As ever, I was frustrated in that the best approach to the fiscal and economic problems we face seems pretty obvious to me but nearly impossible to implement. It has three component parts.
- The top priority is a healthy and growing economy. All sides agree that economic growth is absolutely necessary to escape the morass we’re in. There will be lots of political arguing about this, but the unfortunate reality is that the government can’t do a lot to rescue the economy except at the margins and around the edges.
- We also desperately need fiscal responsibility which includes a comprehensive plan to deal with government spending and deficits. Our current path is simply unsustainable.
- That said, now is not the time to be cutting programs designed to help people in trouble and survive what is still a very lousy economic environment. Moreover, firing government workers when there are few job prospects for them in the private sector doesn’t strike me as a good plan for fixing things.
All of this suggests a pretty straightforward (if difficult to execute) solution — use governmental resources to keep things from getting worse in the near-term and go about doing those things that only governments can do (like fixing our collapsing infrastructure). Even though it is a monumental longer-term problem, we can borrow money today at extremely cheap rates to do so. When economics conditions improve, we can then attack the fiscal problems head-on.
But here’s the problem. There is not a whit of evidence that our bloated and entitled government will ever have the discipline to impose austerity by curbing its spending habits without being forced into it by political mandate. Even worse, it is least likely to do so when times are good, revenues are high and political largesse is easy to bestow.
Sadly, that means I have no clue what is the best way forward. The approach most likely to succeed in the long-run is probably to impose austerity now since there seems to be some real support for it, election results allowing. But if we follow that approach we need to recognize that doing so will force some dreadful near-term impacts, many of them forced upon those least able to manage them successfully.
The better solution (assuming a more perfect world) risks longer-term financial ruin without responsible government and leadership (how often have we seen that recently?) and has potentially nightmarish consequences for our children, who already assume that they will never have Social Security and Medicare benefits even as we Boomers are whining about any potential cuts to that which we are “entitled” (in a social compact we made with ourselves without the consent of our children, who we expect to pay for it).
If anybody has a plausible solution, I’d love to hear it.