False prosperity of growing debt wears thin
by Tom West
The polls are showing that if the election were held today, nothing would change in Washington. That is, President Obama would be re-elected, the Democrats would retain control of the U.S. Senate but lose a few seats, and the Republicans would lose a few seats but retain control of the U.S. House of Representatives.
Meanwhile, spending by the federal government of money that it hasn’t raised through taxes continues to spiral upward. If you grasp economics at all, you should be able to understand that the level of economic activity we enjoy today has been inflated by spending money we will have to pay back in the future. It is a false prosperity.
Republicans say, if we raise taxes, it will slow the economy. Democrats say, if we reduce government spending, it will slow the economy. Both are right.
Then they insult our intelligence by running attack ads on TV that say the whole problem was caused by “the other guy.” Because our leaders don’t have the courage to speak of how dire things are, much less act, the problem continues to grow, like a cancer, and will soon consume us.
Since I’m not running for office, it’s easier for me to tell the truth, and that truth is that all of us are to blame. No one is without fault.
The Federal Reserve Board basically threw up its hands two weeks ago, announcing an open-ended plan to print money until people start investing again. It became clear to Ben Bernanke and friends that the Congress has neither the fiscal discipline nor the ability to find a compromise solution. Even worse, neither side has been able to convince the electorate that consensus can be found. Both sides believe that the other side is made up of “takers” of evil intent.
In this climate, bankers say that they have plenty of money to loan at rock-bottom interest rates. The problem is, investors are so frightened that they won’t borrow plus baby boomers are now moving into that stage of life where they want to get out of debt, knowing that their peak earning years will soon be behind them.
What is the solution? We’ve had plenty of ideas put forward. Last week, former Sen. Alan Simpson and Erskine Bowles wrote an article for USA Today that most political operatives would classify as a “non-starter.” It’s headline? “Debt solution must be bipartisan.”
What are the chances of that happening? Not good. Look at what is happening within each party. Do you hear any Democrats saying they are willing to cut social spending or reform entitlements by trimming the rate of spending growth? Do you hear any Republicans saying they are willing to raise taxes and reform entitlements by making them need-based?
The fact is that it is almost impossible to win an endorsement or a primary by preaching moderation. Months ago, both parties silenced those few courageous voices that not only advocated a middle ground must be found, but actually meant it.
What’s the solution? Simpson and Bowles co-chaired a bipartisan commission that issued a 66-page report in February 2010 on how to corral the debt. The Democrats controlled the government at the time and ignored it. The Republicans gained control of the House 10 months later, and, if possible, even more cobwebs of neglect collected on the report. Simpson-Bowles would reduce the debt by $4 trillion over the next 10 years, bringing the debt down to 60 percent of GDP by 2023 and 40 percent by 2035.
I don’t know about you, but I don’t want the taxes I pay to have to be used to pay off interest on a debt run up by selfish politicians attempting to buy favor with voters. I want my tax dollars to go toward protecting us from the bad guys around the world, maintaining only that infrastructure needed to facilitate business (i.e. transportation), making sure our young people are well- educated so they can compete in a global economy, and helping the elderly and the truly disabled.
I also want the private sector to be left alone enough to be able to create the wealth-creating jobs needed to fund the activities above at a sustainable level. It won’t be at a level that all would like, but it’s time to grow up and understand that growing our debt is only delaying the pain, not fixing the problem.
Tom West is the general manager of the Record. He may be reached at (320) 632-2345 or e-mail email@example.com.