As members of Congress fiddled and postured while the debt ceiling deadline approached last week, the state of Maryland sold $512 million in bonds for school construction and a variety of other projects. There had been earlier indications that the sale would be postponed until after the debt ceiling crisis was resolved, but state officials found a ready market for state bonds at low interest rates.
The good news in that story involves both the successful sale and the reflection that it presents of continued confidence in the way that Maryland manages its finances. The long shadow that looms over the state is the likelihood that federal debt and budget issues could impact Maryland’s economy and even its credit rating in the near future. All analysts agree that a federal default would have had grave consequences for Maryland’s economy. Perhaps more ominous, if that’s possible, is that the “solution” to the debt standoff is also likely to have a significantly adverse impact on Maryland.
The state has certainly benefited enormously from the presence of federal facilities within its borders and from government spending. What has always been one of Maryland’s chief assets is now being described by some as evidence of over-reliance on the federal government, but that may be a bit of a fashionable over-reaction. Tea party preferences notwithstanding, the federal government is not about to go away, and Maryland will continue to have the advantage of location.
Martin O’Malley, in announcing the bond sale, contrasted Maryland’s balanced approach to its financial situation —- significant budget cuts coupled with tax increases -— with the insistence by Republicans on a cuts-only approach to the federal deficit. While the governor might be accused of playing to a national political audience with that comment, many others, including the bipartisan Bowles-Simpson Commission, have reached the same conclusion.
Even as the totally unnecessary crisis over raising the debt ceiling has been resolved, what is most clear is that Maryland’s economy is increasingly intertwined with the national one and that political decisions made in Washington will greatly impact the ability of state policy-makers to keep their own financial house in order. The downward flow of bad news also will have a significant impact on the finances and programs of local governments in Maryland. Whatever the scheduled agenda, you would expect this topic to be the main area of discussion at the August meeting of the Maryland Association of Counties.
Beyond the economic impact, however, what the debt ceiling crisis brings into question is the ability of our political system to resolve important issues facing the country. Or to put it more starkly, are we still able to govern effectively?
Most Americans believe that the biggest challenge we face involves jobs and the lack of predictability of economy growth and stability into the future. (Do you remember John Boehner’s press conference shortly after the 2010 election in which he promised that the Republican focus would be on jobs, jobs, jobs?)
Yet, federal budget cuts are guaranteed in the short term to worsen the jobs situation and to have a negative impact on state and local economies. Misreaders of the Great Depression forget that the economy was recovering until 1937, when the emphasis changed from stimulating the economy to balancing the budget. The New Deal didn’t fail; it was stopped prematurely.
To be sure, the debt is a real problem, but not one that came about overnight or even primarily on Barack Obama’s watch. These hyper deficit hawks were nowhere to be seen when George W. Bush turned a large surplus into a huge deficit by cutting taxes for the wealthy, fighting a war (actually two) for the first time in our history without a tax increase to pay for it, and, by his administration’s lax oversight of regulations, helped enable the reckless and irresponsible behavior of the financial services and mortgage industries.
A rational political system would focus first on getting the country out of its current economic doldrums and then devising a balanced long- term approach to debt reduction. Instead, we have the spectacle of government by slogans, confrontation and demagoguery.
As you watch the performances in Washington, you realize that the true ancestors of today’s extreme Republicans are not the patriots of our Revolutionary War period, but rather the ancient Roman Emperor, Nero. These ideologues have been allowed by the political leaders of both parties and by the media to dominate the public debate even though they represent a small minority of opinion in this country.
For anyone who wants to understand how the current mess could have been dealt with constructively, read Thomas Friedman’s July 27 column in The New York Times. As he correctly notes, neither political party has served us particularly well. Political gain rather than what is right for the country seems the primary motivation. No wonder political cynicism and anger are high and rising.
Laslo Boyd is interim chief of staff in the Office of the President at Towson University. He can be contacted at email@example.com.