Neil Macdonald: Can Obama finish the fiscal fix?

Campaigning for re-election, Barack Obama promised a balanced approach to fix America's surging debt problem, Neil Macdonald writes. So when do the cuts start to government programs?

Tax hikes only half the story

Amid all the post-mortems to the self-inflicted wound known as the fiscal cliff, my favourite bit was the exchange at the White House last week between Congress's two biggest antagonists, John Boehner and Harry Reid.

Reid is the starchy, pitiless Democrat who basically runs the U.S. Senate. Just about nobody considers him a nice guy.

Boehner is Speaker of the House of Representatives, and he, by most accounts, is felt to be a nice guy.

He's most famous here in Washington for crying in public, which is sort of understandable, given his other responsibility: running a Republican caucus that treats him like an annoying substitute teacher and forces him into humiliating public climbdowns.

Anyway, as Politico tells it, Reid and Boehner encountered one another in the White House lobby during the intense post-Christmas negotiations to "avoid the cliff."

Boehner pointed at Reid and suggested, in explicit terms, that he go perform an anatomically impossible act on himself. Reid, no doubt highly entertained, asked for clarity, and Boehner repeated the suggestion, then turned his back and walked away.

When you think about it, that episode distills modern Washington to its essence: Congress has become so indifferent to compromise in the larger national interest, so ideologically calcified, that deliberations on crucial public policy have come down to the big middle finger in the White House lobby.

Democracy in action

Of course, apologists for both parties are trying hard to extract something more optimistic from the short-term non-solution that at least avoided raising most people's taxes.

The New Year's Eve fix, they claim, was democracy in action.

Republican House Speaker John Boehner, treated like a substitute teacher. (Associated Press)

Democrats are praising President Barack Obama for fulfilling his election promise. Republicans say they put the public interest first, and prevented much worse liberal tax-and-spend excess.

Cable TV hosts, meanwhile, posed idiotic "snapper" questions to their endless political panels: "We only have 30 seconds left. Winners and losers?"

Well, the ugly answer is this: the loser in the past week was sensible government.

Having created a potential economic disaster in order to force themselves to do something about what everyone agrees is out-of-control debt and spending, Congress, in the end, did almost nothing about the country's addiction to borrowing, which was the original point of the whole exercise.

What happened was that everybody got together and decided to do as little as possible to get re-elected.

Republicans reluctantly agreed to soak the very rich, expressing their disgust at having been "cornered" and "bullied" into doing it by Obama.

And Obama, who talked endlessly during the election about a balanced approach, now seems to have abandoned the notion of serious cuts to government.

The tough decisions about spending, particularly how to deal with unaffordable government entitlements and subsidies to which voters have become addicted, were postponed once again.

How serious is this? Well, Americans now carry more government debt per capita than Greeks (though, admittedly, a greater capacity to deal with it).

And soon enough there will be another crisis, another mountain, or cliff, or pool of quicksand, or some other inventive geographical metaphor.

The debt ceiling — the U.S. government's legislated borrowing limit — was reached this week.

Treasury officials can do some creative juggling to keep paying the bills for a few more months, but eventually, there'll be another showdown in Congress about that, too.

Not enough swing

Of course when that happens, everyone will profess fatigue with the whole process again.

Pundits will perpetuate the notion that this is not really what the people want at all. The American public, apparently, is a much more sensible lot, who really only want compromise.

It's tempting to buy into that idea, that contemporary Washington is an artificial construct created despite, rather than in response to, public desire — that partisan gerrymandering and special-interest spending have hijacked the people's Congress, thwarting the popular will.

The dismal reality, though, is that American voters effectively demanded the gridlock in Washington.

As Nate Silver, the New York Times data maven, pointed out recently, a close look at November's election results reveals a nation more polarized than it has been in nearly a century, with far fewer swing states where people vote according to issues and solutions, rather than out of blind party loyalty.

Now, I'm not one for lecturing anybody about how Canadians do things.

Frankly, we're probably nowhere near as collectively reasonable as we like to think we are.

But increasingly, the difference between our systems of government is that Ottawa can actually get things done.

In the mid-1990s, Jean Chretien and Paul Martin realized Canada was in the same spiral of debt and spending that the U.S. now finds itself and took the necessary remedial measures.

They cut spending, raised taxes, and ramped up the contributions that support public pensions.

Canadians grumbled at first, and pretty seriously, at least for a time.

But within a few years, fiscal health had returned and Canada was soon being lauded as a hemispheric rock star as far as its economy was concerned.

That persists to this day, while the U.S. elevated can-kicking its problems down the road to official public policy.

Even the United States, though, cannot change the laws of mathematics.

This country could do the sensible thing. It could raise taxes a bit on everyone, and make the obvious cuts to spending, which is what Obama campaigned on. It could make voters pay for the entitlements they love.

Make no mistake, though: a reckoning is coming. And if Congress doesn't act sensibly, and responsibly, then the only likely alternative will be to print a mind-boggling amount of money to cover the country's debts, beggaring everyone else in the process.

If that happens, then America will be effectively telling the world what John told Harry at the White House.