<html> <head><style type ="text/css">body { font-family: "Bloomberg Prop Unicode I", Verdana, sans-serif; font-size:125%; letter-spacing: -0.3pt; color: #FF9F0F; background-color: #000000; text-align: left; } p {line-height: 1.25em; max-width:900px; width:expression(document.body.clientWidth > 900? "900px": "auto" );} h1, h2, h3 { text-align: left; font-weight: normal; color: #FFFFFF; } h1 { font-size: 130%; } h2 { font-size: 115%; } h3 { font-size: 100%; } #bb-style { font-size: 90%; max-width:900px; width:expression(document.body.clientWidth > 900? "900px": "auto" ); } b, strong { font-weight: bold; } i, em { color: #FEC54A; } pre { font-family: "Andale Mono", "Monaco", "Lucida Console"; letter-spacing: -0.3pt; line-height: 1.25em; } table { border: 0; font-size: 90%; width: 100%; margin-left: auto; margin-right: auto; } td, tr { text-align: left; } td.numeric { text-align: right; } a:link { color:#53B2F5; text-decoration: none; } a:visited {color:#53B2F5} a:active {color:#53B2F5} a:hover {color:#53B2F5} </style> </head> <body> <p>By Caroline Baum</p>&#xD; &#xD; <p>The president's aides made the rounds of the Sunday talk shows this week and gave us a taste of the Democratic talking points for the 2012 election. Asked why, in the face of almost $1 trillion in stimulus spending, the U.S. economy stalled out in the first half of the year -- real GDP growth averaged 0.85 percent -- administration officials fell back on that old standby, "uncertainty."</p>&#xD; &#xD; <p>On "Fox News Sunday," Gene Sperling, director of the president's economic council, attributed the economy's malaise to the "cloud of uncertainty" created by the threat of default.</p>&#xD; &#xD; <p>Over on NBC, Obama senior adviser David Plouffe said the "debt-ceiling cloud has harmed our economy."</p>&#xD; &#xD; <p>In what way? President Barack Obama <a href="http://www.whitehouse.gov/the-press-office/2011/07/25/address-president-nation">told us </a>last week that most people outside of Washington had never heard the term "debt ceiling" before.</p>&#xD; &#xD; <p>They need to find a better excuse. Uncertainty is here to stay.</p>&#xD; &#xD; <p>In any case, it's hard to blame a year's worth of high unemployment and tepid growth on the debt-ceiling debate. It was only last quarter that orders for nondefense capital goods excluding aircraft, a barometer of business spending, rose an annualized 17.5 percent. Only as the Aug. 2 debt-ceiling deadline approached did business focus on Washington theatrics.</p>&#xD; &#xD; <p>A comment from transportation equipment manufacturers in Monday's<a href="http://www.ism.ws/ISMReport/MfgROB.cfm"> ISM report </a>for July bears this out: "The looming debt ceiling has government agencies backing away from spending. Forecasting a slowdown in demand in the short term."</p>&#xD; &#xD; <p>The key phrase there is "in the short term."</p>&#xD; &#xD; <p>The debt-ceiling cloud of uncertainty will drift by shortly after the vote to increase it by $2.1 trillion. It will be replaced by other uncertainties, including the prospect of coming up with an additional $1.5 trillion of deficit savings over 10 years -- on top of the almost $1 trillion that's part of the package.</p>&#xD; &#xD; <p>Life is full of uncertainty, which right now is a euphemism for a lousy outlook. (Funny how uncertainty always seems to vanish in good times.) More damaging to the U.S. economy is the hangover from a multidecade debt binge. Both the federal government and the household sector need to pull in their horns. That certainty trumps any uncertainty out there.</p>&#xD; &#xD; <p>&#xA0;</p> </body> </html>