I just concluded a panel at the Conference of World Affairs in Boulder, Colorado, with Gordon Adams, who worked at the Clinton Office of Management and Budget, and Alice Rivlin, who ran the Clinton OMB. 

Both were optimistic about resolving the fiscal and debt crisis that was brought into high relief in August, when congressional Republicans pushed the country close to default by playing chicken with the debt ceiling.

The headline in The Guardian best described the crisis that President Obama resolved by capitulating to the Republicans: "Tea Party holds US – and the world – to ransom."

The U.K. daily got it right. This was a hostage crisis. Eighty-seven freshman Republicans in the House, who cite no economic theory greater than the "family at the kitchen table balancing the checkbook," have held the country, and the world's economy, to ransom.

As I wrote in my last post, and at greater length in the July 15 issue, there is enormous revenue to be raised by letting George W. Bush's tax cuts expire in 2012, as they will unless the Congress again votes to extend them. The authors of the two tax cut bills included sunset provisions in their legislation because the deep cuts in tax revenue were (and are) not sustainable.