Following Europe’s Decline: The Dismal Failure of America’s Government

The United Kingdom based magazine The Economist, which endorsed Barack Obama for president last year, had this to say about the fiscal cliff deal:

The tax deal enacted this week, which leaves income-tax rates where they are for 99% of households while raising them sharply on the top 1%, was indeed a political victory for Mr Obama. For the first time in more than two decades Republicans had voted for higher taxes, by large numbers in both the Senate and the House of Representatives. The deal raised almost as much money from the rich as Mr Obama had first sought, and he made no meaningful concessions on spending in return.

It was less of a victory for the economy. It leaves in place significant short-term fiscal tightening, while doing almost nothing to arrest the escalating national debt in the long term. Mr Obama himself conceded that at the White House: “We still have deficits that have to be dealt with,” he said, surely his understatement of the year.

The problem with the fiscal deal is not so much what the bill accomplishes. Most Americans support higher federal income taxes on the richest 1% of taxpayers, and Congress earns praise for making most of President Bush’s tax cuts permanent. It was for this reason that former Republican vice-presidential candidate Paul Ryan joined most of his fellow partisans in the Senate and many in the House in voting for the bill. In a statement explaining his vote Ryan declared,

Will the American people be better off if this law passes relative to the alternative? In the final analysis, the answer is undoubtedly yes. I came to Congress to make tough decisions — not to run away from them.

I think Ryan made the right decision in terms of the vote itself. But fellow rising Republican star Senator Marco Rubio, one of the few Republican senators to vote against the bill, explained his vote in terms of lost opportunity. As the New York Times reports,

Mr. Rubio, in a statement explaining his vote, warned that “rapid economic growth and job creation will be made more difficult under the deal reached here in Washington.” He added: “This deal just postpones the inevitable, the need to solve our growing debt crisis and help the 23 million Americans who can’t find the work they need.”

In the final analysis Congress’s handling of the fiscal crisis, as well as that of President Obama, has been nothing less than abysmal. In the Washington Post Robert Samuelson highlights the inability of Congress to cut spending by pointing to the perpetuation, year after year, of annual subsidies for farmers in the territory of $10-15 billion. Such subsidies made sense in days when farmers faced unusually crippling economic and environmental uncertainty as well as market exploitation in the late 19th and early 20th Centuries. Today, as my own friends involved in farming confirm, the subsidies are largely unnecessary handouts. Samuelson concludes,

Farm subsidies are a metaphor for our larger predicament. We no longer have the luxury — as we did for decades — of carrying marginal, ineffectual or wasteful programs. We can no longer afford subsidies for those who don’t need them or, at least, don’t need so many of them (including affluent Social Security and Medicare recipients). If we can’t eliminate the least valuable spending, then we will be condemned to perpetually large deficits, huge tax increases or indiscriminate cuts in many federal programs, the good as well as the bad.

What makes all of this most disturbing is how similar the United States’s handling of its fiscal problems is to the recent record of the European Union. Though the problems are different, in both cases, politicians repeatedly pander to short-term fixes while avoiding long-term solutions, even while everyone involved admits that such an approach is unsustainable. We seem to be voluntarily committing ourselves to the laboratory experiment of determining whether or not Alexis de Tocqueville’s famous warnings about the demise of democracy (due to the inability of elected politicians to say no to the demands of the populace, and of unelected bureaucrats to relinquish their own power) are true.

In another article The Economist warily notes just how similar is the track record of the United States and Europe.

For the past three years America’s leaders have looked on Europe’s management of the euro crisis with barely disguised contempt. In the White House and on Capitol Hill there has been incredulity that Europe’s politicians could be so incompetent at handling an economic problem; so addicted to last-minute, short-term fixes; and so incapable of agreeing on a long-term strategy for the single currency.

Those criticisms were all valid, but now those who made them should take the planks from their own eyes. America’s economy may not be in as bad a state as Europe’s, but the failures of its politicians—epitomised by this week’s 11th-hour deal to avoid the calamity of the “fiscal cliff”—suggest that Washington’s pattern of dysfunction is disturbingly similar to the euro zone’s in three depressing ways.

The Economist rightly argues that Republicans and Democrats are equally to blame for the flawed fiscal deal, and that contrary to the view of some, the problem is not that politicians are insufficiently principled but that they are too unwilling to compromise in order to achieve the most important goals.

Viewed through anything other than a two-month prism, it was an abject failure. The final deal raised less tax revenue than John Boehner, the Republican speaker in the House of Representatives, once offered during the negotiations, and it included none of the entitlement reforms that President Barack Obama was once prepared to contemplate…. Democrats pretend that no changes are necessary to Medicare (health care for the elderly) or Social Security (pensions). Republican solutions always involve unspecified spending cuts, and they regard any tax rise as socialism.

There is only one way to prevent the deceptively slow-burning fuse of America’s debt from ending in calamity. Both sides need to remember that they represent the whole country, not just their relative ideological constituencies. Our goal is not to build the kingdom of God, whether as liberals or conservatives understand that kingdom. No one is going to get all of what they want here. We’re just trying to sustain the economic and political stability of the United States of America.

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About Matthew J. Tuininga

Matthew J. Tuininga is the Assistant Professor of Moral Theology at Calvin Theological Seminary in Grand Rapids, Michigan.

Posted on January 7, 2013, in Banking and Finance, Barack Obama, Democratic Party, Economy, Republican Party, Taxes, Welfare State and tagged , , , . Bookmark the permalink. Comments Off on Following Europe’s Decline: The Dismal Failure of America’s Government.

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