The Looming Showdown

Come next January, our dysfunctional system will have to function. Here’s one possible path toward an outside-the-box budget deal.

That broad approach may resolve the tax issue, albeit at the cost of some temporary turbulence, but it leaves open the debt limit and sequestration components of our early 2013 trifecta. Raising the debt limit and waiving the immediate spending cuts associated with sequestration will undoubtedly require entitlement changes. The question becomes whether the House Republicans accept the more modest entitlement changes discussed during the negotiations over the debt limit in 2011, or try to demand something more dramatic and problematic, such as block-granting Medicaid. The Administration would do well to aggressively combat the more radical proposals during the lame-duck session, lest it find itself boxed in unnecessarily in early 2013.

Before the critics start pointing out all the flaws in this strategy, it is worth emphasizing that none of the alternatives, including the one I sketch above, has an easy path to enactment. And that in turn underscores the key point: In a moderate-free Congress, it is much harder to govern—especially in a divided-government scenario. If nothing else, the likely drama later this year and early in 2013 will highlight the challenge of legislating in the new era of hyperpolarization.

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