What needs to be done to bring back prosperity to the United States is not a hard issue. The Federal Reserve Chairman told us. The head of the IMF told us. Short term stimulus (and this should only be needed infrastructure) + long term consolidation (the latter being more important). What's "long term consolidation"? Putting the fiscal house of the U.S. government on a sound, long-term, sustainable basis. What specifically is needed? Comprehensive tax reform, comprehensive reform or elimination of public pensions (federal, state, local), comprehensive reform of Social Security, Medicare, Medicaid, and finally, curbing excessive long-term government spending.
Republicans are loathe to do the former (short term stimulus)--yes, it is hard to spend money you don't have when you can see you're going bankrupt long-term. Democrats are unwilling or unable to do the latter (long term consolidation). This is troubling.
While the Democrats (including Obama) live in a fairy-tale world that if government just spends more, eventually everything will turn out all right, the Republicans (after their drunken spending party during the Bush years) have sobered-up enough to realize "the party is over" and the new normal is here to stay. States like Indiana have already started doing the right things to start back on the road to fiscal responsibility. States like Illinois continue to live in denial and get deeper in the hole, hoping for a "bail-out" from Washington--sorry Gov. Quinn, "ain't going to happen."
Here's the real rub--the rest of the world is not waiting, nor are they going to wait, for the United States to "get its act together." Yes, there will be effects upon the world economy from the downward spiral of the United States--but China, Brazil, etc., will manage, and move ahead on the economic scale. Europe has its own problems, but at the end of the day, the Germans and French will do what is in the best interests of Germany and France--after all, Germany is the world's second largest exporter (after China) and is hardly dependent on the U.S.A.
So where do we go from here? Simpson-Bowles gave us a map. Rep. Ryan has given us his plan. It's not like no one knows what to do. We know what to do. Our leadership is just unwilling or unable to do it. The world is not waiting.
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