Bloomberg View: You Call This a Deal?; The Deceptive Liability of 99-Week Jobless Benefits

The deal reached by the U.S. Congress to raise the $14.3 trillion debt ceiling spared the nation an immediate catastrophe while potentially setting a path for longer-term disasters. Financial markets’ initial euphoria over the agreement faded quickly. The dollar gained against the euro and the yen but declined to a record low against the Swiss franc. The markets’ response underscores an unfortunate reality: While the government may have averted a self-inflicted disaster, it hasn’t solved fundamental problems and appears to have created new ones. What the U.S. needs is a deficit reduction plan to address its long-term fiscal gap without weighing too heavily on a weak recovery. Instead, it’s getting the opposite: immediate spending cuts that threaten the recovery in the short term but aren’t substantial enough to fix long-term budget problems.

Make no mistake: The U.S. is a wealthy country that can afford to solve its budget problems. Closing the fiscal gap will require political leaders to embrace more ambitious policies and to build popular support for the sacrifices they will entail. These tasks will only be more painful if markets ultimately force them on us. Bold measures—including overhauling entitlements, rethinking the uniquely dysfunctional U.S. tax code, and considering a federal value-added tax—must be on the table. At an estimated 30.5 percent of gross domestic product in 2011, the total tax burden on Americans is the lowest among the Group of Seven industrialized nations.