Can Washington Still Govern?

October 11, 2013

The popularity of the government is at an all time low. Different people want different things, thus none of us can have everything we want. What to do? Congress enacts laws and if they later decide that they enacted a bad one they can vote to amend or repeal it. The voting public can vote out representatives who don’t properly represent them and vote in new ones who will adopt the laws they want.  But at the end of the day compromise is required to satisfy the largest number of people.

Refusing to authorize government expenditures for existing laws and thus shutting down the government (sort of) is better described, according to Andrew Reinbach, as sedition:

“The definition of sedition says among other things that ‘If two or more persons in any State or Territory, or in any place subject to the jurisdiction of the United States, conspire… by force to prevent, hinder, or delay the execution of any law of the United States… they shall each be fined or imprisoned not more than 20 years, or both.’”

The best overview of the outrageous behavior by both the Republicans and the Democrats remains, in my judgment, the article by Charles Krauthammer that I posted earlier. “Who Shut Down Yellowstone? /2013/10/03/”.  This all came back to my mind as I drove down Clara Barton Parkway toward the District yesterday morning for an 8:30 am meeting with the Afghan delegation here for the IMF/World Bank Annual Meetings. There are a number of parking areas along the parkway. People park there to take their canoes down to the Potomac or to walk along the river. You might have thought that closing the government would have no consequences for such pullovers. At most it might leave the trash deposited in the trash cans there uncollected. Instead, the government spent the money to place concrete barriers beside the road preventing anyone from pulling off and parking there.  I am told that the same was done across the river on the Virginia side along the George Washington Memorial Parkway and no doubt in many other places as well employing the well-known government trick of making the cuts as painful as possible to the public.  This is the government we have now. The moron who made those decisions should be fired (the gentlest penalty that passed through my mind).

I have always believed that one of the things that makes America great is that it has managed to create a system in which people of different cultures and faiths, but common core values, live peaceably together. This gives our country the enriching benefits of the creative power of diverse ideas from diverse cultures without the costs of social strife. A major source of this success comes from a constitution and system of government that has limited the power of the government and does not overly interfere in the private activities of its citizens. No ones religious beliefs are imposed on anyone else, etc.

These days our political class seems to have lost the capacity of compromise, an essential aspect of living together peaceably. Many of our politicians no longer see compromise as a virtue (the fools). The problem is not a new one, of course. When farmers from the Near East moved into Central Europe 7,500 years ago they were not assimilated by the hunters-gatherers who lived there. Rather they coexisted in parallel cultures, forced by necessity to get alone.  “Stone-age Farmers-Hunters Kept Their Distance /2013/10/10/”

Fortunately, the dysfunction of our government is not reflective of our broader society, though I know there are many ugly exceptions. I was happy to read in today’s Washington Post that a heart wrenching dispute between the natural father of a four year old girl and her adopted parents who actually loved and cared for and raised her has been resolved and a mutually sensible way, keeping hope for civilization alive: “Cherokee Nation and Father of adopted 4 year old girl drop court battle for custody /2013/10/11” Veronica’s adopted parents will retain custody of her but will cooperate in making ways for her natural, Cherokee father to be involved in her life.

Using an increase in the debt ceiling as leverage to reduce the government’s deficit to sustainable rates is quite a different matter.  It has been recognized for many years by both political parties that government spending commitments in the future, given the aging of the population (i.e., the fall in the working age population relative to the retired population), could not be met. The Congressional Budget Office’s current long-term, baseline forecasts, which assume current tax and spending laws (including the reduced spending growth required by the sequester) are for the debt to grow more rapidly than income, i.e., to rise as a percent of GDP without end. One bipartisan effort after another (Bowles-Simpson commission, the Senate Gang of Six, Bipartisan Policy Center’s Debt Reduction Task Force, the Super Committee, etc.) tried to reach tax and spending compromises and failed. Yes, even with the sequester (across the board cuts in planned spending increases) the growth in debt is not sustainable. Something must change. A compromise must be agreed. Using approval of an increase in the debt ceiling as leverage to achieve such a compromise is a reasonable tactic. If not now the market will force it later (significant increases in the interest rates demanded by the market to lend to an increasingly over indebted government). Better and cheaper sooner than later. “The-sequester”  “Thinking About the Public Debt”

Author: Warren Coats

I specialize in advising central banks on monetary policy and the development of the capacity to formulate and implement monetary policy.  I joined the International Monetary Fund in 1975 from which I retired in 2003 as Assistant Director of the Monetary and Financial Systems Department. While at the IMF I led or participated in missions to the central banks of over twenty countries (including Afghanistan, Bosnia, Croatia, Egypt, Iraq, Israel, Kazakhstan, Kenya, Kosovo, Kyrgystan, Moldova, Serbia, Turkey, West Bank and Gaza Strip, and Zimbabwe) and was seconded as a visiting economist to the Board of Governors of the Federal Reserve System (1979-80), and to the World Bank's World Development Report team in 1989.  After retirement from the IMF I was a member of the Board of the Cayman Islands Monetary Authority from 2003-10 and of the editorial board of the Cayman Financial Review from 2010-2017.  Prior to joining the IMF I was Assistant Prof of Economics at UVa from 1970-75.  I am currently a fellow of Johns Hopkins Krieger School of Arts and Sciences, Institute for Applied Economics, Global Health, and the Study of Business Enterprise.  In March 2019 Central Banking Journal awarded me for my “Outstanding Contribution for Capacity Building.”  My recent books are One Currency for Bosnia: Creating the Central Bank of Bosnia and Herzegovina; My Travels in the Former Soviet Union; My Travels to Afghanistan; My Travels to Jerusalem; and My Travels to Baghdad. I have a BA in Economics from the UC Berkeley and a PhD in Economics from the University of Chicago. My dissertation committee was chaired by Milton Friedman and included Robert J. Gordon.

One thought on “Can Washington Still Govern?”

  1. YES Warren — 1. agree on using the debt ceiling as a constant wake-up call for our deep and continued love of deficit borrowing to run the government! But, most importantly for the moment: 2. get the bozo’s at the National Park Service or Secretary of the Interior who managed their portion of this government shut down (ha!) FIRED!

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