It has been an unnerving week for the faint of heart.
The political class in Washington—the richest in the city’s history—has been laughed at, scolded by a rating agency, called incompetent by English politicians, the Chinese government and Wall St. bankers, and damned by American opinion polls and capital markets everywhere.
Liberals who can’t act are being shouted at to “seize the wheel.” Conservatives who won’t act are being told that the status quo is collapsing.
One institution—the Republican presidential primary—carries on as if nothing important happened, nothing confusing enough to abandon a cliché or even invent a new one. The candidates for the Republican nomination held their second debate last night. The only news that seemed to quicken their thoughts is the prospect that the prayerful Governor of Texas will enter the race—and that Sarah Palin is coming to town.
The front runners and the follow-ups exclaim “jobs, jobs, jobs” like every good Democrat since Jimmy Carter. And then they recite a policy prescription—“Cut, Cap, and Balance”—that would kill jobs and economic recovery.
They don’t believe in quick fixes. They think long-term and propose handcuffing the federal government in dealing with long-term problems.
The moderates call Barack Obama a “weak” president. The extremes call him “un-American.” While they look for photo-ops to look stronger by comparison, they promise to make the Presidency and the federal government weaker institutions.
They want to sing “It’s morning in America” whatever the season.
Despite, the war cries of the Tea Party and official party rhetoric about America “losing its way,” they seem to believe that America is so strong, so-unchanged, that the prescriptions to fight the stagflation of the late Seventies are all they have to mouth for the next fifteen months. Their fidelity to the past and their obsessive focus on their personal chances to be President in January 2013 is startling.
Trends in the economy, in America’s demographics, in the finances and obligations of the federal government all insist: big changes, for better or worse, are approaching.
The oath “no new taxes” was, for a time, a credible, albeit conservative, formula for the American federal government. When the population was much younger and employment was booming, and wages were rising, automatic massive increases in federal revenues emboldened spenders in domestic and defense bureaucracies. But, the times are very different now.
Johathan Kay in the National Post decisively captured the problem:
“According to Boston University economic professor Laurence Kotlikoff, formerly of Ronald Reagan's Council of Economic Advisers, the net present value of America's spending obligations, in excess of expected tax revenues, is $211-trillion—15 times the already-staggering $14-trillion sum that represents the country's nominal federal debt load.
"We've got 78 million baby boomers who are poised to collect, in about 15 to 20 years, about $40,000 per person," Kotlikoff told NPR. "Multiply 78 million by $40,000 - you're talking about more than $3-trillion a year just to give to a portion of the population."
How will these Republicans leaders cap the baby boom once they’ve capped the federal budget?
After ruling out death panels and new taxes, they’re left with slashing benefits, depreciating the currency or flooding the country with immigrant workers.
When they get ahead of Obama in the polls, they’ll be taken seriously and then they’ll be in real trouble.