Leon Panetta, a veteran top policy maker, said he believes the government shutdown will soon end and the debt ceiling will be lifted for a "limited time frame," though he added that the atmosphere in Washington is "the worst" he's seen in 50 years.
At a breakfast hosted by the Wall Street Journal, Panetta predicted that both sides would reluctantly agree to budget negotiations to head off a default, but he wasn't especially optimistic about the current state of deliberations.
The former Democratic House member, director of the Office of Management and Budget, White House chief of staff, head of the Central Intelligence Agency and secretary of defense, said it was critical that President Barack Obama become deeply involved in any negotiations. "He can't simply walk away from the table," Panetta said.
According to Panetta, the negotiations will be doomed to failure if Republicans aren't open to additional revenue. "If you're not willing to put everything on the table, then we'll have a breakdown," he predicted.
Panetta said he was skeptical about Syria giving up its chemical weapons. He said that his "greatest fear" for the Middle Eastern country is that al-Qaeda's influence is growing and the terrorist group "will establish a real base there."
But he said the greatest national security threat to the U.S. is "our inability to govern. And it's having one hell of an impact on our world position." The budget impasse, he said, was causing a "real weakening of our defense."
He said the political climate is the worst he's seen due to a "lack of trust." There's "no give and take," Panetta said. He acknowledged that deal-making is harder today than it was during the government shutdown in 1995-96, when he was a top advisor to President Bill Clinton. One added difficulty is that Congress no longer allows so-called earmark funds for special projects. "When we passed the Clinton budget I must have sold about six bridges," he recalled.
(Albert R. Hunt is a Bloomberg View columnist. Follow him on Twitter.)