Grassroots Commentary

Compromise or Gridlock in Washington: Two Unpalatable Alternatives

By Mark W. Hendrickson · Dec. 11, 2012

Editor's note: A version of this article first appeared at Forbes.com.

As soon as the elections were over, a wave of commentaries extolling the virtues of compromise appeared in the press. The common theme is that it is time for Democrats and Republicans alike to end partisan gridlock – to make compromises that will shrink federal deficits without driving us off “the fiscal cliff.”

That said, gridlock has its defenders. They fondly remember “the good old days” in the '90s when divided government (Democratic White House, GOP Congress) produced a gridlock that kept spending increases relatively modest and eliminated budget deficits.

Gridlock today, however, is not as benign as it was then. Also, the '90s constituted a very special case that cannot be replicated today.

In the '90s, gridlock kept the spigot of federal spending stuck at a relatively slow growth rate. Today's gridlock between the Boehner-led House and Team Obama has stuck the federal spigot in the wide-open position of perennial trillion-dollar deficits.

The '90s are an inapt comparison for another reason: That decade featured a fiscal “perfect storm” to wash away red ink: The end of the Cold War led to defense spending cuts; the welfare reform of 1996 slashed welfare expenditures and increased the number of taxpaying workers; the Roth IRA legislation of 1997 induced millions of Americans to pay taxes on their private retirement funds up front; the “Greenspan put”-fueled stock-market bubble gave Uncle Sam a windfall of capital-gains revenue. In short, the propitious confluence of events that stanched the flow of red ink in the late '90s was a one-off phenomenon.

So, we need compromise rather than gridlock, right? But what if compromise is not a viable option either? Compromise may be what fair, reasonable, mature, and enlightened people do; it may be the democratic way, but the problem is that there are limits to compromise, dictated by the immovable truths of economic realities.

We see this at the local level in school district contract negotiations with teachers' unions. The union asks for 10 percent annual pay increases; the school board offers 2 percent; they compromise at 6 percent. That may work for decades, but what happens when the local taxpayers go through a prolonged economic slowdown and the tax base in the district stagnates? There comes a breaking point where teacher compensation can't rise as much as it used to, if at all, and maybe even retirement benefits have to be cut back because taxpayers simply can't afford additional tax increases.

A similar dynamic plays out with the federal budget. The big spenders propose a large increase in spending (an increase above an assumed projected increase, i.e., the infamous “base line”); the opposition proposes a smaller increase; they compromise and spending continues on a relentless upward trajectory. There is a ratchet effect whereby total spending can only move in one direction: higher. But “trees don't grow to the sky,” and eventually government spending produces so much accumulated debt that there isn't enough wealth to tax or borrow to finance spending, so the central bank steps in with “quantitative easing” and financial manipulations. Eventually, the debt burden and the inflation of the monetary unit proceed to the point where they threaten the financial viability of not only the government but the entire economy – the net result of a succession of well-meaning, “fair”-minded compromises.

The pickle we are in today is excruciating. In the first place, the big spenders clearly won't make any more than token compromises. President Obama came out of the election suddenly asking for tax hikes twice as large as he had requested earlier. Senate Majority Leader Harry Reid declared that Social Security was off the table. Since Reid has blown up Congress' constitutional budget-making process for several years already, we know he isn't bluffing. They are willing to drive off the fiscal cliff if necessary, because chaos and crisis provide them with the pretext for more government intervention and control, which is their ultimate goal.

If there is to be any meaningful compromise, the Republicans will be the ones who make it. Yet, if the GOP compromises by agreeing to raise taxes while not curbing runaway spending, the result will be slower economic growth and probably lower federal revenues. Nothing positive will have been accomplished and the government will continue careening toward an eventual financial crackup. We are told that reasonable people compromise, but if compromise leads to disaster, can it be a virtue?

Gridlock or compromise: Heads, Big Government wins; tails, “we, the people,” lose.

Dr. Mark W. Hendrickson is an adjunct faculty member, economist, and fellow for economic and social policy with The Center for Vision & Values at Grove City College.

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4 Comments

Bruce R Pierce in Owensboro, KY said:

Compromise is why we are where we are today; the positive definition is finding agreement through communication, in actuality one side always loses. How can only one side lose you ask? Simple usually one side is going along in life happy when someone else comes along to change things they are not happy with. The individual that is happy says; things are good why? The others answer is because I'm not happy and I want "this" to make things better, but what you propose will make things worse the happy one says. The conversation goes downhill from there with both sides presenting the "facts" as they see it until the one wanting change says; let’s be "reasonable" about this and "balance" this out with "tolerance". Not wanting to be seen as being "unreasonable" the side that is happy gives up some of their happiness, up to half if it is a "meet in the middle" compromise. Result both sides are unhappy because one side gave up some of their happiness while the other not getting everything they wanted is unhappy. Things go alone fine, for a while, until the new agreement becomes the "status quo" then the whole compromise discussion is readdressed "ad nausea" until no one is happy.
Marcus Cicero was correct when he said;
"Extremism in the defense of Liberty is no vice and moderation in defense of Liberty is no virtue."

Wednesday, December 12, 2012 at 10:33 AM

Capt. Call in New Mexico said:

In the Leftist language of doublespeak, compromise means only one thing: the Right gives up its position. For years, conservatives (at least this conservative) have been looking for someone who has enough backbone to say, "Enough! We need spending cuts NOW!" We've got to ignore the lies and cries about the poor being hurt when the government is shut down. Government employees are always made whole anyway. Newt Gingrich's problem was that he gave up too soon, and caved in to the Clintonistas. Now, we are faced with the same problem from the Obamanators. People don't seem to understand that the government is borrowing millions of dollars every day. Just let Obama shut everything down. For as long as it takes, as many times as it takes. Forget opinion polls and do what is right for the country.

Wednesday, December 12, 2012 at 4:34 PM

Murray Bass in California said:

Much of wha wecall Gridlock today is pure fction. Wejust have to look at recent history McConnell offers two plus trillion in the increse of the debt limit even before it is asked for. While big media battles were going on, Boehner was telling apeople at a fundraiser here that thjey were going to increase the limit by more than two trillion. My point, the deals had already been made by the Establishment" there is no reason to believe that it will be any different this time . Same players and essentially the same situation..Congress_ the GOP will trade current spending for fictional future cuts. Nothing has change, Iam sure the deal has already been made. What is happening nw is BS to fool the people. Real fiscal conservaives have been purged from every significant budget committee. Fiction

Thursday, December 13, 2012 at 10:38 AM

Tod the tool guy in brooklyn ny said:

"I'm a gonna git me a tub fulla grapes, an jump inta dem. Imma gunna squish dem 'round an 'round, till dey come up frum my toes alst juicy!" Granpa Joad, in The Grapes of Wrath, by John Steinbeck.

Sunday, December 16, 2012 at 8:09 AM