One of the drawbacks to the concept of “American exceptionalism”
is that it has instilled a belief that the nation can have
everything in perpetuity — the best military in the world, a
vibrant economy, low taxes and a growing welfare state — just
because we’re Americans.
For decades, with times relatively good, this belief allowed the
nation to ignore those who warned about the threat posed by the
tremendous growth of the federal government. Yet when the financial
collapse hit in 2008, it ushered in an era of annual
trillion-dollar deficits, giving Americans just a small taste of
what the future holds.
The conflict over the size of government is not merely a numbers
game, but a generational issue. If federal spending grows at its
current trajectory, America will become a nation of stagnant
growth, high unemployment, crushing tax rates, and runaway
inflation. Its military strength will deteriorate substantially,
making the nation more vulnerable. And younger generations of
Americans will experience a substantially worse standard of living
than their elders.
Over the past several weeks, Washington has been flooded with
deficit reduction proposals sprouting from President Obama’s fiscal
commission. While none of these various plans are likely to be
adopted in the near future, they do help highlight the stark
contrast in visions for how to respond to the nation’s financial
challenges.
On one end of the spectrum is a
proposal advanced by the most liberal member of the deficit
panel, Illinois Rep. Jan Schakowsky. Her plan calls for drastically
cutting the military budget while raising income taxes, estate
taxes, corporate taxes, payroll taxes, and capital gains taxes. She
would implement “cap and trade,” add the government-run plan, or
“public option” to ObamaCare, and have the federal government
“negotiate” drug prices. In addition, she would spend $200 billion
on more stimulus projects. In sum, her plan would put America on an
accelerated course toward a European-style welfare state.
On the other end is Rep. Paul Ryan, who has already presented
his “Roadmap
for America’s Future.” While conceding that entitlement
programs would have to remain intact for those at or nearing
retirement, his plan would reform them for younger workers by
emphasizing individual choice. Alice Rivlin, a member of the
commission and a former director of the White House Office of
Management and Budget under President Clinton, signed on to Ryan’s
proposal to transition Medicare into a voucher program and turn
Medicaid into a block grant to states to allow governors more
flexibility. Ryan’s plan would overhaul the tax code without
raising taxes, and does not involve cuts to the military
budget.
Today, the 18-member commission will vote on the final
report of its directors, former GOP Sen. Alan Simpson and one
time Clinton chief of staff Erskine Bowles. The plan includes steep
military cuts that would bring the defense budget as a share of the
economy roughly to where it was before the Sept. 11 attacks. It
would simplify the tax code by getting rid of many popular
deductions while lowering marginal tax rates. Yet overall, it would
still end up raising taxes by $1 trillion,
according to estimates by Americans for Tax Reform, and move
revenue as a share of the economy from its historical 18 percent to
an alarming 21 percent. In addition, it would make changes to
Social Security, including raising the retirement age by two years
over the next 65 years.
While it has gained some bipartisan support — including from
Democratic Sen. Dick Durbin and Republican Sens. Mike Crapo, Judd
Gregg, and conservative stalwart Tom Coburn, the Simpson-Bowles
plan is unlikely to be enacted any time soon.
That said, these proposals mark a good opportunity for Americans
to question what type of country they want to live in, because the
status quo is unsustainable. Do they want to maintain global
military supremacy, or are they comfortable adopting a
non-interventionist foreign policy and curtailing our military
commitments? Do they want to keep taxes relatively low, or are they
willing to accept much higher tax rates in exchange for government
services? Do they want to be a nation of free markets and
individual responsibility, or are they comfortable evolving into a
European-style welfare state?
It’s crucial that Americans answer these questions now, because
the longer lawmakers delay action, the more difficult it will be to
manage the looming crisis. However inspiring the story of its
founding, whatever its great achievements, no matter how strong its
character has proven to be in the past, America is not immune to
reality.
