Goldmark: What New York's near-default can teach the federal government
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Peering over the edge of default, Congress has kicked the can down the road, and managed for now to avoid blowing up the American economy.
Hardly what you could call a breakthrough moment.
I once had to look into the lifeless eyes of the menacing monster known as default.
In 1975 and 1976, I was budget director under then-governor Hugh Carey when the City of New York, the state and the state's public authorities all came close to default at different points. Facing debt and spending problems as acute as those the federal government faces today, we worked around the clock to stave off default because of the havoc it would have wrought on families, businesses, and the fabric of life in our state and city.
The contrast between that experience four decades ago and what has just happened in Washington is clear. With the eyes of the world upon us, we avoided shooting ourselves in the head last week, but we did little to forge a cooperative path forward out of our predicament. And financial markets and other nations have noticed that we postponed the crisis, we didn't resolve it. The new default deadline is in early February.
"We shake our heads in disbelief at the inability of the U.S. to comply with the basic requirements of financial responsibility," one overseas business leader told me, summing up the situation. "Kicking the can down the road just means another minutes-before-midnight crisis a few months from now and further erosion of America's standing in the world."
To get off the world's critical list of giants suffering from self-inflicted wounds, we will have to:
End statutory debt ceilings that can be manipulated for short-term political purposes.
Pursue budget and tax disputes without resort to "economic terrorism," in the phrase of a Financial Times pundit.
Make clear beyond any doubt to the world and to our own citizens that America's leaders will act responsibly to maintain and strengthen our financial system and meet our financial obligations.
In a free republic built on a system of checks and balances, any branch of the government has the power from time to time to bring it all to a halt. The Supreme Court, the president, and either house of Congress can throw the whole system off the rails by refusing to do their duty. A faction of the Republican majority in the House of Representatives is the first group to use that threat seriously since the run-up to the Civil War.
The Founding Fathers understood that protecting liberty and preventing abuse of power would require elected officials and citizens to stand behind the self-governing system as a whole even if they differed over particular policies. The conditions, especially a polarized electorate, and the attitudes, particularly the willingness by some members of Congress to hold the American economy hostage, that brought us to the edge of the precipice last week remain. Our elected representatives are divided because we, the citizens who elected them, are divided. What have we learned? And what are we prepared to do differently going forward?
It's not clear at this point what we've learned. Representative Tim Griffin, an Arkansas Republican, said: "And the long teachable moment ends: stove is hot." Maybe that's a forward step. But it's not enough.
We'd better start thinking about what we're prepared to do differently if we want a different outcome. Self-government is not a spectator sport.
Peter Goldmark, a former budget director of New York State and former publisher of the International Herald Tribune, headed the climate program at the Environmental Defense Fund.