Democrats are adamant that income taxes on those earning $250,000 or more must increase, and the federal estate tax reinstated, to cure the deficit.
Republicans are adamant that extended federal unemployment benefits must end, unless paid for by other spending cuts, to cure the deficit.
President Obama and congressional Republicans agreed Monday to a tentative deal that would extend for two years all the Bush-era income tax breaks set to expire on Dec. 31, continue unemployment benefits for an additional 13 months and cut payroll taxes for workers to encourage employers to start hiring.
Of course both decisions are eminently reasonable in the short term. We're in a depression, albeit one caused largely by the fact we've lived beyond our means since 1971. Raising taxes in the middle of a depression would be insane. Cutting off unemployment assistance in the middle of a depression would be cruel. So we compromise.
But one day, and that day's arrival was accelerated this afternoon, the Chinese will no longer compromise with us by buying our bonds. And if past, and present, performance is any guide, on that day and in the days following neither of the major parties will do anything to solve what will be our second great depression. They'll just lay blame, one complaining that the other failed to diagnose the tumor, and the other complaining that the one failed to treat it. Don't expect either party to do anything until they all twitch at the base of a bullet-riddled wall.
Fortunately, in the words of some Brit who hated America almost as much as the Chinese do, "in the long run we are all dead."