Denial is not a river in Egypt, but it does water the root of America’s economic trouble


Please read this column.  Loren Steffy, the excellent business columnist at Houston’s Leading Information Source, makes a point that he and others have been making for a long time, but he does it today in such a clear and simple and straightforward manner that this truth must now be self-evident after any honest appraisal of the economic facts as they are recognized here in the reality-based community.

We know that increasing spending faster than revenue is unsustainable.  We know that fixing our problems will require both cutting spending significantly and increasing revenue.

We just don’t want to do it.

We haven’t even wanted to think about it for generations.  We elected representatives who promised programs that benefitted us; incumbents campaigned on a record of “bringing home the bacon” and we rewarded them with re-election; we treated the federal treasury as an ATM machine with no limits on withdrawals; and any candidates who spoke honestly of a need to raise revenue to meet government obligations were thrashed.  When the rising tide of the tech revolution lifted all boats and left the government with an actual surplus, we thought we were crapping platinum.  Our aversion to reality was so strong that rather than raise taxes to pay for two simultaneous wars we chose to trust that all would be well since we were on the side of the angels.

All those expenditures through all those years, without enough real money in the bank to pay the bill, added up: more than $14.5 trillion and counting.  As Steffy says, it doesn’t matter now whether President Obama lacks leadership or Congress lacks backbone or Standard & Poor’s bears some of the blame for the subprime mortgage crisis and subsequent recession that led to the bailouts which contributed to the debt:

If we’re honest with ourselves, we know that S&P’s analysis rings painfully true.  We can blame whomever we want, but it’s a couple of decades past time to do something about it.

The leaders of the House and Senate are announcing their selections for the deficit reduction committee called for in the debt ceiling deal; that’s where the work has to start, now.  Let’s please pull our heads out of ___ _____ (you fill in the blanks) and find a solution to our problem.

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2 Responses to Denial is not a river in Egypt, but it does water the root of America’s economic trouble

  1. Pascal Piazza says:

    Not only do we lack the willpower to do what needs to be done, we enshrine certain economic ideas with untouchable status that we cannot even discuss the concepts. Our economic models, whether on the right (e.g. the Austrian School of von Mises and von Hayek, Milton Friedman and trickle-down economics), on the left (e.g. John Maynard Keynes) or in the middle (e.g. laissez-faire economics of Jean Baptiste Seay and Adam Smith) must be starting points. No economic concept is unreviewable.

    We must break out of the mold and, yes, by God, think outside the box. We must think comprehensively. We may need to evaluate newer trends that reflect the changing nature of the markets. Thomas Friedman’s “flat-world” may be overstated, but it may employ concepts which bear greater review. Lean analysis should, by defintion, complement any analysis.

    Just like laissez-faire economics changed the rules of what is normative, we need a new organizing paradigm to break the logjam. That is why the current trends in Washington are all trains on the same wrong track. They are merely trying to rearrange the deck chairs on the Titanic.

    Merci. Pace e salute. Pascal

    • Pat Ryan says:

      I agree: we’ve got to try something new, because what we’re doing isn’t working. I was impressed with the long view taken by the Bowles-Simpson Commission; perhaps we’ll see some structure like that come back again from the current committee.

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