Monday Morning: Deadlock is good, deadlock works … in D.C.

A political stalemate ? How terrible.

Well, maybe not so terrible.

Almost forgotten in the furor over the still-undecided presidential election is the fact that Congress will be virtually evenly balanced.

At deadline, the Republicans held a 221 to 211 lead in the House races and the incoming Senate was split 50-50.

Given that both parties are fractious – a few Republicans or Democrats are always opposed to some proposal advanced by their respective parties – it will be virtually impossible for Congress to pass any significant legislation.

Social Security reform? Forget it. Health-care reform? Not likely.

If Vice President Al Gore or Gov. George W. Bush becomes president, either will be able to veto legislation without fear of an override. The stage will be set for legislative gridlock.

But is that so bad? Yes, the country has some problems that need attention. Without changes, Social Security will run out of money within the working lifetimes of people now entering the work force, and the longer we delay addressing the situation, the more painful the solutions will be.

Medicare is in even worse financial shape. The health-care system in general also needs attention. The military either needs more money for new equipment or it needs fewer assignments. The environment needs some attention.

But there is no consensus as to what shape the solutions should take.

There is not even a plurality, judging by the election results. That suggests more debate is needed to persuade the voters of the merits of one solution or another.

Until a majority of voters is persuaded in one direction or another, it is probably best that nothing is rammed through Congress. None of the problems is so serious that action can’t be postponed for two more years — until the mid-term congressional elections.

My money

There is a bright side to this impasse: Neither party will be able to significantly increase government spending or pass significant tax cuts. That means the surplus won’t be squandered during that time.

Now, personally, I would like a tax cut, even if only a modest one, just to reaffirm that the money I earn belongs to me, and not the government, and that I should have first call on it if the government doesn’t really need it.

If there’s a surplus, the government doesn’t really need it, though it might like it.

But I’m willing to forgo a tax cut for a few more years if it also means government spending is controlled a while longer.

If I can’t have a tax cut, I want the surplus used to pay off a good portion of the national debt.

I do not believe that that would happen if either party were in a position to spend it or give it away.

I don’t want the national debt to completely disappear.

As Alexander Hamilton said, the national debt is a blessing if it’s not too large. It lubricates saving and investing in the economy by, among other things, providing a risk-free rate against which to price more-risky securities.

So let’s take at least the next two years to pay off some more of the national debt while we continue to debate the other priorities.

Once we decide, we might have better solutions, and we’ll be in even better financial condition to implement them.

Mike Clowes is the editorial director of InvestmentNews

Related Topics: Just Thinking