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Obama urges a budget without brinkmanship. But can Congress stop the insanity?

In his State of the Union address, Obama calls on Congress to reject manufactured crises as a way of doing its budgetary business. But with fiscal flash points looming, the temptations are powerful.

By Staff writer / February 13, 2013

President Obama talks with members of Congress as Senate majority leader Harry Reid (D) of Nevada (l.) departs with him at the conclusion of the president's State of the Union speech on Capitol Hill in Washington, Tuesday night.

Jonathan Ernst/Reuters

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Washington

President Obama presented Congress with a plea for sanity during his State of the Union address Tuesday night.

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“Let’s set party interests aside and work to pass a budget that replaces reckless cuts with smart savings and wise investments in our future,” Mr. Obama said. “And let’s do it without the brinkmanship that stresses consumers and scares off investors. The greatest nation on Earth cannot keep conducting its business by drifting from one manufactured crisis to the next.”

The problem? Everyone in Washington – Republican and Democrat – agrees that the 11th-hour, shrouded-in-secrecy fashion in which Washington handles its financial matters is profoundly insane. Yet none are willing to give up their own points of fiscal leverage to allow the rational, top-to-bottom review of the nation’s taxing and spending policies that everyone says the town needs.

First, a quick review of impending fiscal flash points. Some $85 billion in spending reductions (known in D.C. as the “sequester”) that will hit nearly every function of government outside federal health-care programs, Social Security, and military personnel, land on March 1.

At the end of that month, funding runs out for the federal government’s general operations (via a “continuing resolution” in D.C. speak). And the nation must raise its borrowing authority (aka the “debt limit”) sometime during the summer.

But the first installment, the sequester, is a good example of Washington making lots of noise about rationality while a given fiscal fuse burns.

Congressional Budget Office Director Doug Elmendorf recently testified that those cuts would reduce gross domestic product (GDP) by more than half a percentage point in 2013 and cost some 750,000 jobs. In an economy crawling along at about 2 percent annual growth in GDP and some 150,000 jobs created per month, that’s a big deal.

But just as the newly reelected president was able use the countdown to across-the-board tax increases with the fiscal cliff to extract tax increases from a recalcitrant GOP, Republicans are patiently waiting for Democrats to make their day as spending cuts loom.

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