To those who have been paying attention to the fiscal problem, the message of this book may seem rather familiar. The government is spending beyond its means, the politicians in DC are not doing anything about it, and sooner or later the pattern of chronic deficits and soaring debt will come to end when lenders start demanding higher interest rates and inflation ramps up to an extent that the American public will find intolerable.
“Clearly,” as Tanner puts it, “we are on a course that cannot continue. The question isn’t will it stop, but how. Will we find our way to a soft landing that minimizes disruption, allows for renewed economic growth and protects those Americans who are most vulnerable? Or are we on the road for the turmoil and economic stagnation that we see in countries like Greece? Despite the undeniable fiscal facts, politicians from both parties continue to obfuscate and dodge the difficult decisions that will determine which of those two paths we follow.”
What seems most helpful in this analysis is the way in which common misconceptions (or perhaps convenient excuses) are laid to rest, including the following:
1. The fiscal problem is not simply a failure to balance the budget, but the underlying growth in government that is diverting resources from the productive private sector.
2. Raising taxes can’t solve the fiscal problem, only spending cuts could work.
3. Although it’s clearly desirable to eliminate waste, fraud and abuse from the budget, the resultant savings would be comparatively minor in relation to the overall fiscal problem.
4. Even drastic cuts in discretionary spending could only postpone the day of reckoning, as projected growth in entitlement programs as the aged population increases will eventually crowd out all discretionary spending. Besides, some discretionary spending is essential, including the costs of maintaining a strong US military and protecting against security threats.
5. Like it or not, the fiscal problem cannot be solved without restructuring entitlement programs to spend less money (Tanner offers specific suggestions for Social Security, Medicare, Medicaid, and GovCare, all of which programs have serious problems in their current forms).
6. Don’t count on a “grand bargain” to solve the fiscal problem; the oft-cited success of the 1983 Greenspan Commission in “saving Social Security” was based on a huge tax increase coupled with only modest (and long deferred) benefit reductions. This is not the type of solution that is needed.
This book should be required reading for all members of the DC establishment in influential jobs. As a class, they created the fiscal problem over the course of several decades, and it would seem only fair to expect them to address it now before the country suffers irreparable damage.