Wednesday, April 18, 2012

America, The Best Looking Horse In a Glue Factory…Why the passage of a non-binding budget is still crucial.

"We know you’re trying, but we just don’t care.” That was the message the GOP sent Senator Kent Conrad (D-ND), Chairman of the Senate Budge Committee, this week when they apologized for not wanting to pass his 2013 budget. They blamed the Democrats for holding up a budget markup in fear of an unnecessary political battle during an election year.
While there is no doubt that Democrats deserve a good amount of blame in this process, the GOP is as unwilling to allow the Democrats to have a financial success, as the Democrats are to face scrutiny over tough decisions. The passing of a budget before the election cycle helps no one. And when neither side benefits from the passing of such a vital piece of legislation, our country ultimately loses.

Congress has not passed a budget since the House and the Senate were both under Democratic control in 2009. Although this $3.55 trillion budget was not exactly the picture of financial responsibility, it did give the world economy a signal that the government is working. To me, the loss of that signal is one of the worst consequences of gridlock today.

People often say that the Congressional budget is not binding and therefore not an important piece of legislation. Remember, the United States was not downgraded by the rating agencies because it was unable to pay its bills, it was downgraded because the agencies did not believe that the United States had the POLITICAL capacity to ensure its debtors that they would be paid. That is why votes like these are so important, they provide the signal to our debtors and to our citizens, that we are healthy.  This is very similar to a company issuing quarterly dividends. It’s a market signal, as long as it continues, shareholders can have some faith that the company is running smoothly, but when a dividend payment is missed, their stock price drops dramatically and investors rush to get out of a sinking ship.

This is the message we’re sending to our nation and the world economy. America is not stable, because its fiscal policy is not stable. If the creditworthiness of the United States is not a rallying cry for Congress, then I don’t know what is. It’s a good thing that Europe isn’t doing so hot either. Now Americans can rightfully claim, in an accurate reflection of the lack of prestige and longevity of our current position, that although we’ve got issues, we’re still the best looking horse at a glue factory…   

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