The post-election opening for a balanced deficit deal

The News TribuneNovember 25, 2012 

Because Democrats and Republicans couldn’t make a real deficit deal last year, they made a deal so bad they’d have to come back to the table this year. That was the theory, anyway.

The bad deal now stares us in the face. Unless Congress and the president do something by January, $1 trillion worth of guillotine blades will automatically fall on domestic programs Democrats love and defense programs Republicans love. (There’s crossover love on both sides, of course.)

Combined with the simultaneous expiration of various tax breaks, especially the Bush tax cuts of 2001 and 2003, that constitutes the “fiscal cliff” that President Barack Obama and Congress must now steer the country away from.

Destruction lies at the bottom of cliffs, especially this one. The defense cuts alone would shake the Puget Sound economy to the bedrock. Joint Base Lewis-McChord, for example, is by far Pierce County’s largest employer; it has a payroll of more than 50,000 and is currently spending hundreds of millions a year on construction.

The automatic defense cut of 10 percent would probably knock a big hole in the South Sound economy. Same goes for Snohomish and Kitsap counties, both home to naval bases and – in the case of Everett – the planned assembly line for the Air Force’s new Boeing-built tanker.

The guillotine is unlikely to fall. The cuts were designed to be so mindlessly stupid and destructive that the Republican House and Democratic president and Senate would have to come up with something better.

Many of the tax cuts are likely to stay in place, too. Neither party wants to get blamed for throwing the country into a new recession.

This may be an artificial crisis, but it shouldn’t be wasted. Congress is now as far as it ever gets from the next election. This is the time to come up with the “grand bargain” – a combination of taxes and spending cuts that will ratchet down the country’s $1 trillion-a-year deficits in a responsible way.

Powerful forces are maneuvering to make sure this doesn’t happen. Democratic interest groups don’t want middle-class entitlements cut by a penny; they talk as if the problem can be solved solely by taxing the rich. Many Republicans don’t want to raise rates for even the richest Americans.

Those are the same positions that produced the gridlock that led to the fiscal cliff. But Obama was re-elected on a grand-bargain platform; he pledged to both cut spending and expand revenue over the long term.

That’s the kind of deal he and Congress should have reached last year. Obama’s re-election – and the re-election of a Republican House – clarifies the political necessity of a grand bargain. This time, the forces of gridlock must be broken.

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