Daily Archives: January 3, 2012

The failure of the “Super Committee” last year to reach a budget deal underscored the underlying wedge in US politics. The distribution of the electorate through most of the post-1945 years has been a dominant centre, slightly to the left or right of centre. This enabled legislative compromises to be reached with relative ease.

But a political tsunami has emerged out of our past in the form of the Tea Party, with its ethos reminiscent of rugged individualism and self-reliance. It has yet to obtain sufficient traction to forge majorities for new legislation but its influence beyond its numerical strength has created an effective veto of new legislation before the current heavily Republican House of Representatives.

The emerging fight over the future of the welfare state, a paradigm without serious political challenge in eight decades, is accentuating the centre’s decline. The welfare state has run up against a brick wall of economic reality and fiscal book-keeping. Congress, having enacted increases in entitlements without visible means of funding them, is on the brink of stalemate. As studies have demonstrated, trying to solve significant budget deficits predominantly by raising taxes has tended to foster decline. Contractions have also occurred where spending was cut as well, but to a far smaller extent.

The only viable long-term solution appears to be a shift in federal entitlements programmes to defined contribution status, but the political problems of such a switch can be seen in state and local governments’ attempt to trim public defined pension plans. Public sector unions have fought mightily to avoid having their pensions shrink, as they have in the private sector.

We now face a true revolution, not so much in the streets but in the fundamental choices we will have to make to secure our fiscal future. Arithmetic demands it. Read more

I bravely predict more of the same in the coming twelve months.

Mitt Romney will win the Republican nomination after the party has exhausted its one-week-long love affairs with each of the non-Romneys. Barack Obama will be re-elected, because his one consistent strategy – to stay one step towards the centre of the rightwing Republican party – will prevail. But the presidential elections will do nothing to reinvigorate American society. Government will remain corrupt, incompetent and shortsighted. A chronic budget deficit will lead Congress to continue to slash education, family support, health for the poor, infrastructure, and science and technology. American exceptionalism will mean that the US is the only leading country at war with its own teachers and children.

The world as a whole will become less stable. Though word has not yet reached (drought-stricken) Texas, climate change is real; so too is a rapid increase of population whenever families have no access to family planning and basic healthcare. The young generation will increasingly tire of the increasingly turgid baby-boomer politics. The groups that took to the streets this year from Tunis to Cairo to Tel Aviv to Santiago to Wall Street to Moscow will be back.

This, then, is the meaning of more of the same: the continuity of change. As the great A-lister of the sixth century BC, Heraclitus, put it much better: “All is flux, nothing stays still.” Read more