Of Debts and Doubts

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The New York Times
By: Matt Bai
December 5, 2010

WASHINGTON -- Common wisdom here holds that the report issued by the president's fiscal commission last week is probably going nowhere, despite the endorsement of 11 of the 18 commission members. Sure, voters like to complain about the debt, the insiders say, but once you start talking about higher taxes and cuts in benefits, you find that no one wants to be the one to sacrifice.

There may be truth to this premise, but only some. After all, generations of Americans have sacrificed plenty for the nation's cause, and there's no reason to think we've lost the capacity. What makes this case for sacrifice so much harder to embrace, perhaps, is that it goes to our national psyche, threatening our self-image as a land with limitless potential. While past generations have readily sacrificed for national greatness, debt reduction -- at least in the gloomy way its advocates argue for it -- feels like a call to sacrifice in the name of our national decline.

After all, this sense of limitless potential, too, is what we often mean by ''American exceptionalism'' -- a concept that, as the reporter Karen Tumulty noted last week in The Washington Post, has recently come to permeate the rhetoric of leading Republicans. It isn't simply that America, by virtue of symbolizing liberty, has a unique responsibility to shape the affairs of humankind. It's also the belief that free markets can create a kind of endless prosperity, driving an economic and military dominance that exempts Americans from having to accept constraints or trade-offs.

For much of the Industrial Age, and especially between World War II and the oil crises of the 1970s, this was, in fact, reality. Wages and profits rose, the social safety net and the nation's military reach both expanded, and government lived largely within its means. College education, suburban lawns, good pensions and blissful security all became part of the pact with the middle class, as much a part of the constellation of entitlements as Medicare and Medicaid.

Exactly who or what lost the never-ending expansion -- liberal excess, conservative nihilism or simply the tide of technology and globalization -- is the animating debate of modern politics. Whatever the answer, the fiscal commission's point is that the limitless age is at an end.

We've debated looming debt before, of course, most notably in the Reagan years and again in the early '90s. But never did the crisis seem so immediate as now. In the preamble to its report, the commission warned that by 2025, should trends continue, federal revenue would be enough only to cover entitlements and interest payments. Everything else, including defense spending, would have to be borrowed.

Digested line by line, few of the commission's proposals to prevent this calamity seem all that radical, and the most painful are offset by ''sweeteners.'' Increases in Social Security and gas taxes, for instance, would be accompanied by a new, streamlined tax code that would lower income taxes for citizens and businesses.

Taken together, however, especially as a flurry of bullet points on cable news, a lot of the proposals would seem to chisel away at our inherited notions of that 20th-century American ideal. Changes to Social Security, for example, would mean higher taxes and reduced benefits for the guy who manages to pull down six figures, while Americans entering the work force now would have to wait until 69 to retire. (As it stands, the retirement age is ultimately slated to reach 67.)

The commission report touches on our expectation of homeownership, too, by proposing to roll back the tax deduction for mortgage interest. Such a change would hardly rip the stuffing out of the American dream, since it would apply only to mortgages over $500,000 or to second homes. But just raising the issue suggests that government should no longer make homeownership a priority for middle-class Americans, that maybe renting isn't such a bad idea after all.

The commission's recommendations would necessitate a leaner military, undermining our postwar image of America as the world's reigning protector. The proposed increase in the gas tax -- by 15 cents over a period of a year -- carries more than a little symbolic weight in a culture where the open road, and the ability to access it cheaply, is tantamount to personal liberty. And the proposals would eliminate some subsidies for federal student loans and the tax exclusion for employer-based health care, both emblematic of things Americans once took for granted but now find increasingly worrisome.

All of this might give the impression that the panel's work is, in fact, an acknowledgment of inevitable decline, an accord to be signed mournfully at the Appomattox of the American century. But that's not necessarily the case.

In fact, policy experts argue that steps along the lines of the commission's recommendations could actually modernize outdated systems -- making the country more competitive as a result -- without profoundly affecting the American experience. A simpler, updated tax code for businesses might help spur entrepreneurship, while a hard line on inefficient spending (farm subsidies come to mind) might free up government to invest more in new technologies and infrastructure. A streamlined military of the kind championed by Robert Gates, the defense secretary, would probably be better prepared for the challenges ahead than a military burdened by the costs of obsolete weapons systems and bases left over from the cold war.

If that's true, the pivotal question for advocates of budget reform may be how to communicate that more optimistic vision to voters, rather than focusing so relentlessly on the pain they intend to inflict. Absent some change in the public perception, after all, lawmakers aren't likely to risk their careers for what amounts to a menu of unpopular choices.

Maya MacGuineas, president of the nonpartisan Committee for a Responsible Federal Budget at the New America Foundation, suggested that the commission enlist the help of all the living ex-presidents to make its case. The political scientist William Galston believes that President Obama should use his State of the Union address to lay out a case for the commission's plan.

Former Senator Gary Hart, who recently helped author his own budget plan as part of a panel assembled by Esquire magazine, thinks the commission's chairmen should take their case on the road, flashing Ross Perot-style flip charts at chambers of commerce and Kiwanis Clubs around the nation. The idea of such a campaign in the Internet age sounds almost quaint, an echo of 20th-century life. Then again, maybe that more hopeful echo is what anxious Americans really need to hear.

Online Correction: December 4, 2010, Saturday

This article has been revised to reflect the following correction: Because of an editing error, an earlier version of this article misstated the ages required to retire.

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This page contains a single entry by CFED published on December 6, 2010 4:28 PM.

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