The Fiscal Cliff and the Federalist Papers

Nels Johnson

Federalist Paper 10 and Bipartisanship

The problems presented by the Fiscal Cliff are real, and an impending danger. If no deal is reached between the President and Congress, then on January 1st, 2013, all of the Bush Tax Cuts expire, the temporary payroll tax cuts expire, the end of certain other tax breaks expire, Unemployment Insurance is set to expire for millions of out of work Americans, and the spending cuts agreed upon by the President and Congress from the summer of 2011 kick in, cutting billions of dollars in spending and affecting over 1,000 government programs, including the defense budget and Medicare.

The situation surrounding the Fiscal Cliff is grave, and discouraging. There’s a lot of handwringing and rightly so. In the past week the Dow Jones Industrial Average has dropped several hundred points as a result of fears about the inability to find a resolution to the Fiscal Cliff. Wall Street is afraid that Fiscal Cliff negotiations will repeat the 2011 Debt Ceiling negotiations where by some estimates Congress and the President will wait until mere hours before the end of 2012 to reach an agreement, or worse. All of this sounds gloomy, but there is actually a real opportunity for a deal to get done – one that allows us to tackle our nation’s debt in a substantive way while protecting programs that care for the most vulnerable in our communities. A deal can be reached and James Madison has shown us the way.

In 1787, James Madison published the Federalist Papers, providing arguments for why the various states should ratify the United States Constitution. In Federalist No. 10, Madison was responding to a time similar to our own, as articulated by Alexander Hamilton in Federalist No. 9. In Federalist No. 9, Hamilton argued that all of the various parties, or factions of 18th Century America were undermining the government’s ability to work effectively and therefore, the government should exclude the destructive factions that were doomed to tear apart the new America. The parallels between 18th Century new America and today are obvious. We live in one of the most politically-polarized times in American history, where most people question whether our federal government can function well enough to pay its bills on time, let alone tackle the big issues of the day. We need help!

Madison offered two ideas for how to limit the damage to fledgling American government caused by factions. The first idea was to remove the troubled factions or reduce their ability to participate in the system. Madison argued that such an approach was everything the New World stood against and such a move would destroy the very idea of a democracy. Instead, Madison argued that what was needed was a Republic, one that was big enough where the various factions could find commonality and solutions, rather that partisanship. Madison believed that what made the American Experiment different from any other one in the past was the process by which the government would solve the biggest problems of the day. Various parties and factions would debate vigorously, try to persuade others to agree with their solutions, but at the end of the day, compromising for the good of the country and getting the best deal possible. Madison’s idea of coalition building around a particular issue, instead of partisan fighting, has proven successful. For over 300 years, we’ve abolished slavery, provided Social Security, Medicaid, Medicare, passed the Civil Rights Act; the list goes on and on. The President can build a coalition around his plan incorporating various and divergent factions like Wall Street, defense contractors, poverty advocates, etc., groups who have a direct and vested interest in avoiding the Fiscal Cliff at all costs.

As the Euro-Crisis in Europe has shown, solving the nation’s fiscal challenges is of paramount importance to the health and wellbeing of a nation. But the Fiscal Cliff is about something even bigger - more fundamental and truly seismic; it’s about whether the process of American government still works. Process is one of the things that distinguish America from the rest of the world. It’s the only nation on earth where rival factions can engage in the brutal battle of an issue, fighting like hell for every inch and idea, but at the end of the day, compromise for the best deal possible for the country. Madison understood this, and that, as a nation, we are strongest when we rally not around parties or factions, but come together as a coalition around the grand issues of the time, and solve them together.

As the Fiscal Cliff negotiations get underway, may President Obama and Speaker Boehner reread Federalist No. 10 and understand the American process of vigorous debate, coalition building and compromise still works; the fate of America depends on the process working.

By Nels Johnson Nov. 26, 2012