Republican Rep. Paul Ryan, of Wisconsin, and Democrat Sen. Patty Murray, of Washington, are leading a House-Senate conference charged with developing a budget by Dec. 13 to help avoid another budget stalemate early next year.
If the two leaders have any doubts about the urgency of reaching a consensus, they should consider how the senseless 16-day partial government showdown hit the nation’s economy in the throat.
The Wall Street Journal reports that Standard & Poor’s economists cut their fourth-quarter forecast for economic growth from 3 percent to 2 percent and that Macroeconomic Advisers estimates all the fiscal-policy brinkmanship since 2009 has cut economic growth by one-third of a percentage point a year — a drop equivalent to 900,000 lost jobs.
That’s nearly a million lost jobs because the two parties can’t reach sensible agreements.
Sattar Mansi, a University of South Florida economist, told the Tribune’s Richard Mullins last week that the country already has lost about $20 billion in economic activity because of the congressional impasse.
American consumers, who account for more than two-thirds of the nation’s economic output, are discouraged by Washington shenanigans that are undermining an already sluggish economy.
Mullins found a number of forecasts show Americans are cutting spending, and this Christmas could be a painful one for retailers:
“The International Council of Shopping Centers and Goldman Sachs found 40 percent of shoppers in a survey between Oct. 10 and 13 have already reined in their spending with 47 percent of those who make $35,000 or less a year cutting back the most and 32 percent of those who make more than $100,000 also cutting back.”
The Wall Street Journal noted that Gallup’s daily index of economic confidence’s plummeting numbers during the showdown were similar to the crashing numbers during the September 2008 financial crisis. And when consumer confidence crashed after the 2011 budget ceiling fight, it took six months to recover.
The Journal also found businesses are curtailing hiring because of the uncertainty in Washington: “Half of big-company CEOs surveyed by the Business Roundtable last month said the fight over the budget and debt ceiling was crimping their hiring plans over the next months. The prospects of replaying the drama three months from now could continue to restrain their employment and investment.”
More government foolishness, particularly another close default call, will sabotage the economy and threaten Americans’ jobs and investments. This should be unthinkable.
The Republican members who rightly want to dramatically slash the deficit should recognize that with a Democratic White House and Senate they will not get all they want. But this is a long-term fight. Incremental progress is still progress.
Democrats who want to preserve an expansive social safety network should acknowledge the nation’s entitlement system is unsustainable, and continued excessive spending will ultimately ruin the nation.
No one expects fiscal miracles by Dec. 13. But with less partisan grandstanding and more mature leadership, Congress should be able to craft an acceptable budget and prevent another economy-killing showdown.