This might have been the front-page story of a national newspaper today. But that's in a parallel universe. Instead of announcing a plan which would begin to reduce our medium-term debt and bring entitlement growth under control, much of Washington is participating in a dangerous game of chicken with the debt ceiling -- a game where failure would destroy our credit rating, rather than preserve it.
There's plenty of blame to go around. Most Democrats came late to the deficit reduction game and have been playing from behind ever since. Rather than using the Fiscal Commission's recommendations as a starting point for negotiations, President Obama mostly ignored it, omitting the lion's share of its recommendations from both his budget and State of the Union address. Only in April, after the administration had already conceded substantial domestic spending cuts, did the President come around and endorse a framework similar to the commission's. Even then, he excluded the commission's proposed changes to Social Security and Medicare benefits, and many Democrats appear to remain unwilling to make the hard choices on entitlement programs necessary to put our long-term trajectory back on track, even if those concessions might spare important programs today or bring Republicans closer to accepting tax increases.
Republicans, meanwhile, have let the perfect be the enemy of the good. The party continues to allow tax orthodoxies to blind them from an opportunity to cut spending. Some have come to the understanding that tax expenditures -- such as the ethanol credit or the employer health exclusion -- are really just spending in the tax code, and that giving them up in exchange for holding traditional spending down to controllable levels is a good deal. But most of the party has called for a spending cut-only solution and has made it clear that they would rather solve only part of the problem and have no revenue (even if entirely from tax expenditures) than solve the entire problem while accepting some revenue.
There is an incredible, yet very real, chance that the U.S. could default on its obligations if a deal to increase the nation's borrowing limit is not reached by the August 2nd deadline. Brinksmanship, rather than bipartisanship, has once again seized Washington. By imposing an artificial deadline on a budget deal, politicians are choosing to make time their enemy. The less time negotiators have to come to a deal, the worse chance we have to see a comprehensive agreement.
This is unfortunate. The grand deal still represents our best hope of putting our budget and economy on a sustainable path. Only a comprehensive solution allows for the trade-offs necessary to get the debt situation under control, because only a comprehensive agreement allows both sides to give up their sacred cows and and share in the political fallout.
We do have one hope: a small "gang" of senators continues to work on producing legislation based upon the recommendations of the fiscal commission. With the support of many of their colleagues, Senators Warner, Chambliss, Crapo, Conrad, and Durbin continue to work toward a bipartisan solution.
It's too late to hope for a fairy-tale ending, unfortunately. But perhaps the Gang will be this country's Cinderella Story.