The debt-ceiling deal passed the House last night, and it did so with ease. With 269 "yea" votes, the bill was never even close to failing. And a good thing, too: there were mounting signs as the weeks wore on that the market had had just about enough of Washington's games. But with the details understood and the legislation on its way to a quick approval in the Senate, it's worth stepping back and saying what we all already know: This is a terrible, no-good, very bad deal.
It's not just that Congress waited until the last minute, taking an unnecessary risk in a fragile economy. And it's not just that the tough decisions got punted once again. This is a bad bill at a time when the economy -- and the American people -- needed a good one. It's a bill that does too little now, and too little later, and it comes in lieu of an obvious, achievable solution that would have done better.
The two reigning theories of our current economic moment are not opposed to one another. The economy is weak now, with too little demand and too little growth, and threatened by mounting deficits later. The answer, as any economist can tell you and as many told Congress, is simple: do more to support the recovery now and more to cut deficits later. In the short-term, we should expand the payroll tax cut, make a massive investment in infrastructure, continue funding unemployment insurance, and do more to aid the states. In the long-run, we should cut spending in entitlement programs as well as discretionary programs, and raise significant revenues and modernize the tax code by flattening the base and closing loopholes.
These two priorities don't conflict. In fact, they support each other. Faster growth now will mean smaller deficits later. And politically, more stimulus now would have helped Democrats agree to more deficit reduction later. But our political system isn't very good at both/and. It's more suited to either/or. And so Republicans fought stimulus now and couldn't agree to the revenues necessary for significant deficit reduction later. So we got neither. We're pulling support out from under a teetering economy now and we're punting the hard decisions on the deficit to yet another committee, and yet another manufactured deadline.
Today, the markets are breathing a sigh of relief because Washington managed to agree before it sparked an unnecessary financial crisis. But we could be celebrating an agreement that actually did what was necessary to speed the recovery now and reduce the deficits that matter. Congress may be patting itself on the back because it didn't needlessly wreck the global financial system, but that's not evidence of success. It's evidence of how terribly they have failed us. And the fact that so many are celebrating this deal only goes to show how used to their failures we have become.