Cut spending or go broke: America’s existential moment

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Cut spending or go broke: America’s existential moment

(Centennial Fellow) In arguably the most colossal political blunder of the 20th century Adolf Hitler declared war on the United States three days after Pearl Harbor based on his fatal underestimation of America’s prodigious capacity for war production.

A dozen years later Dwight Eisenhower wrote that “the greatness of America and its capacity for doing good in the world is inseparably linked to the might of the U. S. economy.”

Thirty years later Ronald Reagan launched a massive military build–up believing correctly that he could win the Cold War by breaking the back of a Soviet economy that had no chance of successfully competing with the American economic juggernaut.

Since the Second World War Americans have viewed their country’s global dominance and concomitant economic primacy as a constant in world affairs. They have also seen that economy as a mighty engine that would endlessly elevate the quality of life for each successive generation of Americans.

Now in less than three years that mindset has been definitively shattered. Today—however unwillingly—we must actually contemplate the possibility that our country could go bankrupt and our economy collapse under the weight of heretofore unthinkable debt and deficits. Perhaps ever more damaging to our collective psyche is the thought that we are ushering in a new Gray Age of American history in which our children and grandchildren will look back on our time as a moment of national fecklessness that led to the death of the American Dream.

This bleak scenario arises from a perfect storm of global events most notably the world’s worst economic shocks since 1945 and a new American Administration at once economically clueless and blindly driven by a redistributionist ideology.

At a moment when all of Europe is beginning to turn away from the destructive consequences of socialist economics the Obama administration is racing hell bent to embrace it.

Just when these baleful trends appeared irreversible there occurred an extraordinary and leaderless popular uprising among the American people. Some defined it narrowly as the “Tea Party Movement” but it was actually much broader than that as was demonstrated last November in the most stunning mid–term elections in seventy years.

The most remarkable aspect of that election occurred not at the national level, but at the base of the American political pyramid. There Republicans gained nearly 700 state legislative seats—the most they have held since 1928. The consequences of this startling shift are now being seen in statehouses across the nation—nowhere more visibly than in Madison, Wisconsin.

Pundits and Parties alike are yet divided on the meaning of this political earthquake but one truth seems emergent: virtually every American adult understands the relationship between income and expenditure, and that when the latter consistently outpaces the former it is a bad thing. They also know that just as excessive debt can crush a family, so too it can ruin a nation.

At present the two political parties are engaged in a contest to determine which can more skillfully respond to the American people’s convictions regarding income and expenditure.

The Democrats—at least those in Washington—are at a disadvantage in defending a President loudly advocating the need for more spending and rhetoric aside showing almost no interest in cutting spending.

Republicans who have no history of ever cutting spending are gripped by uncertainty and divided between those determined to make the leap to real spending cuts—including entitlements—and those terrified of being politically savaged by demagoguing Democrats.

Though they are most disingenuous in articulating it the Democrats as the historic party of more government believe that large tax increases will at once fix the economy and banish the entitlement nightmare.

Though tongue–tied about what and how much to cut—particularly entitlements—Republicans as the party of less government see tax increases as anathema to recovery and believe only dramatic spending cuts can re–energize those market forces that have historically been the mighty engine of American growth and prosperity.

The bet here is that just as governors like Wisconsin’s Tommy Thompson, and Michigan’s John Engler built the state laboratories that helped shape the resurgent economy of the Eighties and Nineties, so too will it be Republican governors from the Heartland like, Walker, Daniels, and Kasich who will boldly go where a timid Washington establishment has feared to tread and thereby show the way to rescuing an American economy trembling on the brink of catastrophe. All Americans should wish them well, for if they and their states fail, it is hard to imagine how our country can succeed.

William Moloney’s columns have appeared in the Wall St. Journal, USA Today, Washington Post , and many other outlets. He is a Fellow of the Centennial Institute.

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