With the 16-day so-called shutdown of the federal government over, is it possible for folks in Washington to get serious, find a handful of problems that majorities in both parties can accept and begin to address some of the intractable problems that threaten the nation’s long-term viability?
It’s hard to be optimistic about anything positive coming out of the nation’s capital. The ideological divide among the American public is wider than it has been in generations.
Compounding the immediate problem are the diametrically different lessons that members of the two parties took away from the financial crisis. The vast majority of Democrats attributed the crisis to 30 years of deregulation culminating with the demise of Glass-Steagall and the relaxation of capital requirement rules that allowed financial institutions to leverage their balance sheets 40 to 1. In their view, the result was economic instability, lower living standards and widening income inequality.
Republicans blamed the Great Recession on government-mandated lending standards that encouraged and, in some cases, forced banks to make loans to uncreditworthy homebuyers. In their view, it was incompetent regulation and the God complexes of some of their own fraternity brothers like Alan Greenspan and Henry Paulson that brought the U.S. economy to the brink. At the onset of the financial crisis, TARP would give birth to the Tea Party and health care reform would sustain it.
One reason the two parties remain so intransigent is that both are right. When it comes to apportioning the blame, however, the story gets a little more complicated.
It was President Clinton who ultimately dismantled Glass-Steagall, something his Treasury secretary at the time, Larry Summers, never did. But Republicans supported both moves. President George W. Bush famously proclaimed that not enough Americans, particularly minorities, owned homes, placing him in lockstep with the likes of Rep. Barney Frank, the patron saint of Fannie Mae.
If Democrats and Republicans can work together to screw up the economy, are they capable of working together to solve a handful of problems at the margin? The guess here is no. Whatever their virtues, future students of negotiation will look back on President Obama and Speaker Boehner as two of the worst negotiators in modern times. Both men repeatedly make faulty assumptions about the hands they and their opponents are dealt and then play the wrong cards at just the wrong time.
Moreover, neither one seems able to stand up to extremists in his party. In the wake of the collapsed shutdown, Tea Partiers are facing ridicule. But whenever the president has tried to reach an agreement with the speaker on minor fixes to entitlements like moving Social Security to a chain-linked index or means-testing Medicare—these ideas are rejected even before any details are released by the likes of Nancy Pelosi and Paul Krugman.
Who is to say we don’t end up in another silly game of brinkmanship in early 2014? I hope I’m wrong.
Evan Simonoff, Editor-in-Chief
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