Another centrist editorial that seeks a balancing of the pain as the US figures out how to write off its debt, but fails to ask the right question:
Menzie Chinn and Jeffry Frieden via The NY Times
The recent skirmishes all dance around the central issue: the United States is in the midst of the world’s largest debt crisis. The Treasury now owes the public almost $10 trillion, including $4.5 trillion to foreigners — and that doesn’t include what households and companies owe. For decades to come, Americans will face the core problem of every heavily indebted nation: who will bear the burden of adjustment?
Countries borrow for many purposes: canals and railroads in the 19th century, factories and highways in the 20th, and in the last decade, a housing and financial boom in Europe and America. When the projects don’t pan out and the debtor country falls into crisis, what happens to the accumulated debts? Who pays? Creditors or debtors? Workers or investors? Rich or poor? The European Union is tearing itself apart over this question, which divides creditor nations from debtor nations and which divides groups within nations. The American variant of this conflict is just beginning.
Perhaps, some Americans believe, we can shunt the adjustment costs onto foreigners. Indeed, our creditors worry that the United States will reduce its debt burden the old-fashioned way, by inflating it away. A few years of moderate inflation, and a weaker dollar, would significantly lessen the real cost of servicing the country’s debts — at our creditors’ expense.
But adjusting to the reality of America’s accumulated debts will inevitably require sacrifices at home. The battle over who will be sacrificing has already begun, albeit under veils of rhetoric. The Republicans seem unconcerned about stimulating recovery, and primarily concerned that none of the long-term costs of balancing our budget be paid by upper-income taxpayers. No surprise: unemployment among the one-third of Americans with the highest incomes is barely 4 percent, while for the lowest third it is more than four times that level.
The Democrats, for their part, seem content to insist that the adjustment burden not fall on beneficiaries of government spending, whether public employees or recipients of social spending. This reflects their base in the labor movement, the public sector and the poor.
Yes, the GOP wants to spare the wealthy from any pain, either increased taxes or a write down of the value of their treasuries.
And, perhaps the authors are right about the Democrats — that they are working only for those with entitlements. At any rate, they are trying to make sure that the poor, the old and the young aren’t the first thrown from the lifeboat.
But the missing question is ‘Who is responsible? Who is to blame?’
Why are we incapable of pointing at the folks who created this mess and saying they are responsible and should pay? The banks, the wall street traders, the CEOs of organizations that gambled and lost, and then paid off the politicos so that the debts would become ours, added to the government’s deficit?
If the government only exists as a means for the wealthy and the corporations to abrogate their obligations, and the Democrat-led government prosecutes no one, then its clear that GOP and Democrats alike are incapable of leading us.
The New Depression is casting its growing shadow, and there seems no will to do what is needed: a massive jobs bill, to restart the stalled American economy, and grow our way back.
Obama has been emasculated by the GOP terrorists, and there is no voice of reason, aside from shunned economists and progressives, all deemed too far left for today’s realpolitik that considers Obama’s policies — far to the right of Reagan and Nixon — socialism.
Who speaks for us? Where is the Martin Luther King or Franklin Delano Roosevelt for our time?
We thought it was Obama, but he’s faded: the light’s gone out of him, like a firefly too long in a corked bottle.
Who will lead? We seem to have no plan, no direction. We have no leaders worthy of us.