We have put ourselves into a debt trap because of two impulses that cannot possibly be reconciled: We want to spend a lot of money, and we don’t want to pay for our spending.
Our entire national debt when we add together the federal, state, and local totals is now trending in the region of 57 trillion dollars—a number so huge that it strains all comprehension. It is, unfortunately, too late in the game for easy—or even vaguely palatable—solutions, and we could very well, as some have suggested, be sliding in the direction of an economic collapse that will strain the fabric of our social and political institutions to the breaking point. Therefore, it seems logical to look down the road at the problems this will cause to crash down upon us and consider some much-needed changes that will be vital first steps to both putting our fiscal house back in order and creating a sustainable path to the future.
Calls for massive governmental budget cuts and substantial tax increases are surely right over the horizon—no matter how much we may wish it to be otherwise—and the collision of financial obligations and available funds is going to push us to make decisions that might have seemed unthinkable only a few years ago. We can already see the dark clouds of what is to come as cities around the nation struggle to avoid—or are caught up by—municipal bankruptcies.
The problems inherent in paying public sector obligations after several decades of both spending ourselves into a massive current accounts payable hole and failing to set aside even the minimum necessary to meet our future obligations are going to fray our most basic ideas of what government is meant to do. We expect services and support in exchange for our tax dollars; a debt-laden system that decrees creditors will be paid before the basic daily needs of citizens are met is likely to cause outrage—and we already see this happening across the pond in Europe.
Given the ridiculous levels of income and wealth inequality that now exist in the United States—the richest 20% now hold roughly 85% of Americans’ net worth—it would seem logical to ask those who have much to pay a little more, but that seems to be going nowhere fast in a political climate that has the “haves” firmly lined up to defend their wealth against all those pesky “have-nots” who are hoping that somewhere there is a government program that will help them put food on the table, heat in the furnace, and a tolerable roof over their heads. Although it is certainly true that some of those who are seeking assistance lack a driving work ethic and have failed to learn marketable skills, it is also obvious that a great many others are decent and industrious individuals who are being slowly crushed by a global economic train wreck that few completely understand—and from which even fewer are safe.
Although no one can predict the exact shape of the future, we can certainly see the dread outline of large-scale and intractable suffering for many looming out of the shadows before us, and no amount of charitable giving can possibly suffice to fill the void left behind by the rapid withdrawal of needed social, medical, and educational spending by all levels of government. Although our debt is now far too mountainous to avoid a great deal of pain no matter what course of action we take to manage it, it could still be possible to begin the healing if we take action right now—not after a decade or so of additional study by blue-ribbon commissions.
First of all, we need to reconcile ourselves to the fact that, as the experience of the past three decades shows, handing out tax breaks and shouldering the risks of economic development for businesses in the hope this will provide future tax revenues has not proven to be an economic winner; corporations both large and small simply go shopping for a better deal—or shut down entirely—when the public dollars are withdrawn. Corporate welfare is not a growth strategy for any community, state, or nation, and we can no longer afford to ask taxpayers to fund someone else’s private money-making venture in the hope that some benefit will eventually work its way down to the rest of us. Although “safety-net capitalism” promotes profits (and our largest corporations are making stupendous profits at the present time while often paying little or no taxes), it does not benefit society because our communities—and the governments who represent us at every level—are starved of tax revenue while being forced to assume the ownership of mind-boggling debt that is funding ever larger executive pay packages and, in many cases, the very business expansion abroad that is robbing our nation of the desperately needed jobs that safety-net capitalism was supposed to save.
Therefore, instead of shredding the social safety net by firing teachers, firefighters, police officers, and other essential government workers while also cutting benefits for the most vulnerable members of our society, perhaps we should be taking a hard look at removing the corporate safety net that provides safety only for those who are busy counting their stock options. We need to insist that our leading capitalists be capitalists and not incredibly well paid wards of the state.
To help push this effort forward, and to put our nation on a firm footing for the future, we need to pass national legislation that simplifies the Byzantine system of business loopholes now imbedded in our federal, state, and local tax structures (a move which is, thankfully, at least being discussed at present) while forbidding governments at all levels from engaging in the counter-productive and ethically questionable practice of handing out public dollars to private companies under the guise of economic development.
We need to let businesses be businesses. Work hard, play fair, produce a great product or service, make money—and pay your taxes. It’s the true American Way. If we remove the corporate safety net, it should be possible to revitalize our system of competitive capitalism by providing actual market discipline, which will, in turn, provide us with a more secure and stable democracy by allowing our nation to better support the needs of all our citizens.
However, the question of whether—in a system awash in campaign cash seeking the granting of expensive favors that benefit the few at the expense of the many—we can muster the political will to do any of this is a question that has yet to be answered, and the active engagement of all our citizens will be vitally important if we are to take our nation back from the lobbyists and hucksters who have brought us to this point.