The fire next time
Economy | Marvin Olasky
As Republican leaders work out a strategy to take on the deficit problem, they need to define the problem accurately.
The problem isn’t economic, or different opinions about economics. Everyone knows we can’t perpetually run trillion-dollar deficits: We’re only surviving so far because of abnormally low interest rates. Everyone knows we can’t get rid of the deficit by raising taxes further on the top 1 percent: Even if that somehow did not destroy entrepreneurship, not enough revenue resides there.
The problem is character. Many politicians kick the can down the road, hoping disaster won’t come until 2017 or thereafter. But anyone with 2020 vision can see that the next seven years, even if they are half-fat, will lead into seven or more lean years. Unless we have the character to make hard choices, we’ll have no soaring ’20s (that would be exciting) and no snoring ’20s (that at least would be safe). We’ll have a warring ’20s, with different social and economic groups fighting each other and grabbing anything to get through dark nights.
The Washington religion of self-aggrandizement may get in the way of admitting that. The Obama administration is increasingly faith-based: Its anti-business bias has contributed to low- or no-growth for four years, but it hopes the economy will suddenly take off in a way that boosts tax revenues. Those who are reality-based, lacking such faith, know we’re heading for a crack-up unless we reduce government spending.
Sooner or later we have to stop extending the debt limit while we run more trillion-dollar deficits. Some states, like Indiana, have embraced serious cuts and come back stronger for it. So have some countries, like small Estonia that I visited last fall. Can the far larger United States afford to take a medium-sized shock now to avoid a gargantuan one in several years? The better question is: Can we afford not to? With the United States now the most indebted country in world history, 2013 is decision time: We can take the heat now, or we can have an economic hell later.
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