It's the Congress Problem Stupid!

Ezra Klein came into my inbox today with this nugget of wisdom:

On Wednesday, the Congressional Budget Office released its latest long-term budget outlook. As always, the scorekeepers offered up two scenarios: In the first, Congress does nothing, follows the laws currently on the books -- which means the tax cuts expire, the Medicare cuts from the 1997 Balanced Budget Act go into effect, and the Affordable Care Act is fully implemented -- and the debt stabilizes. In the second, Congress extends most of the tax cuts, ignores the Medicare cuts and repeals various cost controls in the Affordable Care Act. Debt, of course, explodes.

We have a congress problem, not a deficit problem. The deficit only explodes if the next few congresses vote to detonate it. Congress doesn't have to extend the Bush tax cuts without offering offsets, or put off the Medicare cuts without paying for them in other ways, or do the easy parts of the health-care law without doing the hard parts. The answer to this, however, is not a high-stakes negotiation over the debt ceiling, where one false move could bring down the American economy, but a much-strengthened version of PayGo, where deficit-increasing deviations from current policy need to be offset with spending cuts or tax increases elsewhere.

Politicians are constantly talking about the need to signal seriousness to the markets, but what could be more serious than saying that they will work from the baseline in which America's deficits are much more under control, and though they intend to change those policies, they do not intend to deviate from the manageable deficit path they've already agreed to? That must be preferable to saying that Congress chooses to believe it will vote to increase the deficit by trillions over the next 10 years, but that the market shouldn't worry as the two parties plan to stop the government from paying its bills and throw the financial system into chaos if the other party doesn't agree to the deficit-reduction strategies they prefer.

It is incredibly stupid to play the totally unnecessary game of chicken the two parties are currently engaged in.  The whole point of that exercise in futility is simple power grabbing.  It's a high stakes poker game they are playing with the entire world economy in the pot.  It's the refusal of either party to let the other have any success at all.  As Mr. Klein says, one misstep and the whole pot explodes....

Extortion is no way to govern. Compromise means that sometimes your political opponents get what they want.  Terrorism means that if we don't get our way, we'll just blow everything up.  Write a letter to your local terrorist congressman and tell 'em to walk away.  Go solve the jobs crisis instead.

More work to do.