Book Review

In This Game of Chicken, We All Lose

Report offers challenging yet pragmatic approach to fixing our nation’s financial woes.

August 7, 2011

If you’re a fan of old, classic films, you may recall the scene in the 1955 James Dean movie “Rebel without a Cause.”

Dean’s troubled teenage character is challenged to a dangerous game of chicken that involves driving cars towards a cliff. “We both head for the edge, and who jumps first is the chicken,” says Dean’s antagonist.

Our fiscal future
“Choosing the Nation’s Fiscal Future” is a free, 338-page report by the National Academy of Public Administration and the National Research Council of the National Academy of Sciences. Access it here.

Dean’s character jumps from his car at the last possible moment while his opponent, whose leather jacket sleeve becomes entwined with the car door handle, plunges to his death.

Watching the debate over the nation’s federal debt ceiling is like watching that scene over and over again, except that the car going over the cliff is our country’s fiscal health and our kids’ future.

Our national debt is staggering—$14 trillion and growing. And the political debate over the debt is staggering in its ineptness and in the toxic partisanship that poisons it.

Those with the loudest voices and most extreme views control the discussion. Average American working men and women are weary by the histrionics and are increasingly angry at the inability or unwillingness of our lawmakers and policymakers to compromise and forge a sustainable solution.

Those who fall within the moderate spectrums of the political right and left are especially dismayed as ideologues continue to play chicken—and come ever closer to driving the car over the cliff.

The saddest part of this self-inflicted game of mutual destruction is the reality that there’s no shortage of good plans. The plan proposed in “Choosing the Nation’s Fiscal Future” is a pretty good one.

Many of its recommendations are similar to those advocated by last December’s report from the National Commission on Fiscal Responsibility and Reform, a presidential commission appointed by Barack Obama more commonly known as the Simpson-Bowles Commission after co-chairs Alan Simpson and Erskine Bowles.

Next: Report recommendations

Report recommendations

The report is the outcome of a two-year project sponsored by the National Academy of Public Administration and the National Research Council of the National Academy of Sciences. The work was performed by a committee representing a diversity of disciplines and practices—people with a wealth of experience with the federal budget and public policy, as well as a wide range of political and policy reviews.

The latter point is important as it reveals that reasonable people can disagree and still form a consensus based on compromise. That is sorely lacking in Washington, D.C. these days.

Much to the nation’s misfortune, the current debate over deficits and debt is dominated by ideologues, not pragmatists. We face the very real possibility of doing more damage than good when wild-eyed partisans act more like Lizzie Borden chasing her mother and father with an axe than the consensus seekers a healthy democracy requires.

“Choosing the Nation’s Fiscal Future” neither “presumes nor recommends a particular path to a stable fiscal future,” according to its editors. “In a democracy, it is not the role of experts from outside the government to decide important policy questions, especially questions of this magnitude. This is the task of political leaders.”

The report also tasks voters to engage in the issues with an open mind, elect officials who understand the challenges, and then hold them accountable for acting responsibly.

There’s the rub, to quote Hamlet. American voters—those citizens who actually do vote—aren’t as engaged about the issue as they need to be. They tend to vote for partisan solutions that hold a strong emotional rather than practical appeal, and they seem to be all over the board when holding lawmakers accountable, voting people and parties in and out each election cycle.

That last point, however, is also a sign of growing voter frustration that manifests itself inefficiently in wide swings in voting patterns.

There’s no short-term solution to our growing fiscal problem, and even the most reasonable solutions will require pain and a willingness to share the sacrifice.

As baby boomers age, the projected growth in three major entitlement programs—Social Security, Medicare, and Medicaid—is unsustainable without large tax increases, major restraints and reform in entitlement programs, or some combination of the two.

The challenge is compounded because we continue to wage two wars simultaneously and, for the first time in history, we also cut taxes as we went to war. This was a recipe for an eventual fiscal disaster that has been made worse by the Great Recession, government stimulus spending, and a tepid economic recovery with little associated job growth.

Next: Painful action required

Painful action required

While members of the commission who wrote “Choosing the Nation’s Fiscal Future” disagree on many policy matters, the report states, “We are unanimous that forceful, even painful, action must be taken soon to alter the nation’s fiscal course.”

Not to do so risks a fiscal crisis that could throw the country back into recession, spark an interest-rate increase that will heighten what businesses and consumers pay for credit, and risk a downgrade in the nation’s credit rating. Sounds much like the crisis created around raising the debt ceiling.

“Choosing the Nation’s Fiscal Future” proposes a decade-long time frame that uses as its primary metric the size of the government’s debt as a percentage of the nation’s gross domestic product (GDP).

The debt, which was about 40% of GDP just a few years ago, is now close to 100% following the recession and stimulus—the highest rate since the end of WWII.

The project’s committee proposes 60% GDP as an initial goal, believing that target is achievable over the next decade or so. But it will require spending restraints, including cuts to entitlement programs and revenue increases.

The latter is the primary stumbling block responsible for our current political gridlock—particularly as Tea Party Republicans in the U.S. House of Representatives refuse to consider any additional revenue, including the elimination or reform of tax expenditures or loopholes.

Progressives, on the other hand, will have to accept that a lower ratio means spending restraints and reform they would have found unacceptable only a few years ago.

The committee believes 60% is an appropriate balance between the risks associated with the current high ratio and the difficulty in implementing policies consistent with a lower ratio. It lays out different potential revenue and spending scenarios that our policymakers could choose among to hit that goal.

Beyond the next decade, the committee recommends additional reductions in the ratio to give the nation flexibility to handle any major crisis that could come along.

On the bright side, if our lawmakers find common ground and embrace the need for spending restraints and revenue enhancement, then the distasteful battle over raising the debt ceiling in 2011 may prove to have been a good thing for the nation.

If common ground isn’t discovered, then as a nation we may want to respond as white-tail deer do to a threat—turn and run for the hills.

I purchased “Choosing the Nation’s Financial Future” when it was published in 2010, but the entire report is available here at no cost.

You can download the report in its entirety or by specific chapters. The website is worth visiting as it has become a forum for moderated debate and an aggregator of relevant information on the nation’s fiscal crisis from a wide array of sources.

MARK CONDON is CUNA’s senior vice president, business and consumer publishing. Contact him at 608-231-4078.