Turning Point

By Timothy B. Clarke

August 1, 2010

Choices we make now could spell prosperity or decline.

Should we countenance another round of stimulus spending, adding billions more dollars to the national debt, or should we finally begin a serious effort to cut deficits and debt in the interest of longer-term prosperity? Congress is all but deadlocked on that issue.

Are we at a point in our history where choices made now will put us on the path either to renewal of the free enterprise economy of our forbears, or lead us down the road to European-style statism, reliant on powerful bureaucracies and confiscatory taxation? Do the choices we make during the next policy cycle imply that the nation will head either for prosperity or decline?

It seems our government might have reached a crucial turning point-after years of fiscal indiscipline, concomitantly expansionist policies and failure to focus on the long-term needs of our society. The congressional deadlock is itself evidence of the struggle to set the nation's course, as Obama administration stimulators and their allies in Congress have not been able to carry the day over those who can no longer support the borrow-and-spend policies of the past decade.

Even small, temporary steps to keep the economy from receding-such as extending unemployment insurance-now are attacked as unwarranted expansions of government and irresponsible additions to the national debt. Only after months of debate did the Senate muster enough votes to pass an extension of jobless benefits in late July.

Framing this debate in a philosophical context, and with a longer-range view of government's role in America, Arthur C. Brooks, president of the American Enterprise Institute for Public Policy Research, and a distinguished group commissioned by the Center for the Study of the Presidency and Congress this spring issued cogent analyses arguing that decisions made now will have great bearing on the nation's future prospects.

Brooks lays out his case in a May 23 essay in The Washington Post. He sees a "new culture war [pitting] the forces of free enterprise [against] an expanding and paternalistic government." Brooks puts Obama squarely in the second camp, citing the president's 2009 speech chiding people who "chase after all the usual brass rings [and] after the big money . . . and worry about whether [they] have a fancy enough title or a fancy enough car . . . [a] message that's . . . been in our culture for far too long-that through material possessions, through a ruthless competition pursued only on your own behalf-that's how you will measure success."

Seventy percent of Americans favor the free- market economy, but they're losing to the 30 percent who want government spending and ownership (GMC, major banks), regulation and income redistribution, Brooks argues. Happiness, the pursuit of which is our third inalienable right, does not come with a welfare check but rather with the opportunity to succeed, he argues convincingly.

Brooks' argument against government expansionism is echoed in less ideological form in the final report of the CPSC's Strengthening America's Future Initiative, issued in April. It too posits a key turning point and seeks to lay out ideas for "regaining our strategic and financial freedom of action, unity at home and standing abroad." CPSC President David Abshire, former Colorado Gov. Roy Romer, leading defense industrialist and Pentagon official Norman Augustine, and former Comptroller General David M. Walker led the initiative's steering committee. Walker is now president of the Peter G. Peterson Foundation, which funded the study.

It raises the alarm about the looming fiscal crisis. Interest on the nation's debt soon could be the largest item in the federal budget, buying us nothing of value, the study notes. And it steps up the argument a notch, suggesting we soon might face a situation analogous to the time when, as one of its leading creditors, we forced the British government to abandon a plan to regain control of the Suez Canal. In "an American Suez," China and other major purchasers of U.S. debt might similarly face what British leader Harold MacMillan called "the last gasp of a declining power."

While focusing principally on the fiscal challenge, the CPSC report recommends government undertakes comprehensive political and programmatic reform-in electoral practices; congressional committee restructuring; civil service training; new policies to enhance educational achievement and proficiency in math, science and engineering; energy consumption; infrastructure improvement; immigration policies; and more.

In a June 8 speech at the Center for American Progress, Peter R. Orszag, the Office of Management and Budget's departing director, touched on the administration's spending restraint program: its request that agencies submit budgets encompassing a 5 percent cut to facilitate its plan for a three-year freeze on discretionary spending without killing all new initiatives.

Most of Orszag's speech focused on improving execution of government programs, with special emphasis on bringing Web and other technology practices up to private sector standards. Federal management gains are important, to be sure, but as to the essential steps we need to remain a great nation, Obama has kicked the can down the road, hoping the fiscal reform commission he appointed will produce politically palatable solutions when it reports in December.

By Timothy B. Clarke

August 1, 2010