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January 19, 2012

Washington Gridlock Impacts US Financial Standing

by Michael Bowman

When President Obama lays out his vision for the United States this year in his State of the Union speech, one challenge before him will be getting Congress to agree on the nation's finances. The politically divided Congress fought all last year over America’s fiscal woes: a trillion-dollar federal deficit and a $15 trillion national debt, and made little progress.

At a time of daunting economic challenges, many Americans are dismayed by Washington’s political paralysis.

Fueling the gridlock: divided government. Republicans control the House of Representatives and Democrats control the Senate.

Perhaps the biggest casualty of gridlock: U.S. fiscal health and financial standing in the world. With the nation teetering on the edge of a debt default last year, Congress engaged in a ferocious, months-long battle over deficit reduction.  Republicans demanded deep spending cuts.

“Giving the federal government more money would be like giving a cocaine addict more cocaine,” said John Boehner, Republican Speaker of the House.

Democrats accused Republicans of targeting the poor and protecting the rich.

“There is not one red cent coming from America’s wealthiest families, while we are willing to cut education for the poorest children in America,” said Democrat Rep. Nancy Pelosi.

President Barack Obama, a Democrat, sought $4 trillion in deficit reductions over 10 years. In the end, the White House and Congress could only agree on about half that much. The fight nearly led to a U.S. debt default. Credit ratings agencies blasted Washington’s performance. Standard & Poor’s did what once would have been considered unthinkable: it downgraded U.S. creditworthiness.

“Political gridlock in Washington leads us to conclude that policymakers do not have the ability to proactively put the finances of the U.S. on a sustainable footing,” said Chambers.

Finger-pointers all have a common target: Washington gridlock.

"This slash-and-burn, take-no-prisoners, no-compromise-no-matter-what approach to politics is one of the reasons why Congress is having such a difficult time getting things done," President Obama said.

“The biggest threat to our economy is not Europe’s instability or China’s monetary policy or anything else, it is this partisan paralysis and political cowardice that I think is defining Washington,” said New York City Mayor Michael Bloomberg.

Members of Congress regularly bemoan America’s fiscal problems. But taking action means surmounting partisanship, something Washington struggles mightily to do.