I feel like I must be the only person out there actually pleased with the outcome of the debt-ceiling debate.
One of the hallmarks of a compromise is that nobody gets everything. A little bit of this, a little bit of that, and the deal goes through. But in this case, it seems like everyone is unhappy. Tea-partiers decry the phony accounting that calls previously scheduled troop draw-downs “savings.” Democrats are incensed that revenues were taken off the table. Economists see that little of substance was accomplished. Politicos look at the committee or commission or commissary to be named later and keep saying, “kick the can.”
But I think the deal reflects the nature of the electorate. We’re a 50/50 nation. Half the country thinks that government is too big, and half thinks that it isn’t big enough. Half wants to roll back the Affordable Care Act, and the other half wants to go all the way to a single-payer health care system.
What the debt ceiling bill did was put in big enough automatic triggers so that everyone’s sacred cow is on the table. Defense and domestic programs are both subject to major spending cuts if Congress doesn’t agree on a further plan by the end of the year. This pushes the debt and spending issue solidly into the 2012 election, and that’s where it belongs. We need to provide our representatives with some direction, and an election is the best way to do that.
After the election, Congress can work on the Big Deal. Until then, we need to limit our expectations. Politics is the art of the possible.
Douglas R. Tengdin, CFA
Chief Investment Officer
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