A Less Than Grand Bargain

James Surowiecki argues that a decent grand bargain can’t be hammered out before the end of the year:

If Congress and the President were to come up with a grand bargain in such a short time, there’s a good chance that it would be largely a product of the inside-the-Beltway biases of deficit hawks (who tend to dominate the “serious” discussions of budget policy), rather than the long-term interests of the country. And at a time when long-term interest rates are at historic lows, with the U.S. able to borrow money for ten years at less than one per cent, we simply don’t need to rush to come up with a massive debt-reduction plan. Yes, in the long run we need to deal with the debt (which, above all, means dealing with the rising cost of health care). But there’s no reason to let the fiscal cliff force us into policies that Americans don’t actually want.

James Joyner counters this sort of argument:

In theory, it would make sense to kick the can down the road—passing a law extending the Bush tax cuts and avoiding sequestration for six months—to give some breathing room. But the recent history would seem to indicate that we won’t get serious about negotiations until the deadline approaches.

Krugman is on a tear as well. He wants much more debt! The truth is: we hit one fiscal cliff in the summer of 2011, in terms of debt levels that may be cheap now but may well not be cheap later. We punted for a final time – with sequestration as the stick. If we now wriggle past this opportunity, why would anyone believe the US is serious about its long-term fiscal position?