Republican leaders in Congress like to talk about the need to foster more economic "certainty" and "reassure" the markets. Just yesterday, for example, House Speaker John Boehner appealed for cutting social insurance programs on the grounds that "Nothing – nothing – would send a more reassuring message to the markets than taking bipartisan steps to fix the structural problems in Medicare, Medicaid and Social Security."
Boehner sure has gall. In reality, the GOP's entire approach to governance is thwarting a functioning bipartisanship and seems calculated to foster maximum economic uncertainty and market jitters.
The best way to foster certainty and steady the stock market would be for the GOP to govern like it used to, back when there were still moderates in the party. In those days, like during the Reagan years, the GOP clearly positioned itself as the party that wanted to reduce taxes and the size of government, yet was flexible enough to compromise and raise taxes when necessary.
That same approach would remove a huge question mark now hovering over the economy: which is whether another crisis like the debt ceiling debacle in August lurks just around the corner. If Republicans were willing to raise taxes, and govern like normal deal-making politicians -- as opposed to ideological extremists -- than markets could be fairly confident that Washington was not going to sink into paralysis at some point over the next year.
Obviously, bipartisan governance is impossible without compromise. That means a Democratic willingness to cut spending and a Republican willingness to raise taxes. Period. If anything, Democrats on the supercommittee have over-embraced this outlook, last week offering up $3.2 trillion in deficit reduction that included just $1.2 trillion in tax hikes.
Boehner quickly rejected this excessively generous offer -- helping perpetuate uncertainty.
One reason that many who work on Wall Street are open to higher taxes, as polls have shown, is because they are practical people who understand the real world: you don't get to yes if everyone is saying no. By now those who actually make a living investing should realize that Republicans who care more about ideology than the economy are not their friends.
All sides have to give up something for government to work. Too bad not everyone running the government gets this elementary point.