international analysis and commentary

The campaign and the economy: small politics in the face of big challenges

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Mitt Romney’s selection of Congressman Paul Ryan as his running mate was heralded as transforming this dismal election into a contest of Big Ideas giving voters a clear choice between the two parties. Instead, it merely highlights how small our politics have become and how similar the parties remain in their treatment of voters.

Let’s start with Ryan and the Republicans. For over thirty years, Republicans have advanced an increasingly anti-government fundamentalism. Now, the fiscal crises in southern Europe and several American states, along with the growth in federal deficits and long-term debt projections under President Obama, have provided a new basis for their old argument: America can “no longer afford” the welfare state of the 20th Century.

For the last three or four decades, over-spending, particularly on consumption, has become a society-wide phenomenon, not just a politically liberal, public-sector issue. Household debt, credit card borrowing, mortgage-based financing, private sector leverage, and trade deficits have all steadily increased. Pension savings, both public and private, were underfunded and raided. Capital investment was largely abandoned in the public sector while asset values – as we recently discovered – were cheerily over-estimated in the private sector.

Yes, government policies have often supported these trends – such as the mortgage-interest tax deduction, the deregulation of the banking sector, the promotion of free trade, and tax cuts unconnected to spending cuts – but as often as not the impetus for these policies has come from the anti-government party, not the liberal statists. In short, all Americans, like most in the post-war West, have felt entitled to spend like there is no tomorrow. The increase in unpaid-for government spending is simply reflective of a larger set of choices.

We easily could make different choices. We could decide to spend less on government – or we could spend more, while spending less on other things. We no more “cannot afford government” than we “cannot afford” houses, cars, entertainment, healthcare, schools, Chinese imports, financial speculation, or bombs. We must make some tough choices, however, between continued consumption of all these things and investments that could raise future wealth and income; whether to do this through private or public mechanisms is a related, but different,question. 

The Ryan/Republican plan, then, is not really about saner fiscal choices, it’s simply about eliminating the welfare state. Thanks to the “perfect storm” of a global economic meltdown, persistently-high domestic unemployment, and the presence of an African-American in the White House, conservatives believe that they can be both more radical and more straight-forward about this objective than at any time since the disastrous 1964 Goldwater campaign. And yet, political misgiving about this path is reflected in the Ryan Plan’s most disingenuous and disastrous policy decision: Ryan’s much-ballyhooed budget plan doesn’t start cutting the deficit, or even transforming Medicare, for the next ten years; it doesn’t achieve its stated goal of downsized government and balanced budgets for 30 years in the rosiest scenario (more like 40, according to the non-partisan Congressional Budget Office); and it completely drops any mention of Ryan’s original objective of privatizing Social Security. So, Republicans want you to know, you won’t have to live with the consequences of your conservative convictions unless you’re younger than Paul Ryan (except for those who are already poor, in which case, of course, the cutbacks begin immediately).

Despite Republicans’ claims of courage, intellectual honesty, and ideological consistency, this is nothing but pure political pandering. And not particularly adept pandering, at that: Polls show older voters – disproportionately concentrated in key swing states like Florida, Pennsylvania, and Iowa – unalterably opposed to any talk of changing Medicare and Social Security, even when wrapped like the Republicans’ proposals in a promise that it will only punish other people.

So what do Democrats offer as an alternative? At least for now, counter-pandering. Most observers believe that simply running against Ryan’s plan, as Democrats put it, to “end Medicare as we know it” – by turning it into a voucher program whose real value will steadily decline over time – will peel away enough of these older voters from the Republicans to ensure the President’s re-election. End of discussion.

This is unfortunate for the country. President Obama at least came into office with a vision of an investment-driven growth future, based on ramping up educational levels for all Americans, a shift away from carbon-based fuels built on all-new energy infrastructure, and a healthier population. But the first two engendered interesting policy pronouncements that haven’t gone much of anywhere, while the “Affordable Care Act,” likely the defining issue of his presidency and perhaps his lasting monument, is, at its core, more about “care” than “affordability.”

While the President has occasionally talked a good game on entitlement reform, he’s never really done anything about it. Arguably that’s because of the political bind he’s been in from the start with a recalcitrant Republican opposition, but we know from the transition memos leaked to Ryan Lizza of the New Yorker that deficit reduction has never been of real interest to Obama. And aside from letting the Bush-era tax cuts expire only for the wealthiest of Americans – which everyone admits will not come close to eliminating  the deficit – the President has shown no more appetite than any other politician for addressing the nation’s fiscal situation from the revenue side. 

Obama no doubt means better than his opponents – as well as the rest of his fellow Democrats, who stand steadfast against any changes whatsoever in entitlements or domestic spending – but the resulting campaign debate offers no real choice on the real national decision of the day: Not, Can we afford government any longer?, but, Can we reprioritize government spending today in order to leave the next generation of Americans more tomorrow?

Neither Republicans nor Democrats seriously contemplate asking the majority of today’s voters to make any sacrifice for the nation’s good. Each, in their own way, passes the bill on to the post-Boomer generation. What the nation needs is a serious plan to start asking the current generation of Americans to pay forward our inheritance from the past, rather than taking everything with us to the grave (except, of course, for the bill).