Compromise often is a losing proposition
By: Robert E. Meyer
In the aftermath of the wrangling over increasing the federal debt ceiling, the editorial topic du jour seems heavily invested in lauding the â€œvirtueâ€ of compromise. Itâ€™s as if the mere mention of the term automatically places one on a higher echelon of reasonableness and enlightenment. There is nothing like appointing oneself an economic or political philosopher-king.
The financial markets welcomed this â€œcompromiseâ€ with a week pandemonium and volatility. The downgrade was supposed to be a consequence of a default which was to happen if the debt ceiling stalemate was not resolved by August 2cd. We got our compromise in the 11th hour, but still experienced the downgrade in our Treasury Bonds, aggravating a correction already under way in the stock market. The first hint we had that this was a bad deal, was when establishment politicians started claiming that the Tea Party should be delighted with the agreement.
When it comes to financial matters, we ought to infuse some sanity into the situation. We must consider how we do finances at the kitchen table. If the credit card is â€œmaxed out,â€ do we assume a credit line increase is the solution? The rules of logic are suppressed or discarded when applied to macroeconomics at the federal level.
The whole concept of baseline budgeting makes it possible to talk about slashing spending, while at the same time, within the dimension of reality, actually continue to increase spending on preferred initiatives. All the while, certain groups of voters are riled up and motivated into taking political action against those scoundrels who want to abolish their entitlements.
Compromise becomes a necessary evil in situations where firm principle isnâ€™t essential, or under circumstances where splitting the difference is actually beneficial for both parties involved. But often that is not the case. Why must one negotiate toward a middle ground when one of the alternatives is completely unreasonable? A friend used to tell me that compromise of the type alluded to above is a compartment vacated by a lack of conviction.
If someone was trying to shoot me with a firearm, should I compromise with the would-be killer, telling him that he could just shoot me in the foot? He would still get the joy of shooting me, and I would be happy that my life was spared. Both sides win, right? If a mugger wants my wallet, why shouldn’t I offer him a $20 bill instead? He gets the money for his cheap bottles of swill, I get to keep my wallet, with most of the still money inside. Things get a little easier when you try to compromise.
There are two primary perspectives in this argument. Their are those who see the economic woes as a lack of revenue, and those who view them as an overspending problem. All our economic problems hinge on failure to gain consensus on the identity of the economic culprit. Those who insist we have a spending problem are depicted with pejorative labels up to, and including, â€œeconomic terrorists,â€ despite obvious evidence of rapidly accelerating government debt, and unprincipled spending. One wonders about the appropriate title for those who got us into this unsustainable finacial fiasco through their mantra of “spend, spend, and spend to daylight.”
Of course, increasing taxes will always be popular to those who are subject to little or no taxation, and also depend the taxation of ohers to fund their entiltement programs. People always have the option of making contributions to the national debt when they file their tax return, but who is so foolish to believe that any revenues from increased taxes will go to debt reduction as opposed to more spending.
If those who claim that governmental expenditures are causing the problem are correct, how is the â€œbalanced approach,â€ touted by the president, a solution to anything? The term itself seems like vocabulary lifted from an Orwell novel. Is the combination of immediate tax increases, coupled with promises of future reductions in the rate of spending a legitimate compromise?
Only if you believe debt spending to revitalize this economy has proven more productive than attempts to win at a carnival game.