The United States has suffered through unserious leadership for years now. Besides a flawed, but well-intentioned effort to reform our faltering social security entitlement system, President George W. Bush did little to curb the relentless government spending that is putting our remarkable country in peril. In his three years so far in office, President Barack Obama has not only done absolutely nothing to contain our out of control deficits and spending, but actually put them on an even more unsustainable path.
The numbers don’t lie; the American financial system and economy is in deep trouble:
Obama’s ten year budget projections, which include optimistic GDP growth estimates, contain over a trillion dollars in debt annually. Our dire situation is not just for policy wonks or Chicken Littles. One only has to look to what is happening in Greece this very day to remind us how bad things can become. How did we get here?
Walter Russell Mead attempts to answer that question in a piece called ‘When Government Jumps the Shark‘. He brings his readers along the progressive path to a growing government with more and more responsibilities. The first few stages usually have gone well with small government programs providing services that the American people want and can use, but then comes trouble….
The fourth stage of life comes when the Great White Elephant morphs into a Great White Shark: a man-eating terror of the deep that ruthlessly attacks anyone who gets in its way. At this stage the government program has moved beyond being wasteful and has become unsustainable. Fannie Mae goes from providing mortgages to creditworthy households to providing vast numbers of mortgages to uncreditworthy households, poisoning the financial system with bad loans. Medicare is unsustainable in the medium term and hugely expensive day to day — even as the procedures and regulations of Medicare warp investment decisions across the entire health care system.
But even as these programs become unsustainable, they have become so powerful — there are so many interests and industries that grow rich on these programs, and so many families for whom these programs have become the cornerstone of what little financial security they have — that they cannot be touched. One way to tell when an elephant has morphed into a shark: when pundits and politicians start describing a government program as a ‘third rail’: you touch it, you die.
The Great White Shark is a menace that cannot be controlled. The program has gone rogue: the Army Corps of Engineers isn’t just building pointless dams. It is building bad dams. The agricultural subsidies aren’t just encouraging farmers to plant wasteful crops; by subsidizing corn ethanol they are contributing to food price inflation that threatens political stability in countries like Egypt. But just as the programs are most in need of reform, reform becomes impossible. If you try to stop Fannie Mae from tempting poor urbanites into ruinous mortgages..
The problem today is that we are looking not just at one or two government programs that have succumbed to elephantiasis or turned into sharks; the progressive complex of social and economic policy as a whole has reached this point. Today many of our New Deal and Great Society programs are either elephants or sharks. They either lead us to misallocate scarce resources in ineffective ways or they threaten us with ruin by becoming politically untouchable budget busters.
Progressivism itself, and not simply the individual government programs it spawns, is moving through the same cycle of life. The most urgent social problems that progressivism set out to solve have been dealt with. Child labor and lynch mobs are no longer common in the United States. The greatest natural and scenic treasures of the country are protected by the National Park system. Food is much less dangerous, buildings are better built, cars are safer, the air and water is in better shape and the charismatic megafauna (big interesting animals) have been saved from extinction. Many more people have much more access to education today than was true 100 years ago; ditto for lifesaving medical treatment.
The progressive vision morphed from Great White Hope and Great White Father into Great White Elephant over the years. Early progressives picked the low-hanging fruit; they addressed the most important problems that were most susceptible to progressive interventions. Increasingly they are left with more expensive, less effective approaches to big problems (like Obamacare) or the agenda moves from issues of great moral and political significance like equal rights for African-Americans to less consequential issues like wider social acceptance of the transgendered. To raise the percentage of young Americans attending college from 2 percent to 20 percent is a significant achievement; to extend it from 40 percent to 60 percent will likely cost much more and accomplish much less in terms of raising social productivity.
We now see the progressive agenda dealing with issues like high speed rail, where the gains are so small and the rationale are so weak from the beginning that the program is a white elephant before it is fully set up.
If you aren’t already shaken, beware, as there’s one final stage and it isn’t pretty. Think Greece, but on a massive scale. Instead of jumping the shark we might be eaten by a whale.
(Chart: Courtesy of Keith Hennessey)