National Debt: Fix It or Face National Decline

National Debt: Fix It or Face National Decline


In spite of the jubilation over the demise of mass murderer Osama bin Laden there is a demoralized public sense that our government is in disarray and unable to make the wise and tough decisions to get things done to solve the problems of the nation, including our national debt. They seem not to have the capacity to build a consensus for constructive compromise, which is critical to solving our problems.  We need someone who fits Harry Truman’s definition of a leader:  a man who has the ability to get other people to do what they don’t want to do and to like it. 

The talk today is about decline and recession and a faltering America that no longer leads the world.  No longer do we have the air of what Mark Twain once described as, “the serene confidence of a poker player with four aces.” 

We worry that our children will not enjoy the opportunities we so long took for granted.  We worry that our financial system is broken and is still not fixed.  We worry that our healthcare problems are not solved.  We worry about our fiscal problems, in the face of trillion dollar plus deficits as far as the eye can see.  Who would have ever imagined that the credit rating of the United States would be put on financial watch by Standard & Poor’s? Who would have imagined the largest fixed-income financial firm, PIMCO would have stated they have not only sold all their treasury paper but are selling American bonds short because they do not have faith that our political leadership can deal with the fiscal crisis?

Congressmen spend more of their time raising money
for misleading and defamatory TV commercials than
they spend settling our predicaments.

There is a sigh of “too true” in Mancur Olson’s contention in his book, The Rise and Decline of Nations, in which he decries the creation of a culture of entitlement, where special interest groups take bite after tiny bite out of the total national wealth through tax breaks, lobbying for special appropriations, earmarks, and other favors that are all easier to initiate than to end, thus undermining the will and moral authority to govern on the basis of the country’s long-term interests rather than the short-term political interests of our representatives.

Congressmen spend more of their time raising money for misleading and defamatory TV commercials and attacking their opponents than they spend settling our predicaments. They remind me of what Linus said to Lucy after she asked him why he polished only the front of his shoes. “I only care about the impression I make when I come in.” The president started his next presidential campaign with a major national fundraising effort that began in California and announced that he expects to raise a billion dollars for his campaign.

The budget can no longer be a perpetual motion
machine for new spending on new programs for new
needs on top of those we already can’t afford.

The most devastating illustration of this disconnect is reflected in the instinctive conclusion among the American people that the debts we have accumulated are of critical importance and, shuffle the numbers as you may, the level of debt is unsustainable.  Millions of voters have discovered that for themselves, when they woke up and learned that they have a mortgage that exceeds the value of the home and a credit card line that they cannot repay.  They know that bills travel through the mail at twice the speed of checks. They have truly learned the lesson that debt catches up with you and understand that we are going to have to find a way to live within our means.  That the budget can no longer be a perpetual motion machine for new spending on new programs for new needs on top of those we already can’t afford.

Politicians and diapers have one thing in common;
they should both be changed regularly
and for the same reason.

The people understand.  The deficits and government spending has jumped from 10th place to one that is second only to job creation and economic growth.  We are learning from the Europeans what happens when the risks that come with excessive debt become reality.  There are two warning signs of a budget crisis:  rising debt and the loss of confidence that the government will deal with it.  This administration is fulfilling both conditions. The public is aware of the crisis for they recognize in overwhelming poll numbers that the country is headed in the wrong direction. They understand that politicians and diapers have one thing in common; they should both be changed regularly and for the same reason. It is no use if our political leaders say we are doing our best. They have to succeed in doing what’s necessary.

Nevertheless, we should not despair, for if the new frontier is the global economy, we are as well placed to exploit that as we were in the new continental marketplace of a century ago.  As Ovid once said, “let others praise ancient times, I’m glad I was born in these.” Our past investments and high-tech training have dramatically increased quality control, improved information systems, and enabled us to produce sophisticated goods derived from intellectual output in knowledge-based industries. American management is second to none.  During the 1980’s and 1990’s, the United States created 73 million new private-sector jobs while shedding 44 million for a net job creation of 29 million jobs as we adjusted to global competition.  By the end of those two decades, 55 percent of the workforce was in a new job.  By contrast, continental Europe, with a larger economy and workforce, created under five million new jobs during the same time period. 

We have a unique culture of enterprise and sophisticated management.  How else to serve a market stretching vast distances over mountains, deserts, and rivers and meet the needs of diverse populations.  Our culture has long valued individualism, entrepreneurialism, pragmatism, and novelty along with an abiding respect for the rule of law by which the country was founded.  Business is dominated by merit and a common belief in technology and scientific management not by primo genitor.  Our people are mobile physically and mentally.  No other country has a population given to self-help, self-improvement, and even self-renovation.  No other country invests so much in training and retraining.  No other country has similar quality graduate and under-graduate business schools.  No other country draws so many of the world’s best and brightest to its labs and universities.  No other country attracts so many talented immigrants.  No other country sees its most talented people move so overwhelmingly into the private sector. 

Large blue-chip companies no longer have a lock on recruiting the best and the brightest but now must compete with thousands of smaller companies, over two million in the last 15 years that have the potential to blossom and grow, even as thousands have gone belly-up.  As new products and services are developed, American businesses’ unique marketing and advertising skills have the potential to establish their success at home and abroad.  The flexibility, openness, reinvention, and get-up-and-go spirit of business nurtures the industries and technologies of the future.  That is how we marry a new economy to an older economic culture.  We are the only country that funds so many of its young.  We increasingly fund the future, not the past, the new and not the old.  And not with short-term capital but long-term risk capital. 

No other country is so open to reform.  Worry has always preceeded reform in America.  We are not, most of all, subservient to some outdated theory or attached to some ideology.  We do not, and did not, go into five and ten year plans formulated by some central government.  We enjoy a public policy framework that outlines not just what the government does but what the government does not do.  We leave it to the private sector to allocate resources. 

Alexis de Tocqueville was particularly astute some 200 years ago when he wrote, “the greatness of America lies not in being more enlightened than other nations but rather in her ability to repair her faults” -- to which I would add, “hopefully quickly”.

Mortimer B. Zuckerman is the Chairman and Editor-in-Chief of U.S. News & World Report and is the publisher of the New York Daily News. He is also the founder and Chairman of Boston Properties, Inc. This piece was adapted from a speech he gave at a Manhattan Institute event on April 27, 2011.