Tuesday, August 02, 2011

"... don't give up on America"

The deal disappoints, but don't give up on America
Derbyshire, England (CNN) -- Tucked away here at a family reunion among rolling hills, one can easily drift into another, more pleasant world, but the old realities keep intruding. Time and again, English relatives have gingerly but worriedly asked, "What is to become of America after this debt struggle?"

How to answer? The truth is that none of us knows, and deep insights are especially elusive at this distance.

I try to tell them that the United States is going through a rough patch: the rise of lots of problems that we have allowed to fester over the years now coming to a head just when our politics are polarized, poisoned and paralyzed. Moreover, there is almost no one in high places who commands the full trust of the country -- from the White House to Wall Street, from Congress to the media.

But, I hasten to add, don't write off America -- we are usually at our best when we are down. These are the toughest tests we have faced since the 1930s and '40s, but remember how well we pulled together then.


Still, this is a deal that deserves only one hand clapping, not two. It fell far short of a "grand bargain," a dream scuttled by the tea party as well as the White House. In particular:

• With at least $10 trillion in new deficits expected over the next decade, it cuts only a little more than $2 trillion. The grand bargain called for $4 trillion.

• It solves neither of our biggest fiscal problems: reform of Medicare, Medicaid and Social Security and reforms of taxes that are not only fairer but bring in more revenues, especially from the affluent.

• It does not provide for an equal sharing of burdens: The middle class and working people are likely to bear the most.

• It fails to provide an extension of payroll tax relief and jobless benefits into next year, which are so needed in this economy.

• It could well weaken the economy in the near term and, given the debates that will now arise in this congressional committee, will set off a flurry of lobbying and uncertainty in a business community that desperately craves a clearer sense of policy and regulation.

• And it threatens to savage the Defense Department with cuts that will force the United States to pull back from its leadership role in the world and reduce the pay and benefits of those in uniform.

With the fight over, it is like waking up to a bad dream and realizing that much of the nightmare is still here.

The markets recognized that hard realities still persist on Monday after the deal was done -- stocks sank at the end of the day -- and the rest of us will likely get our dose Friday with new unemployment numbers. The politicians will immediately turn their attention to jobs, but they seem to be mostly out of ammunition and so is the Fed. (QE 3 anyone?) [...]

QE3? I sincerely hope not. QE1 & 2 have only created more problems, and devalued our currency. Why would QE3 be any different? Why keep doing what doesn't work? Unless you WANT to collapse our currency and destroy our economy?

I've resisted the temptation to blog on all this; it's been such a dog and pony show. And if doing things like balancing the nations budget and living within our means are now considered to be radical, dangerous "fringe" ideas, I can only say, "Where are all the grown-ups?". If this is what America has become, then I can only wonder if it can, or even should, survive? I only say that because, Nature does not tend to favor the foolish for survival.

No, I've not given up yet. But it's hard not to feel pessimistic as we continue following policies that are failing us. Also, it's taken a while for us to get in this mess; I suspect getting out of it will not happen in a hurry either.

The author of the article ends his piece by saying: "Can Gabby Giffords just show up a few more times this summer? She surely reminds us that no one should ever give up on America." That's a nice sentiment, but we are going to need a lot more than that. We are about to see if we have what it takes.

No comments: