The perils of living for today

April 08, 2009|By Andrew L. Yarrow and Addison Wiggin

The very real need to address the nation's immediate economic crisis has drowned out meaningful debate on how to address the much more serious long-term fiscal challenges the nation faced before the collapse of housing, credit and stock markets. Because of the economic crisis and the splurge in federal spending during the last year, the terms of discussion from just a year ago have changed drastically.

The Obama administration has claimed the right to use extraordinary measures - spending a lot of money, and spending it now - to "get the economy back on track." But the economy was on the wrong track even before the crisis emerged. There's no rainy day fund, just borrowed umbrellas. Issues that will matter most over the coming decades for our nation's macroeconomic well-being - large and growing entitlement programs, an inefficient and unfair tax system, and others - are off the table (or, at best, tucked away on a little table in a side room).

The real nub of the problem is cultural and political as much as it is economic: It's a state of mind that has come to envelop America during the waning decades of the 20th century. One could call it the "tyranny of the here and now." Or, in the words of a 1960s song by the Grass Roots: "Sha-la-la-la-la-la live for today, and don't worry 'bout tomorrow." But unless we embark on long-term reform, when AIG and GM are long forgotten, we'll still be confronted with tens of trillions of dollars in unfunded liabilities for Medicare and Social Security, a nearly trillion-dollar trade deficit, a near-zero personal savings rate and the reality that 40 percent of Americans say that they save nothing for retirement.

True leaders in both parties have a chance to get it right, but it will require hard choices. What about keeping Medicare costs down by mandating basic health insurance for all Americans at the state level, with managed competition among insurance plans and government subsidies for only those who most need it? Could we impose stricter government controls on the prices that medical providers charge and require the plans to pay for quality (rather than quantity) of service?

Similarly, unless we are willing to see the demise of Social Security, we need to take a hard look at the options for keeping it solvent. With Americans living far longer and healthier lives than when the program was created, should we gradually raise the retirement age by indexing it to increasing life expectancy? Or establish mandatory retirement savings programs that foster personal responsibility, reduce government expenditures and yet could be supplemented by public funds for low-income Americans? What, if any, policy changes are being discussed to encourage individuals to take a larger role in saving and providing for their future?

Neither the American public nor our elected leaders seem willing to seriously consider the options - including the sacrifices, whether personal or political - necessary for financing the future, yet that is precisely what they must do. As it is now, we're living on borrowed time. The credit crisis of 2008-2009 is just a shot across the bow.

As former Treasury Secretary Paul H. O'Neill - one Republican who was unceremoniously cast aside by the Bush administration - said in I.O.U.S.A.: "When you get to a point where you can't service your debts, you're finished."

We don't want get to that point, and so, despite the current crisis, we can't afford to simply "live for today."

Andrew L. Yarrow, vice president and Washington director of Public Agenda, is author of "Forgive Us Our Debts: The Intergenerational Dangers of Fiscal Irresponsibility." His e-mail is ayarrow@publicagenda.org. Addison Wiggin was executive producer and a writer of the documentary "I.O.U.S.A.," is author of "The Demise of the Dollar" and heads the Baltimore-based research firm Agora Financial.

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