Fortune editor says U.S. needs another financial crisis

Sequester protest
Federal employees staged a demonstration protesting the federal budget sequester on May 7, 2013 in New Yor City. Hundreds of federal employees from the National Treasury Employees Union (NTEU) were joined by Internal Revenue Service (IRS), employees as well as agents from Customs and Border Protection (CBP) outside at New York's Federal Plaza.
Photo by John Moore/Getty Images

Allan Sloan, senior editor-at-large for Fortune, thinks the country needs another financial crisis to get back on track.

He wrote in Fortune that Congress has forgotten about the automatic federal budget cuts -- known as the sequester -- and hasn't done much of anything to help the sluggish economy.

Except for the Federal Reserve, which has consistently tried to help the economy, misguided though some of its actions may be, about the only real changes our government has made since the onset of the financial crisis were induced by fear. The Troubled Asset Relief Program, which played a vital role in restoring confidence and stability to the financial system, was passed only because the House's rejection of it on Sept. 28, 2008, set off a 778-point plummet in the Dow. That scared the House into reversing itself.

The only parts of the budget sequester -- an exercise in economic idiocy -- that have been modified are the FAA's cutbacks that caused air-travel delays bad enough to scare politicians into action and the food inspectors who were rescued after the meat and poultry industry spoke out in support of them. The sequester, remember, was a doomsday device created to resolve the debt-ceiling crisis in 2011, on the assumption that sequestration was so stupid and damaging that people would do anything to keep it at bay. Yet here it is.

Now, for the third time in two years, we're dealing with a debt-ceiling drama. The previous two times Republicans played this game -- the summer of 2011 and year-end 2012 -- they damaged the country's financial credibility for no discernible gain to themselves. Why they think the third time will be the charm is beyond me. I blame the Republicans (my former party) more than I blame the Democrats (my previous former party) for our national gridlock. But the Democrats are no prizes either.


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