Sunday, July 31, 2011

Avoiding Damage to the Biggest Economy on Earth: the belated compromise and the shaky future?

Keywords or Terms: Debt Ceiling; Interest Rates; Recession; Unemployment; Failing economy; Failed amendment to constitution; CBS; NBC; ABC;  PPACA; Senator Kennedy; President Obama; Washington DC; Balanced Budget Amendments 

There are several issues that may propel disaster for American economy due to the fall-out of inaction to raise the debt ceiling by congress: rising interest rates and slowest of all economic recovery of all time. The recession is not only bad; it is by any measure, the worst this nation has known. The nation probably had reached a point, where we can barely afford the interest payments on our debts. Had we failed to reach a consensus or agreement on raising the debt ceiling by the deadline, the survival of many sectors of the economy would have been in question; even the best of the best economists and policymakers would have wondered, why we inflicted the harm on ourselves in the first place. The dance around the potential doom by many lawmakers in congress, reminded many of us of two kids at the play ground sticking needles into each other’s eyes. You want to ask them to quit, but you draw back knowing you are not their parents. You doubly wonder, didn’t each of their parents once warned them, if you keep on doing what you are doing, you’ll soon go blind? If you play with fire, you’ll surely get burnt!

Now going by all the Sunday morning talk shows on CBS, ABC and NBC, I came out with an important assurance that these lawmakers are probably getting it, there is no winner in a disaster like the one that is about to deluge the country. Forget about the politics of the past three weeks on the subject of raising the debt ceiling, who of us is willing to pay a higher interest rate for his or her credit cards; or, who of the millions of Americans with adjustable mortgage interest rates, is willing to pony up more money to the banks, finance and insurance companies? You probably heard the President could invoke the fourteenth amendment if the worse came to the worst; however, the repercussion of that action could lead to a consequential problem for the Presidency: Impeachment!

Now, lets throw the dice, if we had failed to handle this hot issue, it would not only have propelled the country’s economy into a new low, it would have widen the gap between the rich and the poor; and, that middle class that has been shrinking since the beginning of the recession, will get an additional hit probably up to a tipping point that could have led to a class war. Here are some terrible symptoms of the failure to act: 1) how about the worst job market in recent memory with youth unemployment in the range of 15 and 25%, families would not only feel more pains, the possibility of a soup kitchen expanding into semi-affluent neighborhoods, may turn to be a new reality; 2) how about shattered dreams and broken promises for the elderly on fixed income? and 3) how about many chapter eleven and probably seven bankruptcy filings and more walk always from mortgage loans? These are issues and questions that will impact Americans; they may actually set a new imbalance for the world’s biggest economy. No congressmen or women would have been exempted from the nation’s anger and when push comes to shove, a new class of congress would have been voted in anew, if that does not eventually take place with the current experience.

One early key to overcoming resistance from some lawmakers is a fundamental conviction in compromise and avowed belief that our lawmakers understand what are at stakes and would rather not have to deal with them. We have had long debates over bills and public issues in the past and often reached a compromise early enough to meet our deadlines, even when such compromises had been lukewarm. Unfortunately, it is the rarity of the current episode on disagreements between political parties and among our lawmakers that have worried the market and many of us watching the theater in both chambers of congress. After all the effort put up by leadership in both political parties, including the President of the United States, a compromise had basically remained elusive until today. The President came out with announcements at about noontime that an agreement had been reached and the final arrangement to ensure that the nation does not default is probably more of a reality. In simple words: The government of the United States of America will raise its debt ceiling and a super congressional committee that has the responsibility to tidy up some minor differences before the month of November will be inaugurated, empowered and set in motion to settle whatever differences are outstanding and to ensure that the nation does not get into another limbo on the issues of budgeting and raising the debt ceiling before 2012 general elections

One all the difficulties that the negotiation process had suffered are the painful perception or assessment that the Tea Party faction of the Republican Party had held the negotiation process in congress to ransom. It may be an incorrect perception or assessment; however, there are issues which made it seem like a group of lawmakers had pushed the negotiation process in congress to the brink. Especially on a bill that is expected to raise the nation’s debt ceiling and prevent a default. The power of compromise and reconciliation is often superior to confrontation and extreme recalcitrance. Using negotiations to achieve results in provisions expected in a bill is an understood practice that has been tried and tested over two decades. The process of these negotiations do not have to be strife or confrontational to an extent that the issue of civility is once again called into question among our lawmakers. Whether we are experiencing a new dynamics in congress because of the pressure group’s demand within the Republican Party or because of rejection of extreme demands on revenue raising or a balanced budget amendment to the constitution, one thing is very certain, the process of negotiations has gone too far and the acrimony among our lawmakers has not been helpful to the legislative process nor restoring of confidence in the people regarding how our lawmakers take issues that affect virtually all of us and our finances, very seriously.

Who can fail to understand that the longer the negotiation on raising the debt ceiling went, the jitterier the stock exchanges, here and around the globe, will become. Financial houses, banks, insurance companies, creditors and debtors, all across the globe were wondering, if the biggest world economy is about to default or actually defaults, what this singular irresponsibility will mean for the global market place. Remember the anxiety that accompanied the process of passing the Patient Protection and Affordable Care Act among democrats in Senate, after Massachusetts voters, elected Scot Brown to replace Senior Democratic Senator Ted Kennedy, who had left office due to the act of nature. The recent pandemonium regarding whether our congressmen and women were going to reach accord in passing a bill that will prevent the nation from defaulting on her financial obligations, was synonymous with the anxiety and events of those days. How about the excruciating pains of negotiations, rejections of bills in both chambers of congress, press conferences that turned out to be more of grandstanding rather than substance in the past week; all these compounded the whole mess and made many in the country wonder, if our law makers are meaningful or cautious of the implications of their impending inaction before the August 2nd deadline.

All of the challenges and anxieties now make some perfect sense, after hearing from the White-house what the tentative agreement is and what is more likely to happen so that the nation does not default on her financial obligations. The stakes were essentially too high and any effort to underplay the risks of indecision; or any ploy to continue to hold the nation to ransom, would have been tantamount to a disgrace and ineptitude on the part of our congressmen and women had the announced agreement failed to materialize as pronounced by the President. But, what is most surprising of all the hullabaloos surrounding the passing of a bill that will prevent the nation from defaulting was the fact that some lawmakers objected to a balanced approach in dealing with the nation’s deficit. In reality, many observers had not linked raising of the debt ceiling with establishing a constitutional amendment of balancing the budget. The latter’s demand from the Tea Party faction is hardly new; and, had once been considered under a Republican majority congress that failed; it is therefore whimsical to assume that now, when the Republican have to share the houses of congress with Democrats and the White House, they still expected to force through this amendment that will require the two-thirds of congress to pass; a very long shut if you asked seasoned lawmakers and close watchers of American congress.

Understanding the difficulty of passing an amendment to the constitution on any issue, not even one on finance, should have informed many lawmakers to understand that this is a very huge challenge and no matter how well intentioned the Tea Party group in the Republican Party is, it is probably unlikely that this form of amendment will pass under the current congressional arrangement. They need to understand and be understood in moving bills across congress is a sin qua non for any new lawmaker to congress. The neophytes in congress, who had campaigned that they were going to change Washington DC, have definitely underestimated the existence of negotiations, willing and dealing, that surrounds the task of passing laws in the United States Congress. The experienced Republican lawmakers must educates their green hands that they must first understand what it takes to pass simple laws not to talk of a constitutional amendment to afford for a balanced budget all the time. 

The lawmaking process is arduous and the issue of balanced budget while laudable does not take priority over many other more pressing issues. How about a constitutional amendment to ensure that women have control over their bodies; or, rights to abortion; or better still, how about a constitutional amendment to guarantee that all Americans who want a job, get one? These are the type of issues or questions that are synonymous with the demand for a constitutional amendment for a balanced federal budget, emanating from the fringe group in the Republican Party. If congress accedes to the demand or request for a constitutional amendment for a balanced federal budget, what would be next: a constitutional amendment to allow big banks or automobile manufacturers to be bailed out, when they under-perform? This is why this demand of the Tea Party members are ludicrous; and why many people are considering this demand as being out of torch with the reality of federal governance. There must remain the opportunity for the federal government to borrow to meet infrastructure development and national security, like building roads, airports, dams, bridges and military reparations from foreign wars if we are to have a viable and growing economy. Taking that opportunity away from the federal government under the disguise of fiscal responsibility as advocated by Tea Party members, is tantamount to governance irresponsibility. State governments may be similar to federal government; however, their capacity to function are dissimilar and to go on advocating that thirty or more states have constitutional amendments to balance their budget, and so the federal government must have a similar provision, is showing ignorance of what federalism entails.

If the culture of congress is to accede to every demand from a group of lawmakers, without exclusion, the hill will turn out to be a lame organization populated by Yes men and women, who hardly have a mind of their own. If congress is unlikely to take out extreme groups among themselves, perhaps we would not be able to integrate some laws with important and meaningful bills that will correct for past mistakes or some oversight in existing laws. Changes can easily be made to a weak or an ineffective law; however, this hardly rises to the level of constitutional amendment as the issue before congress today is to arrange to meet its past and probably current financial obligations; and, to set a less robust budget that meets current requirements of austerity and to still meet federal obligations to its people in growing the economy without undermining the lives of the least privileged among us.

The unifying principle of lawmaking is an understanding that the passing of bills requires some give and take from everyone from both parties. When lawmakers advance the incredulous, the possibility of their loosing credibility rises up a notch. The uniqueness of the request for a balanced budget amendment to the constitution from the Tea Party faction of the Republican Party, rises up to the level of incredulity; and this is why Democrats, especially those who are experienced in lawmaking turned the whole idea down, even before reading the whole text of the bill passed in the House on Friday. To achieve the demand of the Tea Party faction of the Republicans Party for a balanced budget amendment requires innovation. Without such innovation, it is rather likely that the issue of ethics will arise and very unlikely that two-thirds of congress will go along with the demand. To obtain the consent and support of the required two-thirds, some nimble time and effort must be expended and not with an acrimonious bill that already has its own other issues
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