Stalemate Nation

Washington can't make big fiscal decisions without taking things to the brink of disaster, but there's an end in sight

If we learned one thing from the debt stalemate, it's that nary a big decision gets made these days without a crisis.

In the past eight months, we've had three major stalemates that brought Washington to a halt as some type of fiscal disaster loomed:

• Last December, with the Bush tax cuts set to expire, President Obama and congressional Republicans squared off in a national policy battle as Congress prepared to go home for its Christmas recess. Republicans refused to accept a partial extension of the tax cuts for incomes under $250,000 and, to get their way, they successfully leveraged their opposition to two administration policy priorities, ending "Don't Ask, Don't Tell" and approving an arms-control treaty with Russia. Just before Congress left town, Obama signed a full two-year extension of the Bush tax cuts, and Congress repealed "Don't Ask, Don't Tell" and ratified the Russian arms treaty.

• This April, the federal government nearly shut down as Obama and Congress struggled to agree on how to keep it funded. After a series of temporary funding measures, both sides agreed that temporary fixes were no longer acceptable. After two days of late-night negotiations with House Speaker John Boehner and Senate Majority Leader Harry Reid, Obama signed a bill to cut $38.5 billion from the budget and fund the government through September.

• On Sunday, after two weeks of stalemate over the debt limit, or more accurately over which deficit-reduction package to attach to a debt-limit increase, Obama and congressional Republicans finally agreed to a package that would cut at least $2.2 trillion and raise the limit by $2.1 trillion. Obama signed the bill on Tuesday, the Treasury's deadline to avoid a national credit default and a potentially ruinous spike in interest rates.

What to make of this, other than that there is now a deep schism among U.S. political leaders? Since Obama's first year in office, many longtime insiders have remarked that Washington has reached an unparalleled level of partisanship, but the new trend -- putting off decisions until government's hand is forced by the brink of disaster -- surely makes the realization a bit more real. The rise of the tea party, a movement comprised of hard-core, anti-tax, small-government ideologues, has undeniably helped us get here.

"You never want a serious crisis to go to waste," former White House Chief of Staff Rahm Emanuel has said. Now, it seems everyone has that idea, and crises abound as tea-party Republicans in particular use them to drive their policy agendas.

Brinksmanship almost caught up with Washington this time. The Dow Jones plunged 266 points Tuesday, continuing a multi-day slide on debt fears, but rebounded a bit on Wednesday. Moody's reaffirmed its AAA rating of U.S. credit, and while markets wait for word from Standard & Poor's, U.S. credit could still be in trouble.

Unfortunately, two more fiscal-political crises loom on the horizon.

As Derek Thompson pointed out, the debt deal sets us up for another stalemate later this year. Congressional leaders will create a "super committee," charged with offering a package of $1.5 trillion in deficit reduction by Nov. 23, otherwise $1.2 trillion in spending cuts will automatically be triggered. Comprised of six Republicans and six Democrats, the committee seems designed to deadlock over whether or not to raise taxes, with those across-the-board automatic cuts looming as a consequence if the committee fails to agree.

And in December 2012, the Bush tax cuts will once again expire, opening up the same fight Obama and Republicans had in December 2010.

There is hope in all this, however, since there's an election coming up. The controversy over Bush's tax cuts could play out in the waning days of the presidential election. The Bush tax cuts will likely become a prime voting issue, and the results of the election should more or less determine how Washington handles the possible extension, which figures as America's next major fiscal flashpoint.

In other words, leaders in Washington will hopefully avoid a stalemate among themselves. The people, instead, will have to choose.

Right now, Washington knows little besides tension. Insofar as national elections are cathartic for a political system, the next one can't come soon enough.

Image credit: Jonathan Ernst/Reuters