You’ve read about cults that lose touch with reality and gather on some hilltop to greet the end of the world.
We have a large cult-like group in the House of Representatives who have lost touch with economic reality and whose delusions may cause the country they say they love incalculable harm.
Even with a last-minute deal between Congress and the president to wriggle past Tuesday’s debt deadline, “wriggling” doesn’t count for much in the world of credit and markets. The core problem remains and we’ll continue to pay through the nose until we address it.
The elements of that core problem are: The U.S. government is spending too much, taking in too little, and therefore borrowing more at the very moment when its creditworthiness is in question.
The big spending increases go for health care and payments to the elderly and others in need of support. So, bringing revenue and expenditures into balance isn’t just a matter of closing down a few bridges to nowhere or cutting a new fighter the Pentagon wants; it requires fundamentally restructuring our basic support for the retired and the ill.
The extremist Republicans in the House want no tax increases. But they are not willing to make, and find no support for, the drastic spending cuts required by a revenue freeze. It’s no accident that the budget proposals they put forward never add up.
What’s at issue is whether we can govern ourselves. If we run up our national debt, like Greece, until it overwhelms us, people who lend to us will charge much higher interest rates (making it even harder to trim the deficit), and then some day they will not lend to us at all. Imagine a meeting of the Chinese politburo where they debate what kind of austerity measures to demand in return for a U.S. bailout.
The Republican extremists in the House are bringing us to the brink of disaster with their rigid ideology and have diddled with the numbers to obscure the cost and consequences of their untested ideas. But they have been right on one important point: The deficit must be addressed. One other consistent point of view has been present in this debate. New York Times columnist Paul Krugman and others have argued that the biggest economic problem we face is unemployment, not the deficit, and that just slashing spending will create more unemployment, reduce government revenue, and set us back rather than move us forward.
I believe that point of view is essentially correct. The right answer isn’t to strangle the flow of money and jobs from the public sector, which all together accounts for about 40 percent of our gross domestic product. We need to keep those jobs and cash flows moving through the economy, but at the same time level off and then reduce the deficit.
That’s the only course that will both produce economic stability and command financial confidence from the markets that finance our deficit.
But the only way to keep paychecks and investment flowing and reduce the deficit is to raise new revenue. That means going after the special interests: doing away with loopholes, tax subsidies for corporations and tax breaks for the rich. And it also means raising new taxes, because the damage we have to repair has already been done. And no one in the United States today, from the president on down, knows how to get Congress to adopt such a course.
The alternative is essentially to let the American economic governmental enterprise crumble. You cannot drill huge holes in the bottom of the ship and then say your plan to keep it afloat is to chop up the rest of the ship. There’s no choice but to face the music, and the sooner we get started the better.
By Peter Goldmark, Newsday
Peter Goldmark, a former publisher of the International Herald Tribune, headed the climate program at the Environmental Defense Fund. ― Ed.