At the present moment in historical time, the United States government, and both political parties, are seeking, with a kind of quiet desperation, ways to shore up the financial system of Wall Street, and with it the national and even the global economy. The bailouts, recent and contemplated, stagger the imagination in their scope. The problem? Overwhelming debt based on risky corporate decisions, compounded by an alphabet soup of derivatives, swaps, and other schemes that make Enron’s in-house deceptions look like children messing with play money. The government is now taking on responsibility for huge amounts of debt, and everyone is talking about how much of this is going to become a liability for the taxpayer.
It’s time to talk about the one issue that no one is mentioning.
The best leadership (and the worst) is always by example. The United States Government has set a terrible example, and the markets have followed: it has put itself in increasing levels of debt, with no plan in place to repay the creditors. The guiding fiscal philosophy articulated by Vice President Richard B. Cheney that “deficits don’t matter” has been applied by large institutions, and unfortunately by many smaller entities including households, to their own situations. It’s that simple.
Until we do the hard thing that was done in the waning years of the Bush I presidency, and come up with a bipartisan plan to balance the budget (even if it violates someone’s sacred “read my lips” pledge), and go further and return to the action of the Clinton administration (in cooperation with a Republican congress) by coming up with a workable and working plan to begin in the present tense the task of paying down the national debt, all we have done is kicked this ball further down the field, and the next thing you know it will be the U. S. Treasury that people will be talking about with comforting (?) words like “too big to fail.”
When the Bush II tax cuts were put in place, some responsible members of Congress recognized this state of affairs and required assurances be made, specifically for some of those giveaways to the wealthiest among us (call it income redistribution) to expire beginning in 2010; otherwise some of those who voted to thus eliminate the surplus (remember surpluses?) would never have signed on. Thus, any call to “make those tax cuts permanent” represents a deliberate breach of promise, and a betrayal of the trust of the American people, because no one can show how, with such an action, the debt will ever be repaid.
Until the United States gets its fiscal house in order, and enacts policies like we had in the 1990s, when there was prosperity, low interest rates, surplus budgets and no threat to Social Security in the process, global financial markets will be understandably and justifiably nervous. This is the reality that will face the next President of the United States, and the incoming Congress. Somebody is going to have to show some real spine.