Dear Commons Community,
The “fiscal cliff” crisis has been all the news in Washington, D.C. for the past several weeks. A few minutes ago the U.S. House of Representatives passed the U.S. Senate version of the “fiscal cliff” bill by a healthy margin (257 Yes and 167 No). All that remains is President Obama’s signature which is certain. The vast majority of Democrats as well as a healthy number of Republicans voted for it. I have never bought into the position that the sky will fall had a deal not been made and followed instead Paul Krugman’s view that the supposed “debt crisis” is in fact a political crisis. On December 13th, Krugman stated:
“It’s important to make this point, because I keep seeing articles about the “fiscal cliff” that do, in fact, describe it — often in the headline — as a debt crisis. But it isn’t. The U.S. government is having no trouble borrowing to cover its deficit. In fact, its borrowing costs are near historic lows. And even the confrontation over the debt ceiling that looms a few months from now if we do somehow manage to avoid going over the fiscal cliff isn’t really about debt.
No, what we’re having is a political crisis, born of the fact that one of our two great political parties has reached the end of a 30-year road. The modern Republican Party’s grand, radical agenda lies in ruins — but the party doesn’t know how to deal with that failure, and it retains enough power to do immense damage as it strikes out in frustration…
…Republicans have suffered more than an election defeat, they’ve seen the collapse of a decades-long project. And with their grandiose goals now out of reach, they literally have no idea what they want — hence their inability to make specific demands.
It’s a dangerous situation. The G.O.P. is lost and rudderless, bitter and angry, but it still controls the House and, therefore, retains the ability to do a lot of harm, as it lashes out in the death throes of the conservative dream.”
What we have seen in these negotiations from the beginning is exactly what Krugman described as the Republicans lashing out and unwilling and unable to compromise. Even the bill that was approved is so modest as to have minimal impact on the country’s long-term financial problems. It simply puts off the real discussion for another day but maybe a small step is better than no step.