is not even close.

A vibrant, outspoken and self-critical citizenry is a necessary and vital element of a thriving democracy. But when the public conversation becomes so relentlessly fixated on the disaster porn of political and economic challenges, an invisible but significant line has been crossed. Myopic focus on the next crisis and the battles that loom ahead with nary a sense of balance isn't a recipe for collective action; it's a formula for collective paralysis.

Retrospectively, the fiscal cliff drama - which we will shortly forget was the central focus of politics, the news and the financial markets for the past six weeks - leads ineluctably to the conclusion that we've become addicted to crisis. And like any addiction, we need to break the habit. Unlike an addict, however, no one is going to stage an intervention. (That much was made clear in November's Congressional elections, thanks in part to gerrymandered districts.)

It goes unsaid that yes, we have issues, any or all of which may spell dramatically worse problems ahead. Tens of millions within these United States are suffering, have no jobs, have jobs that pay way too little for too much work; millions have inadequate health care, or mismatched skills for today's labor market. But every society is plagued by the gap between the world it wishes to create and the one it actually inhabits. Washington is imperfect? Why is that newsworthy? Why can that be endlessly repeated and count as trenchant analysis? Because it fills a void in a society that is addicted to crisis.

Our craving will be amply supplied in the coming weeks, with the debt ceiling debate and economic data that will likely remain less robust than we hope or need. The crisis maw will be fed. But until we start putting our travails in perspective, until we start nourishing the better angels of our nature and recognizing what is working alongside what is not, we will remain stuck in place, unaware of our self-fulfilling prophecies, still wondering how things can ever change.

This post originally appeared at Reuters.com, an Atlantic partner site.

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Zachary Karabell is Head of Global Strategy at Envestnet, a financial services firm, and author of The Leading Indicators: A Short History of the Numbers that Rule Our World. More

At River Twice Research, Karabell analyzes economic and political trends. He is also a senior advisor for Business for Social Responsibility. Previously, he was executive vice president, head of marketing and chief economist at Fred Alger Management, a New York-based investment firm, and president of Fred Alger and Company, as well as portfolio manager of the China-U.S. Growth Fund, which won a five-star designation from Morningstar. He was also executive vice president of Alger's Spectra Funds, which launched the $30 million Spectra Green Fund based on the idea that profit and sustainability are linked. Educated at Columbia, Oxford, and Harvard, where he received his Ph.D., he is the author of several books, including Superfusion: How China and America Became One Economy and Why the World's Prosperity Depends on It (2009), The Last Campaign: How Harry Truman Won the 1948 Election, which won the Chicago Tribune Heartland Award, and Peace Be Upon You: The Story of Muslim, Christian, and Jewish Coexistence (2007), which examined the forgotten legacy of peace among the three faiths. In 2003, the World Economic Forum designated Karabell a "Global Leader for Tomorrow." He sits on the board of the World Policy Institute and the New America Foundation and is a member of the Council on Foreign Relations. He is a regular commentator on national news programs, such as CNBC and CNN, and has written for The Wall Street Journal, Newsweek, Time, The Washington Post, The New Republic, The Los Angeles Times, The New York Times, and Foreign Affairs.

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