A reader challenges me on this post:
I am not certain I agree with you entirely on the budget – the belt tightening seems to me likely to be self-defeating by depressing demand and creating further pressures on the federal budget – but it seems to me your real preference should be for gridlock.
If the supercommittee does nothing, we are supposed to get an automatic cut to entitlement and defense expenditures. If Congress further deadlocks on taxes, we go back to the Clinton era tax rates. Again, I am not certain that this is a good idea in the short term, but your preferred fiscal outcome is the default option here … just so long as those darn Washington politicians don't wreck it by gettin' all bi-partisany up in there, to paraphrase an old friend.
My quibble is that I doubt that the House will allow the defense cuts (Romney is already pledging more defense spending) – and then the bottom really falls out of market confidence. I also fear too drastic and immediate a return to fiscal retrenchment, for the reasons you outline. But a clear agreement on a future path, credibly phased in, with structural reforms, as in Bowles-Simpson, would, it seems to me, be more manageable than the nerve-wracking do-nothing option.
It's what leadership is. And I worry that Obama's often-smart hanging back on the ropes is not adequate to this moment.