We can all breathe a collective sigh of relief now. Congress finally approved a bipartisan deal that ends the partial government shutdown of the last two weeks and guarantees that the United States will not default on its debt obligations.
The House and Senate voted late Wednesday night to end the showdown that began when Republicans, led by Tea Party extremists, tried to use must-pass funding legislation to derail the president's landmark health care law.
The Senate approved the legislation by an 81-18 vote. The House followed suit by a tally of 285-144, with 87 Republicans in favor and 144 against. Most House Republicans opposed the compromise bill for failing to do anything about deficits and debt. Democrats unanimously supported the bill, even though it locks in funding at levels required by across-the-board spending cuts known as sequestration that they oppose.
President Barack Obama signed the measure early Thursday.
"Because Democrats and responsible Republicans came together, the first government shutdown in 17 years is now over," he said in the White House briefing room hours after signing the agreement. "The first default in more than 200 years will not happen. These twin threats to our economy have been lifted."
There is a catch, however. The legislation would only fund the government through Jan. 15 and permit it to borrow normally through Feb. 7. After that, Treasury Secretary Jacob Lew will be able to employ accounting maneuvers to create wiggle room on the debt limit into mid-March or so.
In hopes of averting another standoff early next year, Congress' four top budget writers met over breakfast Thursday to begin two months of budget talks. House Budget Committee Chairman Paul Ryan, R-Wis., said the group's goals were "to get this debt under control, to do smart deficit reduction, and to do things that we think will grow the economy and get people back to work."
That sounds great. It also sounds remarkably similar to what Obama said Thursday morning -- that both he and Congress need to "focus on what the majority of Americans sent us here to do -- and that's grow this economy, create good jobs, strengthen the middle class, lay the foundation for broad-based prosperity, and get our fiscal house in order for the long haul."
Both sides of the political aisle seem to have the same goals; the problem is, they are worlds apart in their ideas for how to achieve those goals. And judging from the political rancor and brinksmanship of the past few years, we don't hold out much hope that they will be able to bridge these gaps before the next deadline approaches.
As Paul Edelstein, an economist at HIS Global Insight, told the Associated Press: "The U.S. economy dodged a bullet today. But the reprieve will be short The stage is set for another showdown in January."
These repeated fiscal crises of Washington's making are certainly not good for our still-fragile economy. Standard & Poor's estimated that the shutdown has taken $24 billion out of the economy, and the new deadlines to fund the government and raise the borrowing limit that are now a few months away could also weigh on growth in the first quarter of 2014.
A study by Macroeconomic Advisors, a forecasting firm, found that the repeated cycle of lurching from crisis to crisis has significant and real costs to the U.S. economy. Uncertainty over future government policies tends to raise borrowing costs for businesses and consumers, depress stock markets and lower business and consumer confidence. Higher borrowing costs typically make companies less likely to invest and hire. Lower stock markets reduce household wealth and can cut into consumer spending.
Since late 2009, fiscal policy uncertainty has lowered GDP growth by 0.3 percentage points per year, and raised the unemployment rate in 2013 by 0.6 percentage points, equivalent to 900,000 lost jobs. The study also found that reductions in discretionary spending have reduced annual GDP growth by 0.7 percentage points since 2010 and raised the unemployment rate 0.8 percentage points, representing a cost of 1.2 million jobs.
Obama himself said, "Nothing has done more to undermine our economy these past three years than the kind of tactics that create these manufactured crises."
The time is long overdue for our elected leaders put aside the posturing, stop pandering to special interests with deep pockets, ignore the extremism of the fringe elements and do what needs to be done for the country as a whole. That, of course, will require a level of compromise that has been sorely lacking in Washington lately, and opinion polls show that most Americans know who deserves the lion's share of the blame for this.
Hopefully the more level-headed members of the Republican party will learn from this latest political folly, and the next time extreme partisanship raises its ugly head they will find the necessary backbone to drowned out the obnoxious noise coming from the tea-party elements.