No Way to Run a Country

Life is uncertain, and most people find uncertainty hard to handle. Business — which works to plot out the next quarter, the next year, the next five years — can find it paralyzing.

In the Federal Reserve’s latest “Beige Book,” an eight-times-yearly anecdotal report of economic conditions, the word “uncertainty” pops up at least 30 times. For example, the Fed’s 1st District, Boston, says this about the manufacturing sector: “The key word for the overall outlook is uncertainty. In general, our contacts use phrases such as ‘sitting on the sidelines’ and ‘waiting for the uncertainty to play out.’ … There is uncertainty about domestic policy, including the ‘fiscal cliff’ and health care, as well as uncertainty about macroeconomic performance in Europe and China.”

Congress drove the U.S. to this fiscal cliff by failing to govern. Governing in a democracy requires compromise, and compromise is anathema to dogmatists. Because Democrats and Republicans couldn’t agree on budget cuts to reduce the ballooning deficit, “sequestration,” or automatic spending cuts, may be implemented. These cuts, split evenly between defense and domestic programs, total $110 billion in the first year, starting Jan. 2.

Adding to the danger of this cliff is the prospect of the expiration of the Bush-era tax cuts Jan. 1. Piling spending cuts atop tax increases threatens to shatter an already fragile economic recovery and push the U.S. back into recession. One report on the possible effects of sequestration already has put forward the potential shutdown of the Fort Smith airport. The consequences for failing to govern are very real.

Business people, like battlefield doctors, understand the importance of triage: determining priorities in assigning limited resources. Congress’ priority should be the health of the U.S. economy, not party ideology. Voters’ priority should be ensuring that Congress understands its duty.