When keepers of the conventional wisdom and guardian of the status quo like David Brooks say the United States is becoming another Greece, you can pretty well assume that we’re becoming another Greece. The political divide between Ds and Rs is so wide that the New York Times columnist can’t see how the $1 trillion-a-year budget gap can be bridged.
That’s pretty much the conclusion that I came to a year and a half ago when I was writing “Boomergeddon.” Back then, the idea that the U.S. might one day default upon its debt seemed laughable — the raving of a Tea Party fanatic. Now Mr. Establishment, David Brooks, is resigning himself to the inevitable. “The short answer,” he says, “is, welcome Greece. We’re going to be Greece.”
Just a refresher of what I wrote before the 2010 election:
Tea Partiers may propel the Rs to electoral gains in November, but it’s not clear that the Elephant Clan has the will to defy the organized special interests in Washington, D.C., much less to make transformative reforms that can return the country to a sustainable fiscal trajectory. As long as Obama is president, until January 2013 at the very least, even the eviction of the Donkey Clan as the majority party in Congress will result in little change for two more years. By then, the nation will be $3 trillion deeper in hock, the economy will be as hooked as ever upon Keynesian spending stimulus to keep growing, society’s “unmet needs” will be as acute as always, the evaporation of the Medicare Part B trust fund will be looming on the horizon, and foreign investors will be even more antsy about the ability of the U.S. to repay its debt.”
Taxpayers may vehemently oppose deficit spending and the mounting national debt, but those who pay no federal income taxes — about 43 percent of the population, according to the center-left Tax Policy Center — will oppose with equal vehemence any move to cut entitlements, and both parties will demagogue anyone who proposes to touch Social Security and Medicare. Just look at what the Democrats did to George Bush’s proposal to reform Social Security, and observe how Republicans accused Obamacare of undermining Medicare. Any change, if it comes, will likely be incremental and insufficient to divert the federal government from its downward slide.” …
Although it may be theoretically possible to extricate ourselves … the prospects that the political class, either of the two party/clans or even a majority of the American people will be willing to make the necessary sacrifices are remote.
Once again, I repeat my refrain that the only bastion of functional government in the post-Boomergeddon world will be those forward-looking state and local governments that saw the calamity coming and acted aggressively to shore up their finances and reinvent core institutions, such as transportation, land use, schools, higher ed and health care, upon which our well being depends. The Tea Party and Occupy Wall Street are nothing compared to the unrest to come when the financial markets begin dictating U.S. fiscal policy. They are no more than a warm-up act for what’s to come. They’re not even that, they’re the roadies who walk onto the stage and tinker with the amplifiers before the warm up act. Repent, sinners, the judgment day (of the financial markets) soon will be at hand!
— JAB
