Recommended Reading - 02/17/10

In yesterday's opening missive, I wrote the following:

Though our domestic fiscal problems are shallower than the problems over there, they still run deep. Contrary to the traditional view that gridlock is good for stocks, equities have been on the descent since Scott Brown's surprise Massachusetts Senate win.

The reasons for the weakness are multiple:

• the likelihood that continued gridlock would fail to address our fiscal problems;

   

• the lack of patience on the part of both Americans and our legislators/administration to do the right thing; and

   

• that the odds favor inappropriate policy or weak policy to confront so many structural (nontraditional) imbalances and a number of other issues.

This morning, New York Times correspondent Jackie Calmes discusses the same issue in her front-page story, "Party Gridlock in Washington Feeds New Fear of a Debt Crisis."

Senator Evan Bayh's comments this week about a dysfunctional Congress reflected a complaint being directed at Washington with increasing frequency, and there is broad agreement among critics about Exhibit A: The unwillingness of the two parties to compromise to control a national debt that is rising to dangerous heights.

After decades of warnings that budgetary profligacy, escalating health care costs and an aging population would lead to a day of fiscal reckoning, economists and the nation's foreign creditors say that moment is approaching faster than expected, hastened by a deep recession that cost trillions of dollars in lost tax revenues and higher spending for safety-net programs.

Yet rarely has the political system seemed more polarized and less able to solve big problems that involve trust, tough choices and little short-term gain. The main urgency for both parties seems to be about pinning blame on the other, before November's elections, for deficits now averaging $1 trillion a year, the largest since World War II relative to the size of the economy.

Yes, it is different this time.