Any doubts that this country has an insular, inept, and cataclysmically dysfunctional political class were erased long ago, but it bears repeating that only in certain elite precincts could any of the debt ”deals” discussed over the last month be seen as anything but a juvenile, cosmetic solution to a real and titanic problem. That problem isn’t going away simply because the political crisis may be pushed (the president hopes) beyond the 2012 election.
The federal government receives approximately $2.2 trillion in taxes (or, as the president prefers and Republicans parrot, “revenues”). Medicare and Social Security alone eat up $1.5 trillion of that. Our unfunded entitlement liabilities are more than $100 trillion. Yet last night the president of the United States crowed that the tentative deal makes only ”modest” reforms to entitlements, as if any tinkering with entitlements were nothing more than a bothersome political maneuver designed merely to curry favor with tea-party tightwads.
Under the latest “deal,” we are told, federal spending will be cut approximately $2.7 trillion. That’s false. We’re going to pretend to cut $2.7 trillion, which is somehow meant to be a greater achievement than pretending to cut $1.5 trillion, but not as great as pretending to cut $4 trillion, which is what the rating agencies would prefer. In reality (that benighted realm that exists outside the District of Columbia), spending will increase by about $6,000,000,000,000.
Members of the political class pat themselves on their backs for coming up with a deal that is “the best deal they could get.” The dominant media coo about the statesmanship and sobriety that supposedly pulled the nation from the economic brink, permitting us all to return to our mundane pursuits. But the spending will increase and the liabilities will mount. The day of fiscal reckoning will continue to approach.
And it’s not just the ratings agencies that will be watching. So will our creditors — including those countries whose geopolitical interests don’t necessarily align with ours. In particular, they will be watching as we slash our defense spending at the same time new threats emerge around the world. Some of those countries will place strategic bets. Those bets will not be made the same way they would have been during American ascendancy. Those bets are immune to the conceits of our political class. Those bets are going to create even more headaches for us.
The deal that emerges from the debt-ceiling debate may indeed be the “best deal we could get.” It should demonstrate, however, that this isn’t the best political class we could get. And it should demonstrate the perils of electing a spendaholic regime content to lead from behind.