I don’t know how most Americans feel these days, but I haven’t felt like this since just before Richard Nixon left office in 1974. Our political leaders (think “jumbo shrimp” or “military intelligence”) have just completed a grand game of chicken. They ended up in just the same position Neville Chamberlain was when he negotiated with Adolf Hitler.
I won’t dwell on the inanity of the negotiations or final resolution about spending, revenues and debt limits. Suffice it to say that cutting a little over $2 trillion from the projected 10—year deficit is akin to losing 7 pounds off a starting weight of 350. We will still have accumulated deficits over that time frame of $7 trillion, and we still confront total debt and vested liabilities of perhaps $90 trillion.
One side argues that we can’t raise revenues and the other argues that we can’t cut entitlements. I have no horse in the race, so to speak, so let me be clear: both sides are wrong, dumber than a pile of rocks, but much more dangerous. Entitlement costs, especially healthcare, will eat us alive: without real reform of affordable health delivery, not just reform of access to health insurance, the U.S. economy is doomed. More generally, at all levels, government has given away the future in order to buy votes in the present. It has been a truly bipartisan effort over decades. On the revenue side, we will need to increase taxes, broaden the tax base, and reform the tax code, or we are also doomed.
Because the negotiated settlement of the debt crisis was so lame, a ratings agency has downgraded the country. Instead of asking whether we are indeed in greater danger of long-term financial difficulties, everyone is blaming the bearer of bad news, pointing out that they weren’t exactly prescient in the recent financial crisis. Of course that is true but irrelevant. You don’t need a crystal ball to see that we have an unsustainable business model and no political process for change.
Reading the papers these days is remarkably uninformative. Increasingly, the media mixes editorial and news content. Each outlet picks a side and then puts all its weight behind a particular narrative. Silver-tongued/penned commentators rail against the lunacy of the other side without the slightest sense of humility or responsibility. Meanwhile, the American public divides into equally ill-informed and unthinking partisan camps.
Whenever I see this recurrent set of facts play out, I am reminded of one of the Dr. Seuss books (The Sneetches) in which one group has a star on their bellies and purports to be superior to the non-starred crowd. The latter gets an enterprising entrepreneur to put stars on, which causes the previously starred group to hire the same entrepreneur to remove their stars. In the end, of course, … Next Page »