Morici: Getting Out of the Budget and Debt Morass

NEW YORK ( TheStreet) -- The government shutdown is proving less draconian than presidential warnings, but failing to raise the debt ceiling -- and default would be another matter.

So many government activities have been deemed essential by legislation or presidential order that only 15% of the federal government is closed. The mail is moving and air traffic controllers are keeping the planes flying. Closed national parks are an inconvenience but at least the IRS has been furloughed from targeting conservatives for advocating reforms and other crimes against the revolution.

Still the shutdown can't go on too long without unprocessed small business loans and mortgages dragging growth, but resolution requires the president and Tea Party to recognize the unreality of their positions.

The Affordable Care Act is seen by many as an illegitimate law. Unlike all past major social legislation, the Democrats in Congress denied Republicans any opportunity to participate in its drafting, and dragooned it through the Senate by attaching it to a budget reconciliation bill requiring no Republican votes.

When the individual mandate raised serious constitutional questions, President Obama intimidated Chief Justice Roberts into writing a legally incomprehensive decision to avoid damaging the Supreme Court's longer-term standing.

Those episodes reduced the ACA to little more than a presidential edict.

To resolve the funding crisis, the president should agree to delay the individual mandate a year -- just as he has done for businesses -- and propose negotiations with Republicans that would make the law more universally acceptable. For its part, the Tea Party must let go of free market fantasies that we can return to the status quo ante -- the old system was broken, cost 50% more than what the Germans pay and delivers less-effective care by most measures.

If the debt ceiling is not raised, the United States does not have to default. Taxes will be collected and the Treasury will have 80% of the revenues needed to meet anticipated FY2014 commitments.

The president would have to set priorities to ensure that interest is paid. That entails spending cuts deeper than those imposed by the shutdown but hardly anything the nation cannot endure until the two sides reach broad agreement on the shape of future budgets. That requires the president and Republicans to compromise on entitlements and a growth agenda for the economy.

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