Is Congress to blame for a downshifting US economy?

Still, work is going on behind the scenes, especially in the Senate. The Finance Committee is meeting behind closed doors in an effort to devise a grand tax-reform proposal. The aim is to build trust across the aisle, and to keep election-year politics from shattering fragile discussions.

"We are all gloom and doom because there is gloom and doom in going over the cliff," says Sen. Mark Warner (D) of Virginia, one of the so-called Gang of Six senators dedicated to striking a "grand bargain" to solve America's debt and deficit problems. "But we are one budget deal away from regaining economic preeminence."

Is that view too sanguine, given that Congress seems to be lost in the woods in its search for financial direction?

Senator Warner thinks not. He is a proponent of a blueprint unveiled in late 2010 by Obama's bipartisan deficit reduction commission, known simply as Simpson-Bowles, after its authors. That plan, he asserts, would not cause immense financial pain.

The Bush-era tax cuts, for example, cost $4.5 trillion over 10 years. Simpson-Bowles would raise $2 trillion in higher taxes over that period, Warner says, leaving in place more than half of the Bush-era tax cuts. Entitlement programs get similar modifications – not insubstantial, but not gravity-altering, either.

"If this really was going to be some huge increased tax burden, if this really was going to be major surgery on Medicare or Social Security or Medicaid, then maybe it might be worthy of the battle-to-the-death mind-set of some of these folks," Warner says. "But it isn't."

Because the US can phase in its changes over the next decade, he argues, there won't need to be big immediate cuts like those seen in Greece or Britain. Moreover, Europe's precarious position is giving the US some breathing room.

"If Europe were not in the mess that they were in, we would not be seeing these massive inflows of capital driving down our interest rates," says J.D. Foster, a senior fellow at the Heritage Foundation. "So Europe, and the trouble there, has bought us time. We should not waste it."

But the longer the delay, the closer the US comes to facing deep cuts in government services and higher taxes, the hallmark of what House Budget Committee chairman Paul Ryan (R) of Wisconsin calls "bitter austerity."

But getting a deal, of course, requires Congress to move.

"I believe in miracles, but you don't want to bet on a miracle happening," says Rep. Jim Cooper (D) of Tennessee, one of the Simpson-Bowles plan's House sponsors. "That's essentially what we are doing."

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