Compromises are, by their nature, unsatisfying. Neither side gets what it wants, but both agree that moving forward meets their needs better than standing firm on raw principle.
So it is with the budget deal worked out last week between House Budget Committee Chairman (and former vice presidential candidate) Paul Ryan, a Republican, and Washington Sen. Patty Murray, a Democrat. The deal does not alter nor reform Social Security, Medicaid or Medicare, three entitlements that combine to make up 60 percent of the budget and are on a runaway trajectory. It also doesn’t extend emergency federal unemployment benefits, nor does it increase taxes. The only new revenue is a jump in aviation security fees that amounts to about 60 cents per airplane ticket.
It does erase many of the automatic spending cuts, or sequestration, which went into effect earlier this year when Republicans and Democrats were unable to draft a compromise. And, overall, it does reduce the federal deficit by $23 billion over 10 years which, given the size of federal overspending, will require a microscope to detect.
But, most importantly, the compromise does two things. It begins to bring a sense of calm and predictability to markets that have been jittery in recent years as Washington went from one crisis to the other.
Also, it demonstrates that Republicans and Democrats are capable of working together, even if the result is just a small step in the right direction. Congress faces other difficult, but important, issues demanding compromise, such as immigration reform and farm legislation dealing with food stamps and agricultural subsidies.
Perhaps only small steps can be made on these issues, as well, but the more lawmakers become involved in negotiations, the more they are bound to see avenues for common ground and progress.
Eventually, that could result in progress toward tax and entitlement reforms, issues that must be resolved in order for the nation to reverse a trajectory leading to insolvency, or worse.
The compromise also signals that the more extreme elements of the political realm are being pushed aside in favor of cooperation. This became evident when House Speaker John A. Boehner said conservative groups who oppose the deal have “lost all credibility.” Party leaders clearly feel they no longer have to fear such groups politically.
The budget compromise means the government won’t face the threat of a further shutdown — similar to the one in October — for the next two years. That is, it won’t face a shutdown due to a failure to pass a budget. It may, however, face a shutdown or crisis of some sort early next year as payments on borrowed funds once again hit the so-called debt ceiling. But again, the budget compromise provides a glimmer of hope that other crises may be avoided, as well.
To be clear, we are not entirely satisfied by the budget deal. It doesn’t attempt to tackle the nation’s most important long-term fiscal challenges, dealing with entitlements and taxes. It cuts little from discretionary funds and in fact increases non-defense discretionary spending by 4.7 percent. It leaves in place the Affordable Care Act, a new costly program that has injected an additional layer of uncertainty into private markets.
But it appears to be the best that can be done, given political realities. American voters put Republicans in control of the House and Democrats in control of the Senate. A polarized political atmosphere pushed those two sides apart.
This compromise doesn’t erase those realities, nor should it. However, it does signal that the private sector can begin to rely a bit more on cooler heads in Washington choosing small steps forward rather than drastic steps on side roads with only an extreme political base in mind.