After years of pushing snowballs up mountains, only to break into a snowball fight once they reached the top, our nation’s budget leaders are discovering it may be economically smart to put down the gloves and leave the big snowball intact.
When it’s not in pieces, it’s easier to get the snowball rolling downhill. And more likely it will pick up in size as it coasts.
Of course, some will argue that a runaway snowball must be feared as well. But I would argue if you plan things correctly you’ll have plenty of opportunity to avoid a crash. And central to that plan is communication.
Almost as if divinely inspired, but certainly politically helped along, a pair of leaders from the House and Senate hammered out a two-year budget agreement in December that managed to sail through both chambers, despite the whines and whimpers from the extreme left and right of the two political parties involved. It was so easy it was almost embarrassing (for them, not the rest of us).
This budget is no victory for every special interest and certainly it’s got its troublesome points, not the least of which is leaving unstated the method for fixing the massive debt still facing the country long term.
But it’s a start, and after the last two years of bickering on Capitol Hill, it was almost a Christmas present to the rest of the country to see the art of compromise in action.
House Republican Paul Ryan and Democratic Sen. Patty Murray went behind closed doors, away from the media spotlight, agreed to disagree and communicated the way leaders are supposed to communicate.
They emerged with a plan, explained their mutually arrived at position and took the barbs of their critics. And — what do you know — it worked. Government shutdown was averted. Confidence in government was given a boost. It was as refreshing a development as I’ve seen in Congress in a long time.
And the actions were looked at favorably by the markets, which continued to rise. People, who have long grown tired of partisanship, needed this. So did the business world, which has been hedging investment against the uncertainty of leadership.
Almost as if on cue, but certainly evolving for months, came a couple more bits of good news:
- The U.S. economy grew at its fastest pace in almost two years in the third quarter while business spending was stronger than previously estimated, pointing to some underlying, sustainable strength.
- The Fed announced it would taper by about $10 billion a month the stimulus that it has been pumping into the national bottom line, after what it denotes as progress in the economy.
That second one’s a biggie, almost like parents who feel comfortable turning children into the world, knowing they’ve got a self-supporting job.
Economist Laurence Meyer, a respected, former governor of the U.S. Federal Reserve System, told a St. Louis audience this past month that the Fed wouldn’t begin tapering stimulus without confidence in the direction of unemployment, GDP and inflation.
The economy has been growing at a 2 percent rate since the recovery began. Meyer believes that growth will be closer to 3 percent during each of the next few years. Unemployment, which stood at 7.3 percent in October, should be closer to 5.7 percent in fourth quarter of 2016. By December’s end it was 7.0.
Inflation, meanwhile, should be headed from the current 1.4 percent to around 2.0 percent in the last quarter of ‘16, which is not all that overwhelming when increases come in small, gradual doses.
These positive-sounding predictions are subject to the whims of many different things that bear constant analysis, he said. Among them are housing starts, auto sales, retail sales, durable goods orders and trade data.
To that list I would add crises of government. The Ryan-Murray budget deal didn’t dispel anywhere near all of our financial problems, but it went a long way to showing that leadership often requires compromise. And without such leadership, lasting prosperity cannot be found.