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Worst Week inWashington


The Fix’s BY YLAN Q.MUI By Chris Cillizza C


hris Cillizza is away for the holidays, so no one will win this week’s WorstWeek inWashington title. (Congrats, or something.) But we’re de- lighted to announce that nextmonth, Chris will sift through the wreck-


age of 2010 and decide which politician, power broker or insider had not just the worst week in town, but the absoluteWorst Year inWashington. PastWorstWeek winners include the likes of Charlie Rangel and David Petra-


eus, Jimmy Carter and Clarence Thomas. President Obama won it once, as did Michele Bachmann. TheMineralsManagement Servicemade Elizabeth Birn- baumbriefly infamous. Adrian Fenty took a bow. Tom“Shirley Sherrod” Vilsack had his day. AndMichael Steele shocked the world by taking the title only one time. So whomight claimtheWorst Year inWashington? Go to wapo.st/worstyear to see past winners, vote for your favorites and suggest new candidates.


I


2010 Crystal Ball Andthe winner is ...


I


t took three weeks, one GOP land- slide in the House and a Democrat- ic concession in New York, but Out-


David Chalian


look’s 2010 Crystal Ball competition—one of the closest in the nearly three de- cades we’ve held the election-predicting contest—is finally over. Congratulations to David Chalian, political editor of PBS’s “NewsHour” and


first-time contestant, for taking home the crown! The victory is a “great thrill,” Chalian said in an e-mail. “Now with the Crystal


Ball undermy belt, I amhoping for another competitivemarquee election in Ne- vada next cycle to testmy skills at the roulette table.” It almost didn’t happen. For a while, it looked like the Daily Caller’s Tucker


Carlsonmight pick up crucial bonus points for coming close to the final Demo- crat-Republican breakdown in the House, but he wasmathematically eliminated Tuesday when Rep. DanMaffei (D-N.Y.) conceded to Republican AnnMarie Buerkle. So we wound up with a three-way tie between Chalian, NPR’s Ken Ru- din and Politico’s John Harris and JimVandeHei, who submitted a joint ballot. All three picked five of six categories correctly, and each got one bonus point


for coming closest in forecasting the vote totals in particular Senate or gover- nor’s races. So it all to came down to the tiebreaker prediction:What percentage of the vote will Christine O’Donnell win in the Delaware Senate race? Chalian: 41 percent. Rudin: 43 percent. VandeHarris: 42.5 percent. O’Donnell’s total was 40 percent—giving Chalian the victory. Many thanks to CNN’s Candy Crowley, HuffPo’s Arianna Huffington, The


Washington Post’s Chris Cillizza, ABC News’s AmyWalter and the AP government students at Oakton High School in Vienna for also taking part in the 2010 Crys- tal Ball. Don’t take the loss too hard, folks. 2012 is right around the corner. —Carlos Lozada


lozadac@washpost.com MIKE VOGT/IPT VIA ASSOCIATED PRESS Black Friday crowds at a Best Buy in Idaho, ready to bust down the doors on the first of many “special” holiday shopping days. Myths about the deficit 5 BY WILLIAM G. GALE S 1


uddenly, debt commissions—and commissioners, and reports, and even draft reports—are everywhere. The president’s bipartisan National Commission on Fiscal


Responsibility and Reform is due to vote on its final recommendations by Wednesday (its co-chairs having put forward a draft plan earlier this month). And earlier this month, another commission—the Bipartisan Policy Center’s Debt Reduction Task Force, led by economist Alice Rivlin and former senator Pete Domenici—reported its own plan. Budgets may be boring, but the stakes before us are exceedingly


high. As we go about reducing the deficit, who will pay which taxes? How will we defend our country? And how will we treat our elderly? Unfortunately, questionable thinking and outright distortions by critics from across the political spectrum are getting in the way of these and other difficult decisions.


The United States is on the verge of a fiscal crisis.


Not really.Greece faced a fiscal


crisis earlier this yearwhen it had to slash its deficit


immediately or risk capital flight and economic collapse. Ireland is in the same straits now, and Portugalmay soon be headed thatway.TheUnited States faces a very different situation. Long-terminterest rates on government debt are low. Investors are not fleeingU.S. capitalmarkets; instead,America continues to be a magnet for capital fromaround the world. Of course, the lack of an imminent


crisis hardlymeans there is no problem. If our current policies continue, by 2020 net interest payments on the national debtwill exceed $1 trillion, 20 percent of federal revenues, annually—enough


for rating agencies to downgrade the quality ofU.S. debt,which in turn would raise borrowing costs and increase the deficit further. Even in the absence of a crisis or a


downgrade, the effects of persistent deficits are substantial. For example, the InternationalMonetary Fund has found that for every 10 percentage- point increase in the national debt relative to the size of the overall economy, economic growth in an industrialized countrywill fall by 0.15 percentage points. Thatmay not sound likemuch, but


theUnited States is on a path for its debt-to-GDP ratio to rise fromabout 40 percent in 2008 to about 90 percent in 2020.Thatmeans that our annual growth rate could fall bymore than 0.75 percentage points—with major negative consequences for employment and standards of living.


f you discount it, theywill come. That’s the philosophy of retailers


at the holiday season, judging by the predictably exuberant quality of their ads. Doorbuster deals! Mid-


nightmadness!Gobblepalooza! Ready, set, charge! Such hyperventilation has become par


for the course on Black Friday, the day after Thanksgiving that traditionally kicks off the holiday shopping season. That one day accounted for nearly $11 billion in sales last year, according to research firmShopperTrak. But as the country stumbles toward


economic recovery, one short day is ap- parently no longer enough to win the hearts and minds — and wallets — of American consumers, particularly when retailers rely on holiday shopping to ring upasmuchashalfof theirannual sales. In recent years, the industry has filled the calendar with a slew of new landmark shoppingdays tokeepconsumers firedup right throughChristmas. ThereisSmallBusinessSaturday, start-


ed by American Express this year to send customers to those long-suffering mom- and-pop shops. Then comes Cyber Mon- day, created by a trade group, when we return to work after Thanksgiving and collectively slack off by shopping online. Free Shipping Day, the brainchild of a couponsite, comesnext.AndSuperSatur- day, a retail industry term, rounds out the


EZ BD


KLMNO


SUNDAY, NOVEMBER 28, 2010 Black Friday and other dark days


season on the lastweekend before Christ- mas. Exhausted yet?There’smore. As the calendar has become more


crowded, retailers have resorted to in- creasingly far-fetched ideas to stand out. Infomercials tried to muscle into the game with a short-lived Info-Mania Sun- day in 2007. That was the same year Wal-Mart called forFriday to be stretched over twodays —a48-hourBlackFriday to accommodate its deals. This year, social coupon site Groupon wins “Most Cre- ative”with the introduction ofGrouponi- cus, a “holiday” when deals last longer thanthe usual one day. “Believers acknowledge that all other


winterholidaysareobsolete,” statesoneof the tenets ofGrouponicus. This ridiculousness is rootedinhistory.


The retail industry has shaped our cele- bration of Christmas even before the first miracle on 34th Street. In 1939, as the country was recovering from the Great Depression, retailers lobbied President FranklinD.Roosevelt tomoveThanksgiv- ing one week earlier to give people more timetoshopfor theholidays,ostensiblyto boost the economy. He caved, but Con- gress changedit back to the lastThursday ofNovemberwithintwo years. Two generations later, stores are in the


samepositionandare turningtothe same techniques. Too much is riding on the holiday season to allow shoppers to browseontheirownvolition,withholiday salesexpectedtoriseameager2.3percent over last year’s total, to $447 billion.


Soretailersareginningupspecialocca-


sions for us to shop. There can be kernels of real consumer behavior trends behind them—onlineretailers sawspikes insales before they coined the term“CyberMon- day” five years ago, for example—but the equation can flip quickly. Now, it is often the sales that are in search of shoppers, rather thantheotherwayaround.Anyone want a $19.99 Martha Stewart enamel cast-iron pot, down from $39.99 at Macy’s? Anyone? Iwonderwhatwouldhappenifretailers


just relaxed and consumers shopped free- range, grazing stores at their ownspeed. If no one worried that they had missed the Biggest Sale of the Year! Or, worse, that theywere duped because the true Biggest Sale of theYear!was still to come. I do love a good deal. But the limited-


time-only pressure can be bruising, and I like to believe that we would still shop— and more merrily — without it. Surely it can’t be necessary to camp outside a Best Buy a full 10 days before Black Friday, as the company said one family did this year at a store inSt. Petersburg, Fla. Maybe instead of busting down the


doors,we could just amble through them. That’s not what the retailers want, though.Theywantour calendars filled, so that now, three days afterThanksgiving, I already feel behind.


muiy@washpost.com


YlanQ.Mui is a business reporter for The Washington Post.


Just because there is no crisis right


now, however, doesn’tmeanwe can afford towait. Ifwe address our fiscal challenges sooner,we canmake gradual—if difficult—changes. Ifwe wait too long,we reallywill be facing a crisis, and the necessary adjustments will be farmore severe and sudden.


2


The deficit commissions should propose reforms that are politically viable.


No solution to this problemis


going to be politically popular. But even ifCongress


disregards the current proposals, dismissing themas politically unfeasible, thatwill notmean the commissions’ effortswill have failed. By publicly proposing deficit


solutions, these commissions already have fulfilled theirmain function: to start a serious national conversation. While the combination of spending cuts and tax reforms recently suggested byErskineBowles andAlan Simpson—the co-chairs of the president’s deficit commission —may not evenwin the support of all the panel’smembers, theymight induce the commission’s anti-tax and pro- spending forces to release their own proposals.Thiswould allowvoters and policymakers to compare plan against plan—and that is exactly the discussion the country needs to have. Any eventual solution to the deficit


problemwill involvemeasures currently considered politically impossible. For example, anti-tax advocates have objected that the co- chairs’ planwould constitute a tax increase—even thoughCongress would raisemore revenue by doing nothing for the next 10 years than it would by enacting the plan. Social Security supporters,meanwhile, have heaped criticismonBowles and Simpson for their proposal to raise the early and normal retirement ages by one year per generation for the next two generations—even though the average lifespanwill probably increase even faster, so retirement periodswould still grow. Objecting to these proposals


without proposing alternatives is not productive.


3


Social Security has a surplus, so it shouldn’t be cut.


Supporters of Social Security


argue that the program’s 2010 surplus, combinedwith its


projected 27-year solvency, should exempt it fromthe budget axe. But ruling out cuts is a bad idea.


First, Social Security faces a long-term deficit.And even if the programwere running a long-termsurplus, the


simple arithmetic of the overall fiscal situation dictates that everything— everything—should be on the table. Simply reducing earmarks; limiting


waste, fraud and abuse; or cutting back on governmentworkerswon’t come close to solving the problem. Social Security,Medicare,Medicaid, defense and net interest payments typically account for 70 percent of federal spending and are on course to account for 80 percent by 2020.Any serious effort on the spending side needs to address each of these items. Medicaid andMedicare pose the


biggest challenges to long-termfiscal conditions, of course, but defense cuts are also critical. (Whilewe’re on the topic of defense, it’sworth noting that officials such as Secretary of State HillaryRodhamClinton and the chairman of the JointChiefs,Adm. MikeMullen, have said that the deficit itself poses a threat to national security.) Finally, keeping Social Security


reformon the table isn’t just good fiscal policy, it’s good politics. It underscores the importance of shared sacrifice. Ifwe are to find a solution that is politically sustainable,we cannot exempt large segments of society frompitching in.


We can balance the budget without raising taxes.


impossible in a political sense. Budget disciplineworks onlywhen


4


it is imposed on both sides of the ledger. In 1990 and 1993, the last time we faced a serious fiscal crunch, Congress did just that, slashing spending and raising taxes. In contrast, in 1981 and 2001,massive tax cuts did not lead to reduced spending, despite the hopes of thosewho espouse the “starve the beast” theory of fiscal reform. Instead, the tax cutswere


accompanied by big increases in spending, thus boosting the deficit fromboth sides.The logic is clear: If some politicians reward their constituents through tax cuts, other politicianswill see no reason that they can’t reward their own constituents throughmore spending. It is only when fiscal discipline is comprehensive and coordinated that itworks and endures. Moreover,we shouldn’t balance the


budgetwithout tax increases—they are the onlyway to ensure that high- income households pay a fair share of the deficit burden.Without higher taxes as part of the fiscal reform package,middle- and low-income households—which tend to feel


Although it ismathematically


possible to balance the budget without raising taxes, it is


spending cutsmost acutely —will end up bearing almost all of the burden. The nation rapidly raised tax


revenues and rates duringWorldWar II; for a long time, those rates persisted, and the economy performedwell.Well-designed tax increases could help the economy and the budget now, too.We should cut the mortgage interest deduction,which is expensive and regressive and helped deepen the housing crisis.We should impose taxes on greenhouse gases, for revenue and for the environment.And we need to tax consumption, to reduce our propensity to overspend.


5


A newshort-termstimulus would be fiscally irresponsible.


TheRivlin-Domenici plan


proposes higher near-term deficits as ameans of economic


stimulus, to be followed by cuts down the line. Somemay see this as Washington-style “business as usual” —always putting off cuts until tomorrow—but itmakes sense economically.With the recovery stalling, spendingmore and taxing less nowto get the economy going is perfectly consistentwith the need for medium- and long-termfiscal discipline.Astrong economy can do the budget a lot of good by boosting tax revenues and reducing spending on unemployment benefits and other need-based programs. As always, there is a balancing act


between immediate and longer-term concerns. Fiscal responsibility requires thatwe spend stimulus funds wisely on projectswith the biggest bang for the buck.According to the CongressionalBudgetOffice, these would include infrastructure spending, aid to the states, higher unemployment benefits, hiring credits and a payroll tax holiday. Theotherkey toa responsible


stimuluspackage is timing.Short-term stimulus cannotbecome long-term policy.Congress shouldexplicitly legislate anenddate for anynew stimulus andcouple itwithamedium- termdeficit-reductionpackage. Together, thesepolicieswoulddomore tospur the economy andcurbthe deficit thaneitherwouldalone.


WilliamG.Gale is a senior fellowat the Brookings Institution and co-director of the Urban-Brookings Tax Policy Center.


on washingtonpost.com


3Willilam G. Gale will discuss at washingtonpost.com/liveonline.


this article Monday at 11 a.m.


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