- At this moment the Congress and the White House are shutting
down for Christmas, having spread Christmas gifts in all directions except
toward America's economic future. The feel good part of it is that in
the coming year many Americans will have a bit more spending money. Specifically,
the Bush tax cuts will remain in force, while contributors to Social Security
will see a little larger paycheck month to month because their share of
social security tax withholding has been cut. President Obama started this
process as an effort to terminate tax advantages for the rich while preserving
them for the middle class. He ended it by agreeing to tax cuts for everybody!
Such are the ebbs and flows of power in Washington with each change of
political leadership. This year tax cutting conservatives are winning
the round, while tax increasing liberals are having their faces rubbed
in the dirt. Our system is the worse for it.
- This situation might well be viewed by many Americans
as just the sort of thing Washington does, and it can be ignored like most
things that happen in the nation's capital. However, the pleasing looking
tax cuts were only part of the story. If things go as presently envisaged,
Congress will go home and the White House will go to ground on Pennsylvania
Avenue without having done anything about the rapidly growing national
debt except authorize an increase in the debt ceiling. In effect,
those last minute actions by the Congress and the President preset the
United States to go deeper into debt, further crippling the Government's
ability to pay its bills.
- There are two dreams here that are about to crash. First
is the notion that America can work its way out of this hole without real
changes in lifestyle. Second is the notion that global free trade
practices work ultimately to America's advantage. While clinging to the
first, our debt continues to balloon. While hanging on to the second,
competition from abroad steals our trade advantage. Under the notion that
free trade is always good for us, we have shipped many thousands of jobs
abroad; we are unlikely to get those jobs back because our competitors
are newer and better at this work. Meanwhile, the unemployment picture
hangs in a disturbing 10% neighborhood as our leadership ignores the truth
that we truly need those jobs we so willingly exported. Putting a little
extra cash into the pockets of an under-employed labor force is not going
to turn this large, heavy American economic ship onto a new course.
- Unconventional wisdom has it that we should accept this
new reality, redesign our economy to fit into a new and less central position
in the global system, and simplify our lifestyle to fit this more realistic
vision of the future. In fairness, that is a pretty tall order. In reality,
there probably is no viable alternative to making those adjustments.
- The American dream economy does not need to be abandoned.
It does need to be redesigned. For decades we have lived by the notion
that our knowhow and our global presence were key posts in the natural
order of things. So long as our balance of international accounts remained
positive, that was a reasonable expectation. It became increasingly unrealistic
when, about three decades ago, the balance shifted against us. As that
negative balance has persisted and grown, the unreality of America's position
in the global system has also grown. Real power has moved abroad.
This has accelerated in the presence of rising stars abroad, and our attempt
to maintain position by going into debt in the face of radically changing
circumstances has only added to the need for recognition and change. We
had two problems: Americas declining competitiveness abroad; and the declining
relative capability of the American labor force at home. The two were
and are tightly related, and we have been far too slow in recognizing and
fixing the latter.
- What lifestyle changes do we critically need? Start
with while others save, Americans spend. The central thrust of Washington
policy has been to get Americans back to spending. Many have increased
savings during the economic downturn of the past two years, but that is
not enough to correct the bad habits of the past, and putting that money
back into circulation will only repeat past failures of living well by
- The conservatives about to invade Washington are ostensibly
bent on cutting government and, with that, cutting costs. If several decades
of political behavior offer any prophecy, this enterprise will fail miserably.
In any case, the size of government, per se, is not the problem. The focus
of its activities and our ignoring of the need to pay for them on a current
basis are the main problems. The sooner we pull in our horns, get out of
Iraq and Afghanistan and shrink our sprawling military presence abroad,
the sooner we will be positioned financially to restore the basic infrastructures
of the American economy, while living within our means. If we stop trying
to run the world through piecemeal military establishments in more than
half of the world's countries, we can free up the resources to build and
refocus our system to America's future responsibilities in the global system.
There are no real alternatives to these actions. Let's get on with them.
- The writer is the author of the recently published work,
A World Less Safe, now available on Amazon, and he is a regular columnist
on rense.com. He is a retired Senior Foreign Service Officer of the US
Department of State whose overseas service included tours in Egypt, India,
Sri Lanka, the Philippines, and Brazil. His immediate pre-retirement positions
were as Chairman of the Department of International Studies of the National
War College and as Deputy Director of the State Office of Counter Terrorism
and Emergency Planning. He will welcome comment at email@example.com