Ramping up ideology

There must be at least some envy in Europe over Washington's luxurious deficit reduction timetable.

Lawmakers on Capital Hill -- six Democrats and six Republicans -- on a so-called "supercommittee" -- have been hashing out ways to reduce the federal deficit by at least $1.2 trillion over a 10-year stretch. How Athens would love to have that much time.

Many consider the euro already past the point of no return. Given the size of Italy's deficit and the rate of economic growth expected, some have concluded that the eurozone's third largest economy will require bailouts above and beyond the expectations of any fund set up to stave off default.

Europe's needs are immediate. In Washington, lawmakers have given themselves the luxury of 10 years to accomplish its goals.

Invariably, part of any painful change dictated from Capital Hill is the agreement to put off the pain until at least the day after the next national election. Why make painful changes before an election? Nobody in Washington likes that idea.

When it comes to budgets, there are other common strategies that make no sense. One is to always use the most optimistic numbers. That makes for optimistic stump speeches even if it leads to solutions that fall short.

Another tried and untrue strategy is to ignore the unexpected. Fitch's Rating Service said this week that debt contagion in Europe could affect U.S. banks, which, in turn, would slow the U.S. economy. Some lawmakers will undoubtedly pretend they slept through that news cycle. Why plan for something so unlikely as a second recession even if some have already said is on the way.

There is no question, however, that Washington is seriously torn by ideology and the "supercommittee" is not only no exception, it was set up from the start as the front line for ideological debate. Given that luxurious 10-year time frame ideology was instantly exaggerated. If there are 10 years at stake, a sacrifice on some fundamental point seems all the more unreasonable.

The Wall Street Journal said Friday Democrats on the committee are pushing for the end of the George W. Bush era tax breaks for households that make more than $250,000 while extending the breaks for those who earn less.

This led House Speaker John Boehner, R-Ohio, to say, "You can lead a horse to water, but you can't make him drink."

That expression includes two concepts: The concept everyone notices is the failure of the horse to take a drink. The concept often overlooks the assumption, apparently a faulty one, that the horse was thirsty in the first place.

Here's a political trick that could work: Make a change in a manner that looks like it does not violate a campaign promise even if it does.

Sen. Pat Toomey, R-Pa., has put together a plan that would shrink the deficit by $1.2 trillion. It includes raising $250 billion in taxes by eliminating tax reductions for wealthier taxpayers. In return, the proposal includes making lower tax rates permanent, the Journal reported.

"To get the deal now making those cuts permanent is a very attractive prize. If the price for the prize is to pay $250 billion over 10 years ... that's a deal I'd take," said Ken Kies, a former tax adviser to House Republicans.

But Democrats are not buying. Permanently lower tax rates and cuts in prized social programs, like Medicare? That's a tough sell, House Minority Leader Nancy Pelosi, D-Calif., said.

In international markets Friday, the Nikkei 225 index in Japan lost 1.2 percent while the Shanghai composite index in China shed 1.8 percent. The Hang Seng index in Hong Kong dropped 1.7 percent while the Sensex in India gave up 0.5 percent.

In Australia, the S&P/ASX 200 dropped 1.9 percent.

In midday trading in Europe, the FTSE 100 index lost 1.2 percent while the DAX 30 in Germany lost 0.4 percent. The CAC 40 in France shed 0.2 percent while the Stoxx Europe 600 lost 0.6 percent.