And yes, we'll get to revisit some of these very same dismal dynamics all over again in a few short weeks, when the nation's debt ceiling limit comes up for raising (it would be fiscally impossible to lower it). The clash between advocates of restraining and reducing federal spending, and those who insist that certain "entitlement" programs must be fully funded to meet the needs of an aging population, will no doubt be joined anew, and just as intensively. And probably, in the end - at the very end - some half-baked compromise will be constructed to kick the can down the road for another year or two, while the nation's fundamental financial issues fester on.
Before we leave this entire subject for awhile (a few weeks anyway), here's some closing thoughts.
The deal ultimately forged between the President and Congress was better than the alternative of no deal, and at least averted short-circuiting the economy just as there are some faint signs of life out there. But at some point, President Obama is going to have to figure out how to negotiate with Congress, rather than out-sourcing it to Vice President Joe Biden. Simply raising taxes on the very rich, who, granted, can afford to pay more in taxes, isn't the full answer. Two other shoes need to drop: to re-balance the nation's finances, everybody will have to pay more, and some way needs to be found to rein in spending on Medicare, Defense and Social Security before they combine to bankrupt us.
As a nation, we want big government on the cheap. We want the government to provide a range of programs and services that 50 or so years ago would have been shocking to many people, but we don't want to tax ourselves to pay for it, apparently.
Instead, we've borrowed the money, some of it from ourselves, some from other countries. While many economists today are quick to point out that those investors are happy to park their money here and not ask us for uncomfortably high interest rates, that's not necessarily going to be the way it remains forever. And even if it did, the interest payments on the amount of money we're borrowing, left unchanged, will soon crowd out our ability to spend and invest in areas we really need to spend and invest in - like education, research, infrastructure and the like. We're running big debts and deficits without having the upside of investment in the future. It won't work, and the piper will demand payment within the life spans of most Americans alive today. When that moment arrives - 10, 20 or 30 years down the road - it won't be pretty.
So why not deal with this problem before it becomes a crisis?
Before that apocalyptic moment, let's focus on a long range solution, the likes of which both the Congress and the President ducked last month. One of the problems about getting politicians to do the right thing is that they seldom get the credit for it. Rather, they are forced to endure the short term pain (higher taxes, less spending on popular programs), before the long term benefit (fiscal stability) kicks in. Unless voters expand their vision to think beyond the next election cycle and vote accordingly, politicians aren't going to either.
Of course, speaking the truth would be a good place to start. Having achieved a short term victory on tax rates, after braying about that for months on end before winning re-election, Mr. Obama now needs to address the flip side of the coin - unsustainable federal spending.
We hope to be pleasantly surprised, but the gloating victory lap he took before resuming his vacation in Hawaii doesn't encourage hope for change. Quite the reverse.
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