After the fiscal cliff saga, I was somewhat upbeat. From here on, the focus will be on spending—and conservatives are going to find that the political terrain is not nearly as favorable as they presently anticipate. The economy is recovering. Slowly, steadily. Recovering. With due allowance for unknown unknowns, surely lawmakers in Washington will agree not to actively impede, or possibly reverse, this fragile recovery. As Gallup economist Dennis Jacobe writes:
Gallup’s economic confidence data imply that another debt ceiling confrontation is likely to have a significantly negative impact on economic confidence. During the summer of 2011 debt ceiling confrontation, the percentage of Americans saying the economy was “getting worse” hit 77% in the last week of July and the first week of August, up from 63% just before the July 4th holiday week. That is, pessimism reached levels reminiscent of the levels Americans experienced during the recession and financial crisis of 2008-2009.
With this in mind, a middle-ground consensus should emerge that says, “Whatever we do on spending, first, do no harm.”
But I’m becoming increasingly doubtful.
In reality, such consensus might be impossible to achieve, as there is a stark epistemological divide about annual deficits, long-term debt, and the pace of job growth. There are three parties to this conflict: liberal Democrats who believe we need significantly more short-term stimulus to address unemployment and, at some point, higher taxes to sustain entitlements as currently structured; moderate Democrats and mainstream economists who believe that long-term deficits and entitlements will need to be dealt with, but worry about the negative shock of premature austerity; and Republicans who believe that austerity will unleash more robust growth.
This all seems elementarily obvious as I write it. Everyone knows these are the terms of debate. We’ve known it all too well these last four turbulent years. But consider: how can we agree on an antidote when there’s no agreement on what poison is?
Are you worried now?