A Note from Jack Quinn: It’s no secret that most of the conversation in downtown Washington has been about the debt limit debate – although the record-breaking heat is a close second. Even now, as you well know, it remains unclear how the debt limit debate will be resolved, although it appears the one likely outcome could be a combination of (1) a short term debt limit increase with relatively modest spending cuts (perhaps between $700 billion and $1.5 trillion) that do not affect Medicare or Social Security and nothing that could be characterized as a “tax hike” and (2) a commitment to a longer term process, perhaps modeled after the budget reconciliation procedures, military base closing or “fast track” trade rules, that will require significantly greater spending cuts by a date certain later this year.
This ongoing debate has pushed Republicans and Democrats alike off message – despite appearances, both caucuses are privately divided, and a part of the drama involves jockeying for position as all participants eye the 2012 elections. Both sides are likely to be forced to swallow a deal that is unpopular in both caucuses, but that garners just enough votes (especially in the House) to pass. There is broad consensus that, if Congress and the President fail to get a working agreement, the resulting damage to the capital markets and the economy would be significant (some say “catastrophic”), but this should not be taken to suggest that a resolution before August 2 is a certainty: while the odds of a failure to act before that date are low, they are not zero.
The debate on the debt limit is certainly not new news. In fact, since it was instituted in 1939, the debt limit has been raised 89 times by both Republican and Democratic Administrations and Congresses. But this time the debate is different in that the American public and, indeed, the whole world, is watching. Everyone – whatever their political views or opinions about how to solve our problems – understands that at stake are both our near term economic recovery and the kind of world future generations will inherit. And that is why passions are high on both sides of the political spectrum here at home.
To be sure, even after the urgency of the immediate debate subsides, the tone in this town will likely be different: we will either move toward a renewed commitment to reaching to political accommodation or we will accelerate the trend toward unrelenting challenge and inability to find common ground. The content of the debates going forward will be different as well: fiscal concerns are likely to a significant part of each policy debate more than ever before. Policy makers will focus on whether and to what extent the issues before them involve job creation and whether they implicate economic growth. They will be looking to get the most economic “bang for their buck” for almost every policy choice before them. Whether the focus is on renewable energy, cyber-security, or the new rules governing financial markets, we will all have to be prepared to make the case that what we advocate will help get the best deal for the country.
As an example, the energy sector provides the power that we need to run our factories, automobiles, businesses and all that makes America the economic force it is. The events of this past decade have brought about a renewed public focus on homegrown energy and the need for innovation and support in this burgeoning sector. Sitting back and watching China out-invest us on clean energy while continuing to rely on oil from hostile nations is not the American energy policy of the future and there will inevitably be an ongoing focus on out need to develop a real energy policy for the 21st century. We have the resources, technology, and entrepreneurs to create a robust clean energy economy, and we have the incentive to do so in ways that will be pro-growth and constitute enormously profitable investments for the U.S. economy. As we work with the Congress and the Administration, we will redouble the emphasis we put on the implications of this sector for growing a health public balance sheet.
Second, technology and innovation, along with the financial sector, were the engines of the economic growth that occurred during my time in public service in the 1990s. We believe that that engine will play a similar role in coming years – though the technologies are wholly new and the opportunities may lie in companies, indeed industries, unheard of at the end of the beginning of this century. Indeed, as we have become more and more dependent upon the inter-connectedness that the information super-highway created, we have lately become keenly aware of the need to strengthen the barriers to cyber attacks launched by criminal enterprises, foreign predators and anarchists with an axe to grind against the forces of bigness, both governmental and corporate. The sophistication of these cyber-criminals is breath-taking; they are not seventeen year-olds working in garages. And they are targeting our nation’s defenses, intelligence agencies and critical infrastructure just as they target game networks and retail giants. Congressional attention will surely be focused on this threat in coming months and years to help protect against this growing global risk. The implications for our economy are enormous, including the effects that action – and especially failure to act – will have on the public fisc. We intend to make that case.
Another good example is the financial sector – another engine of growth in our economy, especially in the 90s. The seemingly torturous debate over Dodd-Frank is behind the Congress, at least for the most part, but the process of implementing that new regime now falls on the key agencies – from Treasury and the Fed to the CFTC and the SEC. If the devil were ever in the details, he’s surely going to have his hands full for the next couple of years. As these implementing rules are hammered out, affected parties would be wise to put front and center compelling economic and fiscal arguments for their point of few. And, they should be sure to gather congressional and third party validation for their arguments.
As Washington moves forward past this current debt discussion and turns to a host of other policy issues, we’ll be very much focused on making the case for our clients that we’re on the side of helping agencies and the Congress get the biggest bang for our buck in a leaner and meaner fiscal environment.
