On Monday, S&P placed United States debt under "negative"
credit watch. The ability of the United States Government to borrow
money, while not immediately imperiled, will likely become more
difficult and more expensive in the near future. Far from an abstraction,
this has the potential to profoundly affect our lives.
A generation ago this would have been unthinkable. My parents'
generation (often referred to as the 'greatest' generation) was
accustomed to making sacrifices. They suffered through a depression
and two world wars. They saved. They invested in the future. While
they were far from perfect, they handed to the baby boomers a country
that was the envy of the world -- its undisputed moral and economic
In the span of 40 years, my generation has squandered those gifts.
The idealism we professed in the 60's turned into self-indulgence, self-
interest and instant gratification. From Washington to Wall Street to
the public at large, we live for ourselves and sacrifice for nothing. At
every opportunity we don't address problems -- we kick the can down
the road to future generations, pretending the day of reckoning will
never come. We haven't made a difficult decision in my entire adult
- The good news is we are living longer. The bad news is we can't all live on Social Security for 25 years. We have been fully aware of this brewing actuarial disaster since at least 1980 when John Anderson ran for president on a platform that proposed increasing the retirement age to 68. Yet we have done nothing. We prefer to pretend.
- We have had a health care crisis for over 20 years. We spend almost twice as much for health care as any other country in the world, and yet we all have personal experience with how broken the system is. Yet we prefer denial and partisan bickering to seriously addressing the root problems.
- When we invaded Iraq in 2002, we didn't raise taxes to pay for the war, we lowered them. It was the first time in American history that a war was accompanied by a tax cut. All gain and no pain! In World War II, the highest marginal tax rates were 94%, and people gladly bought war bonds to finance the war effort. In 2011 the highest marginal tax rate is 35%, long term capital gains rates top out at 15%, and many complain those rates are too high.
We have been living beyond our means for the last 30 years. We shun the notion of sacrifice. We assume that the world will continue to finance our self-indulgence forever. In 1980, the US government was $900 billion in debt. Today, we owe $14.3 trillion. Next month, Congress will vote to increase the debt limit and the world will be watching.
Politicians are products of our times -- self-indulgent ideologues who in spite of what they profess have one interest that trumps all others -- personal job security (read: re-election). Each professes the importance of taking responsible action to show the world we intend to live within our means, but heretofore none have been willing to show true leadership. Republicans have never seen a tax cut they haven't loved, and Democrats can't seem to find any programs to cut. The fact that the government almost shut down last month while the politicians argued over $20 billion (in a $3.7 trillion federal budget) illustrates just how out of touch they are.
As a country, we are living on our past laurels. The world is losing
its patience with us. Everyone knows what has to be done. Taxes need
to be raised, particularly on the wealthy. The retirement age needs to
be increased. The health care system needs to be meaningfully
reformed. We need to recognize that our role as the world's sole
policeman is no longer practical or appropriate. Politicians need to
show leadership, compromise and cross party lines. Some may lose
their jobs as a result.
In short, we all need to sacrifice. If we don't make these choices
voluntarily and intelligently, shortly the rest of the world will make
them for us. "Me" generation, it's Last Call.