Theories are nice, but you can’t buy a loaf of bread with one. In a recent New York Times Op-Ed (‘Now and Later’, June 20, 2010), Paul Krugman applied the well-accepted theory of balancing deficits and surpluses in a long-term debt policy to our current economic situation. The theory is wonderful, but Dr. Krugman didn’t address the historical or political challenges involved in trying to apply this theory. His analysis requires a willingness on the part of politicians to legislate massive budget surpluses during the good times…when the economy and businesses are expanding, and when consumers are capable of quite a bit of discretionary spending. This, unfortunately, is the fatal flaw in his argument. I see no indications that the public understands the concepts here…nor do I see any political will to do the right thing at the right time. We need some serious talk about long-term solutions to our out-of-control debt habit.
I decided to table these thoughts until after the national AmericaSpeaks event last Saturday. Since I was helping to sponsor two events…one live conversation in Fairfield, CA and the other an online conversation in the virtual world of Second Life…I felt it might be best to share these thoughts afterwards, so they wouldn’t present a conflict-of-interest for the non-partisan nature of the event. But it was a challenge to not add these reflections as people discussed their personal willingness to do the right thing at the right time…when it flies in the face of our culture, our politics and our personal comfort.
I applaud the AmericaSpeaks process and conversations…they brought a wide cross-section of our nation to the table for some very valuable dialogue. But…I doubt the American people have the courage and fortitude to do the right things in the future, concerning our deficit and debt. Without strong leadership and wide-spread public deliberation over the next several years, we will continue to do what’s comfortable…not what’s right.
Here’s what I see as the real problem: we’re ready to do what’s easy, but most times we’ll resist what’s more difficult. Well, you might say, ‘Where is the surprise there?’ No surprise…just the fatal flaw in the argument to continue indefinitely with deficit spending…while continuing to tell the big lie that we’re willing to support massive surpluses anytime in the future to counter-balance those huge deficits.
No matter what some candidates might say in midst of fierce political campaigns, our government budgets should never be characterized in the same category with family budgets or corporate budgets. For most people, their personal perspective says ‘When we have more than we need for the basics, we should feel free to spend it as discretionary spending.’ For most corporations, their business perspective says ‘When we have more than we need for the basics, we should feel free to pay executives more and to increase dividends.’ No, government budgets shouldn’t be understood in these same terms. Concerning our public funds, our elected officials should say ‘When we have more than we need for the basics, we’ll set those funds aside for use in difficult times.’ Yeah…right!
Federal spending should be the yang to the economy’s yin…it is the philosophical and practical counter-balance that keeps us from rising too fast or falling too hard. It keeps the oven from getting too hot…and it reignites the fire when the oven’s heat is lost. The federal government should take the counter-intuitive positions in saying ‘When we have plenty in our economy, save energetically…and when we don’t have enough in our economy, spend boldly!’ It’s the theory Dr. Krugman is counting on. But…so far, it appears our politicians and the public itself have been willing to contribute only on the side of yin…with hardly any long-term yang. And…that’s really our problem.
We need some serious talk about long-term solutions to our out-of-control debt habit. It’s possible that last Saturday’s conversations at AmericaSpeaks events across the country can provide a jump-start for a productive dialogue that leads to a long-term solution to our federal debt problems…but it’s too early to tell. This I know in my heart…until I hear large numbers of people committing to long-term fiscal sacrifice as a balance to current policies, I will hesitate to believe we’ll be capable of dealing with our inevitable debt problem. Good theories are important…but the willingness to follow through on the complete theory is critical. We need some more serious talk about our deficit and our debt. No…we’re not finished with this conversation…it’s only begun.