Thank goodness cooler heads prevailed. Right down to the wire before both sides came together but they averted Armageddon. At the last moment, the NFL owners and players union agreed to compromise and we will have football this fall!
Meanwhile, back in Washington, D.C., our other favorite pastime, politics, has played out with both sides dug in on deficit debate in what looked like a modern-day rerun of World War I trench warfare.
The debt ceiling has now been raised and we have a modest down payment on deficit reduction. However, all of this uncertainty and partisan wrangling has weighed on the financial markets. Our leaders were basically running around yelling, "Fire!" in a crowded theater. The news media and talking heads of course fanned the flames. But it was self-inflicted wound, no doubt about it.
This obsession with the markets is unhealthy. I swear I'm going to wake up someday (in heaven, hopefully) and see a newspaper headline "Giant meteor destroys the world. Dow plunges 789 points!"
The economy is sputtering and the unemployment rate stands at 9.2 percent. It is 15.8 percent if you include discouraged workers who have given up looking but would like a job. This economic recovery is the weakest since World War II.
Ask any student in an introductory macroeconomics class what should be done and they'll say more Keynesian government spending and an easy monetary policy to jump-start the economy. We tried that. Didn't work, or hasn't yet. And how can you have more spending when our national debt is already $14.3 trillion and every deficit dollar adds to the debt?
The Federal Reserve has kept short-term rates close to zero for two years now. It has dramatically increased reserves in the banking system -- the stuff that our money supply is made of -- to no avail. The money supply is growing only modestly. Looks like the Fed is "pushing on a string."
Besides these constraints, Republicans and Democrats don't trust each other. That makes negotiating and doing the right thing tough -- especially with an election coming up.
The Heritage Foundation has accused President Obama of a "gorge the beast" strategy. He exploded government spending and the deficit. Now critics claim he is arguing for higher taxes to close the gap, which was what he was after all along.
Some say Ronald Reagan exploded the deficit in the '80s by cutting taxes in order to argue that government spending must be cut to address the growing deficit. That was a "starve the beast" strategy. But back then both the relative debt and deficit levels were half of today's. A growing economy eventually got us out of that hole.
One bright spot is that companies are very profitable and sitting on lots of cash. They might spend that money if there was more certainty about the future. Washington could help. Stop demonizing business, reduce regulations and get some of those trade deals done.
Democrats must agree to cut entitlements somewhat or we'll never fix the debt/deficit problem. Government spending is almost 25 percent of the economy and that must come down. Republicans need to recognize that powerful demographics and promised entitlements suggest government spending will need to be above the long-term average of about 20 percent.
I'm OK with letting the Bush tax cuts expire -- for everyone -- in 2013. We are all in this together and class warfare is self-defeating. Raising taxes on "millionaires and billionaires" (defined as anyone making $200,000 or couples making $250,000) isn't nearly enough. If you want to put a big dent in the string of trillion-dollar deficits, raise personal income taxes on everyone, including the 50 percent who currently pay nothing. That's my definition of fair. Better, implement a simplified tax structure.
Despite the debt-ceiling agreement, there is much more work to do. As Winston Churchill said after finally winning a battle early on in World War II: "Now, this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning."
Jeff Pantages is an investment adviser in Anchorage.
By JEFF PANTAGES