After the holiday, Congress should buckle down to business

It is only fitting that on the day after a holiday that commemorates Americans who showed true courage 235 years ago, the men and women who hold the fate of this nation in their hands will be back in Washington, D.C., facing the challenges of today.

The Senate, which had been scheduled to take a week’s break, will resume session Tuesday, said Senate Majority Leader Harry Reid, D-Nev. The House had already been scheduled to work next week.

The decision to work is perhaps the best one that tone-deaf Washington politicians have made in a while. The American people may be divided in their politics, but they know that there is a crisis looming and they know that when there is trouble brewing at their places of employment they don’t get to take extended vacations.

The next order of business is to address the closest looming crisis, which is the economic catastrophe that would follow a U.S. default on its debt.

This is nothing new

There is a reason why Democrats and Republicans alike have increased the U.S. debt limit in the past with little more than token political gamesmanship, including seven times during the eight years that George W. Bush was president: Nothing good happens when a nation doesn’t pay its debts. And when that nation is the United States, the largest economy in the world, failure to honor its obligation results not in recession, but in depression. And not a short, localized depression, but a deep, worldwide event.

Both Republicans and Democrats are right in recognizing that the long term consequences of weaning the nation from easy credit that has been its lifeblood for more than 30 years is necessary. That they disagree on the nature and speed with which that can be achieved is understandable in a two-party system. But no one side has all the right answers.

While the Democrats share the blame for past and present excesses, it is clear that in this standoff it is the Republican leadership that has taken an absolutist position. While Democrats in Congress and the White House have agreed to spending cuts, the Republicans have drawn a line over which they say they will not cross. That line is what they define as tax increases — even on those who continue to reap handsome rewards from a tax system that has been fine tuned to their distinct advantage.

There is a point at which political games become dangerous. And there is a point at which political intransigence becomes reckless.

Most of us are pained by the level of taxes we pay, and that makes catch phrases such as “no new taxes” particularly attractive. But the effective tax rates on our nation’s highest corporate and individual earners are today lower than they have been during times of sustained prosperity. Those were also times when, historically, our debt was under control. While tax and spend can get a nation in trouble, borrow and spend is worse.

What’s ahead

Democrats and Republicans must make a good faith effort to reach a compromise, and the sooner the better. The absolute deadline is Aug. 2.

A Standard & Poor’s executive has predicted what will happen if the U.S. government defaults. Its AAA credit rating will plummet to a D.

Interest rates on Treasury bonds and notes would skyrocket, to the extent that consumer loans were available, the rates would be prohibitive. The economic fallout would be widespread and severe.

The national debt limit did not reach $14.3 trillion overnight. It got there by 78 separate acts of Congress over the last 50 years. That unfortunate momentum cannot be reversed in a day; it can only be reversed by politicians on both sides seeking a balanced policy that doesn’t result in economic chaos.