Since I routinely spread a message of doom and gloom about the ever-expanding welfare state and warn about the potential for European-style fiscal collapse, I guess I shouldn’t be surprised that I’ve received several emails asking me variants of this question: “Do you think the United States can be rescued?”
Or sometimes, I get questions that I think are somewhat related, such as “Doesn’t Washington drive you crazy” or “Why haven’t you given up?”
I’m not sure I’m good at introspection, but I’ll try to answer, and we’ll start with the main question and then deal with the secondary queries.
To be blunt, if I had to place a bet on the outcome, I think the United States will become a failed European-style welfare state. The burden of government spending already is far too high and our long-run outlook is terrible, as shown by these OECD and BIS numbers, and I don’t think the callow politicians in Washington will fix the problems because they rarely think past the next election cycle.
This doesn’t necessarily mean that we’ll have a Greek-style fiscal collapse. Perhaps we’ll simply descend into permanent stagnation, with anemic growth (at best) and widespread dependency and joblessness.
That being said, even though I would bet on a bad outcome, I think there’s a genuine opportunity to save the country.
No, I’m not talking about creating a libertarian Nirvana, with the federal government consuming only three percent of economic output. But I think we can at least hold the line and prevent government from becoming bigger than it is today. Sort of a watered-down version of Mitchell’s Golden Rule.
The key is the right kind of entitlement reform. Our long-run fiscal nightmare is entirely the result of programs such as Social Security, Medicare, and Medicaid, so the solution is obvious.
But is it achievable?
As I’ve already indicated, I wouldn’t bet on it. We definitely know there won’t be any good reforms for the next four years, but let me give you a plausible scenario for what might happen beginning in 2017.
We’ll start with the fact that the House of Representatives already voted for Medicaid reform and Medicare reform as part of the Ryan budget in 2011 and 2012. We also know that Republicans retained the House in the most recent election and there seems to be a political consensus that voting to fix the healthcare entitlements was not a political liability.
There was no Social Security reform in Ryan’s budget, but we also know that George W. Bush (for all his other faults) supported personal accounts in 2000 and 2004 and didn’t suffer any political backlash. Indeed, personal accounts still seem to be reasonably popular.
With this in mind, I think it may be possible to fix entitlement programs in 2017 assuming that the 2014 and 2016 elections lead to pro-reform lawmakers in the House, Senate, and White House.
That may not be likely, but it’s definitely possible.
My job, simply stated, is to help inform and educate people so that the climate is favorable to reform.
Which brings me to the secondary questions about whether Washington drives me crazy and whether I should give up.
The short answer is that I’m intellectually pessimistic but operationally optimistic.
In other words, my brain tells me that things will probably deteriorate but my heart tells me that this is a battle worth fighting.
So, yes, Washington does drive me crazy. It is both an immoral town and an amoral town, pervasively corrupt and filled with people who seem to think that it is perfectly okay to steal so long as it happens through the legislative or regulatory process.
And, yes, I may decide to give up if something really horrible happens, such as adoption of a value-added tax. Giving politicians a big new source of revenue, after all, would cripple any incentive for fiscal restraint.
But until that happens, I think I’m very lucky that I get to wake up every day and be part of the Cato Institute’s fight to preserve (and restore) American exceptionalism.
P.S. This is the second “Question of the Week” in two days, but I neglected to answer a question last week, so I had to catch up and get back on track. Yesterday’s question and answer generated a lot of interest, so I hope this one is equally thought-provoking.
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When America collapse there will still be land here. There will most likely be less of it that is worth inhabiting, but still land. Funny part about the question is that it assumes that there will be a choice. When I read this type of posting I think to myself that we in America think that we can say to the nations that we have bombed “okay I give we can’t torment you anymore so let’s just live and let live.” This is a funny thought. What we want is to think that we will just be able to walk away from our debts and start over fresh and new like nothing happened. I’m not just talking about the country but we the people who support the country willingly or not the Enemy did not differentiate between those that supported Hitler and those who did not support him, all had to pay the price imposed on Germany, and the same will work here. WAKE UP and get a grip.
The Libertarian party(and the Ron Paul “caucus” is the only party advocating for adequate fiscal reforms. The GOP at best says status quo, although we all know how much they expanded government between 2000-2008. Exceptionalism does not mean spending our blood and treasure abroad to enforce our ‘national interest’ or play world cop. Things we clearly cannot afford. What it means is returning to the pre-New Deal, even pre-1913 America, where we had a prosperous society where individuals drove the engine of our success story, without big government and central planners on our back. Post civil war – 1913 were some of our best times in terms of economic growth and hope for the future.
[…] a “Question of the Week” from last month, in which I expressed guarded optimism that America could be saved, she wants to know what I would do if things go the wrong […]
i own and run a company that employs 85 people. Many of them ask to take days off without pay, and/or refuse overtime, becuase if they make too much money they will lose their government funding. I give them a choice: work full-time, or quit. I can’t have workers who can’t work. Nobody in Washington has any idea how big this problem is. You are better off on government benefits that earning $12/ to $15 an hour. Most of them quit their jobs, which is a rational economic choice from their point of view.
Welfare will totally destroy this country, if it hasn’t already. No country can survive long that pays people not to work. By welfare I include Section 8 housing, food stamps, Medicare, etc. All of them have income ceilings, and therefore discourage work. The reason we have so many illegal aliens working is that they have trouble getting the welfare, so it’s worth it to them to work.
From down in the trenches, where I operate, America is doomed.
I stopped reading as soon as you blamed the problem on SS, medicare and medicaid. SS takes in about $840 billion a year and pays out about $825 billion. Medicare is a paid insurance program which was expanded beyond the funding. Either increase that portion of the payroll tax to pay for it or increase the co-pay and the problem is fixed. Medicaid is a pure give away. The people who receive it pay nothing for it. But you missed the real problem; welfare. The federal government spends about $1.2 trillion a year on 2400 welfare programs hidden in 5 cabinet level departments. THAT is the problem and to claim anything else is to be a dupe.
The is a view that will never happen. The system is broken and beyond repair. The way this country differs from European nations is that it has made enemies on a much grander scale than European Nations. We are not just talking about failed Government but attacks from the world community that we Lorded over as if we were superior to all. History offers examples of similar Nations such as the Roman empire that were attacked by other nations as they fail.
We also have a greater enemy to contend with and that is Global warming and the disasters it will bring. You can get my view of how we should prepare for the affects of global warming and its effects on the weather through natural disasters at https://www.facebook.com/pages/The-Point-Mans-Guide-To-Survival/169950776480720 , this is our first Enemy we must battle. If you just look at the relief offered to the victims of hurricane Sandy you will understand.
I would like to ask, out of interest, a question: are you a politician? If so, what office do you hold? Thanks.
Thanks for the article. I, like you, am of two minds regarding whether The Grand American Experiment will succeed.
I don’t think that your use of the term “libertarian” clears things at all. I remember that the US “Libertarian Party” joyfully issued public statements excoriating Republicans during the Clinton Regime and in particular George Bush, in his half-hearted battles with liberal Democrats. Libertarians, as an organized group(?) have no belief if American Exceptionalism. See Ron Paul and his nutty statements concerning our military and security, and his defining of conservatives.
While this last election has sent us nearly over the cliff, the next one will determine whether Americans still believe in Freedom and prosperity, or continue on their path to ruination, Thanks to the Left’s Long March Thru The Institutions, more particularly the school system, New generations are not taught about American Culture, including capitalism and God-given rights, not depending on big government largesse, or tied to a socially stratified society. No wonder they have emerged as a huge Stalinist base.
Who, watching the Democrat convention, where Sandra Fluke spoke about birth control and worrying that taxpayers might not pay for hers, didn’t think that, with all the problems at our doorstep, what on earth are they thinking? This is insane. But it worked, especially for single women, who continue to show disinterest in marriage and raising a family to participate in a free and prosperous America.
And the vermin Joe Biden, telling Blacks that Republicans wanted to put them in chains? Huh?
But while conservatives preached the gospel of American Liberty and Prosperity, the Stalinists zeroed in on the groups they needed to brainwash and frighten, and, thanks to the crashing of our once-great educational system, people see nothing preposterous or wrong about what they said or did. They concentrate on defining us. And Obama, even after winning re-election, continues to do this, eschewing responsible governance as apparent President. He will never stop.
I don’t know how you go after these people with ideas of freedom and prosperity (those words again)? They clearly are incapable of critical thought.
Just my 2 cents.
I’ve lived in and loved my country since 1941. That qualifies me to be an angry senior citizen. When the voters couldn’t see through the politician running for the highest office in the land, and when he succeeded again in 2012 it verified to me that half of the people know nothing about who they’ve returned to power in D.C. Look up the backgrounds of Obama Jr., Obama, Sr., Ann Dunham Obama, and last but not least Frank Marshal Davis who I contend is the real father.