Economic growth covers up a lot of warts, but when growth isn't there, those blemishes start to look pretty ugly. Elected officials at the federal, state and local level are beginning to wipe the steam off the bathroom mirror and they aren't liking the options staring back at them.
Everyone is better at managing when times are going gangbusters. Really, how difficult was it to manage the U.S. economy in the second half of the 1990s? The economy was growing at near emerging market rates. Federal and state tax revenues were filling coffers to the point of overflowing. State pension portfolios were flush and fully funded, and people were able to shop for their dream job. The Cold War was becoming a distant memory and the "peace dividend" alreadyhad been spent. It was like we were on cruise control.
But like any good ride, there comes a point where you run out of gas or you run out of road. If the dot-com bubble was our "out of gas moment", the financial meltdown eight years later was the moment when we ran out of road and coasted to a dead end.
I bet you know what that's like. You're fumbling around in the trunk looking for the jack or the gas can. You're checking your phone but don't get a signal. It's a pretty helpless feeling not knowing what to do next. You're stuck. More often than we'd probably care to admit, you get out of such predicaments through pure luck! No one is at their best in those situations. You're operating on instinct. So why would it be any different for our elected officials?
One of the reasons politicians are so hesitant to make the hard choices on things such as medicare, social security and defense spending is because they are always counting on rebounding economic growth to kick the can farther down the road, hopefully beyond their elected lives.
But what if this isn't one of those times in our history? What if the gas can of our economy is only refilled when we make the truly brutal choices? We all know what they are. The list is like an informercial running on an endless, late-night TV loop. It means testing social security and medicare, raising the retirement age, reforming taxes and, yes maybe even, targeting tax increases to redirect dollars to more productivity-enhancing investments.
The safer political strategy, I'm sad to say, has been to nibble around the edges of the budget, or even worse, to deflect attention from our struggles by raising the urgency of divisive cultural issues that even if settled to everyone's satisfaction, would do nothing to raise the capacity for growth in this country. The time has come to put all that aside and recognize that the hard reality might be that we all have to lose a little in the short run if we're all going to win in the long run.
