David Brooks writes today about the future of US-China relations -- this, from a heated debate about whether the US and China face a future of competition, or cooperation. Brooks concludes:
I came to the debate agreeing more with Fallows and left the same way, but I was impressed by how powerfully Ferguson made his case. And I was struck by their agreement about what to do. This conversation, like many conversations these days, gets back to America's debt. Until the U.S. gets its fiscal house in order, relations with countries like China will be fundamentally insecure.
The first thought I had after reading this piece was: we will never, ever get our debt situation settled. Unfortunately, I'm still waiting for the next thought, but it won't come. I really cannot imagine a situation in which we will embrace national austerity for the sake of paying down our insane and immoral levels of debt. We'll just have to crash, and crash hard. Unless, of course, our new ant overlords take over first.
Seriously, can you imagine the US paying down its debt? If so, give me the politically and culturally plausible scenario. Honestly, I want to be convinced.
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To pay down public debt, people either need to accept less government service, or pay more taxes. But in the fantasy world people live in (exhibit A: California) neither option seems acceptable. I agree with Rod, something needs to crash, or else maybe we just get bought by China and they will establish new rules.
The debt will be dealt with in a few ways:
1. Inflation (which will be moderate if fuel commodity prices are not subjected to the levels of speculation they were in 2007-08; that's no guarantee, but OPEC currently is divided over exploitative vs sustainable price management, and killing the geese that lay the eggs of gold is in the long term not sustainable for OPEC).
2.Taxes: During Obama's first term, the Bush tax cuts will expire (though the estate tax will likely simply be frozen in place). Coming next: A VAT, not in Obama's first term, but a second term, but it would only be sellable when conjoined with income tax reform, a la 1986: a reconfiguration of marginal tax rates (will work in two directions - to have more people nominally paying income taxes with the elimination of more loopholes, chief of which would be a long term phase out of the mortgage interest deduction (perhaps over 20 years - the phaseout of consumer loan interest deductions in 1986 occurred over 4 years).
3. Benefits: Some partial means testing of Medicare benefits and possibly even SS benefits, and removal of the cap on FICA taxes.
How on EARTH can you think it is acceptable in ANY sense, morally, fiscially, economically, or even logically, to raise ANY tax now? We are severely overtaxed and we cannot ever rebuild our economy unless our govenrment stop confiscating at least 3 times as much as is sustainable.
END social security, medicare, medicaid, and about a half trillion other useless and pointless pork programs. And then cut taxes until we have no surplus. THE PEOPLE need money, not government. Business needs money, NOT GOVERNMENT. Business and enterprise grow an economy, government shrinks it.
Our level of taxation now is immoral in it's excess. Considering handing more of our wealth to the cesspool in DC just contravenes every means of rational thought.
Watch it, Arrrghhh. Your call to end SS, Medicare, Medicaid and all the pork the democrats just voted in will make the liberals' heads here explode.
OK, Arrrghhh, you want to end Medicaid. Go down to the local Neonatal Intensive Care unit and start pointing. Which babies do you want to take off life support? Are you willing to stand there and watch them expire, as you take them off the machines?
Are you prepared to care for the millions of old people who would literally be on the streets, impoverished, without Social Security? Do you think "the churches" will do it? (With what money? With what nursing homes? With what free or low-cost hospital care?)
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