In 2012, America's Greatest Economic Weakness Was Its Government
As 2012 comes to a close, partisanship is slowing our economy, making our children unsafe and reducing our confidence in the future. In 2008, egregious behavior by bankers and regulators could be blamed for gutting the economy. In the 1970s, high union wages could be blamed for reducing the competitiveness of American industry. Today, our political dysfunction is our biggest economic and social liability.
Example one: the fiscal cliff. After two months of absurd political posturing, the country is four days away from a wholly preventable economic body-blow that will stall a fragile recovery. The same dynamic that occurred last summer during the debt-ceiling fiasco is repeating itself. The failure to compromise on fiscal policy is eroding consumer confidence and slowing the economy just as growth begins to take hold.
The problem is not that American companies and workers are uncompetitive. It is not that manufacturing jobs are flowing overseas. Those economic trends have largely played themselves out. It is a new dynamic: political deadlock handicapping our economy.
Michelle Meyer, senior U. S. economist at Bank of America Merrill Lynch, said this week that "fiscal cliff" gamesmanship is a drag on the economy. Even if the cliff is averted in the next few days or weeks, Meyer estimated that the U.S. economy will grow by just 1 percent in the first quarter of 2013, a third of the 3.1 percent posted in the third quarter of 2012.