Washington Notebook: A Machiavellian Bargain

03/08/2011 08:52 BST | Updated 02/10/2011 10:12 BST

After a long and painful process both Houses of Congress finally voted to raise the debt ceiling and cut spending in an effort to begin to reduce the deficit.

These legislators managed to piece together a deal that was able to garner enough votes to pass just before the U.S. fell off the economic cliff and lost its AAA rating.

Over the last few weeks, during this political bare knuckles brawl, the Dow lost almost 800 points.

The problems are very clear and the U.S. needs to do FOUR things to solve them -

cut spending, increase revenues, reduce unemployment and spur growth

How the U.S. got into the mess is also very clear.

When Bill Clinton left office the U.S. had a surplus of 236 Billion Dollars...That's right Billion with a "B"

By the time George W. Bush left office - his tax cuts, two wars and the medicare prescription drug plan - all unfunded - had resulted in a 1.2 Trillion Dollar deficit and an economy in free fall....That's right Trillion with a "T".

With the Bush bail-outs continued by Obama and the Obama stimulus, the Federal deficit now seems completely out of control at a whopping 14 Trillion Dollars.

If there had been a Balanced Budget Amendment in place, as the Tea Party/ Republicans are currently pushing for in the second phase of this deficit reduction process, none of this could have been done during the GW Bush or Obama era.

If passed a Balance Budget Amendment would prevent the U.S. Government from responding to a national security challenge - by going by war - or a national disaster unless the U.S. Government could pay for it 'now.'

This is why a Balance Budget Amendment to the U.S. Constitution simply cannot work and won't be acceptable to the very same party that is pushing it.

There are many ways to address these problems however, the legislation that Congress just passed and the president signed into law has eliminated some of the most effective tools that might make a real difference for the American people.

This piece of legislation was not drafted to address those real problems.

Instead it was drafted to give both the Republicans and Democrats a series of mindless talking points for the next election - in an effort to ensure them their best chances for retaining or gaining power.

As a rule, raw politics and good policy rarely compliment one another.

This persistent fight between the Republicans and Democrats over the role of the Federal Government should play has been resurrected once again

Republicans believe that government is the problem and not the solution.

Democrats believe government can solve problems if generously funded.

Almost every aspect of this deficit reduction deal was openly and brazenly political.

No big surprise - even the votes on the deal itself showed shameless political maneuvering just in time for the next election.

Although some Members of both parties bravely voted their conscience - some Republicans voted 'No' to court the Tea Party and avoid a possible primary challenge - some Democrats voted 'No' to show their base that they would not bend to this Tea Party imposed deal, hoping to avoid a challenge from the left as well.

President Obama got enough of an increase in the debt ceiling to avoid another fight over this issue until after the 2012 election.


(See my last blog- "Too Close For Comfort")

To get this deal President Obama and the Democrats traded away most of the tools they could have used to reduce unemployment and spur economic growth.

In short, the Republicans have skillfully done their very best to ensure that the U.S. economy is likely to stay in the doldrums from now till Election Day.

As a result, the president and the Democrats will have to carry the weight of a struggling economy into that election.

The Republicans have mastered the political message - "Everyone wants no new taxes and no reduction in medicare and social security benefits" - but these two goals do not add up although they sound like a great 2012 campaign promise.

The real casualty of this dysfunctional legislative display has been consumer and business confidence.

With just four months to go before the deadline in phase two of this legislation, Congress has laid the real problems in a laps of a Joint "Super Committee" of their own Members.

And to quote President Obama it seems as though they have "kicked the can down the road".

Without skipping a beat the new political fight has moved to the composition of this Joint Committee and its powers and mission.

It seems clear that the real fight over the tough choices which will affect every American young and old has only just begun.

Also see my Washington Notebook blog on Sky News