x Abu Dhabi, UAEFriday 28 July 2017

'Fiscal cliff' deadlines designed to frighten US Congress into action

Analysis: Setting a looming deadline to avert self-created calamity has become a frequent device for the US Congress to get things done in recent years.

WASHINGTON // Setting a looming deadline to avert self-created calamity has become a frequent device for the US Congress to get things done in recent years. When all else fails, as it often does, it is supposed to frighten members into action.

That was the idea when Congress created the "fiscal cliff" in August 2011 to resolve a partisan struggle, also with a deadline and also self-created, over raising the federal debt ceiling.

Catastrophic budget cuts, timed to coincide with the threat of hefty income tax increases, would finally produce big cuts in the soaring federal budget by December 31, 2012, or else.

It did not work.

Congress scared everyone but Congress, which while cutting taxes for most and raising them for a few, made no pretence of trying to make any progress towards reducing the deficit.

"We created a monster," Charles Rangel, a Democrat from New York, said on the floor of the House of Representatives on Tuesday night just before a House vote averted most of the effects of the fiscal cliff.

"This fandango was an immense embarrassment," the American Enterprise Institute scholar Norm Ornstein said, calling it "cringeworthy".

And "the fact that we are going to have another disastrous confrontation over the debt limit in two months, with the radical right wing of the House Republicans determined to send us over the edge if they don't get their way, is actually frightening".

"This House could have done worse, by rejecting the plan" to avoid the cliff, he said, "but it has done nothing to challenge its record as at minimum the worst Congress in our lifetimes".

The next confrontation to which Mr Ornstein referred is likely to start heating up in a matter of weeks in anticipation of the need to once again raise the borrowing limit for the government beyond the current level of about US$16 trillion (Dh58.72 trillion). The risk will be a default by the government.

Republicans in Congress, many of whom acknowledged publicly that they took a beating from president Barack Obama in the contest over the cliff, are promising to pursue spending cuts with extra vigour as a condition for approving the debt ceiling increase in the Republican-controlled House.

Historically, each partisan grudge match over spending has tended to make the next one even more bitter.

Alice Rivlin, a former US budget director and Brookings Institution budget expert, also worries about "psychological fallout" from the battle over the cliff that could spill over into the debt ceiling struggle as well as contribute to the global perception that when it comes to the economy, the US can't govern itself.

"It's very bad for the economy and for our image in the world," she said. "We don't look like a country in charge of its own destiny. That's hard to quantify but it's bad."

"This is a Congress that can barely get its work done - especially when confronting the most important issues of the day," said Sarah Binder, a George Washington University expert on Congress.

"In many ways, public disgust with Congress is already baked in: the public's expectations are so low that it's hard for Congress to surprise us."

That was not the way the minority leader, Mitch McConnell - the chief architect of the cliff - expressed it on August 1, 2011, as he spoke on the Senate floor.

"It might have appeared to some as though their government wasn't working," he said, "but in fact the opposite was true. The push and pull Americans saw in Washington these past few weeks was not gridlock, it was the will of the people working itself out in a political system that was never meant to be pretty."

David Dreier, a Republican member of the House of Representatives, expressed a similar sentiment on Monday night as the House closed the loop on the plan Mr McConnell designed.

"This is the greatest deliberative body known to man," he said.