Have America's institutions grown too big not to fail?

March 26, 2010|By Ron Smith

Smiling Joe Biden got it right when he whispered to President Barack Obama at the health care reform signing ceremony, "This is a big [expletive] deal." The question is whether the jubilation of the left or the trepidation of the right best captures the reality of what Obamacare will actually mean to Americans as time passes and its details are revealed and digested. This newspaper was beyond enthusiastic in its lead editorial on March 23, saying, "For once, political consequences mattered less than doing the right thing." The editorial went on to claim that the Republicans fear that this measure "will become just as popular, just as embedded in the fabric of our nation as Social Security and Medicare." But in case you haven't noticed, those popular programs are not fiscally viable. In fact, they're leading us into bankruptcy.

David Walker, the former comptroller general of the United States, has been warning that the retirements of some 78 million baby boomers over the course of the next 15 years represent a "fiscal disaster bearing down on America." This is no longer some unwelcome math that will have to be dealt with somewhere down the road; it is here now. He calls it a "super subprime crisis," frighteningly similar to the recent mortgage-related meltdown that gave us the Great Recession.

"First, like the securitized investment vehicles that blew up," Mr. Walker says, "federal programs were launched without adequately thinking through who would bear the ultimate cost and related risk. Just as originators of mortgages let themselves off the hook by unloading packages of dubious loans onto others, lawmakers have increased spending, expanded entitlement programs and cut taxes while expecting future generations to pay the bill."

Talk of health care reform has dominated talk shows like mine. For months now, I've been reading about it, talking about it with guests and with listeners, hearing the passion, the anger, the fear that conservatives have about this latest expansion of government into their personal lives. The name calling on both sides has been ugly. Liberals are aghast that the "tea partiers" shout epithets at lawmakers promoting the legislation, while feeling nothing is wrong with calling those opposed to it all sorts of vile names. Such is the nature of politics. I'm right, you're wrong. My motives are pure, while yours are anti-American. Hate is decried in the most hateful manner. All is drenched in irony, yet few seem able to see that.

The mainstream media -- an inadequate term, but one hard to replace -- have rekindled their love for President Obama, seeing his hard-fought victory in Congress as a sign that his karma has been refurbished and that good, "progressive" things lie ahead for the nation. They see this as a win over the hated Fox News and its knuckle-dragging, gun-loving, redneck viewers.

The opposition sees this as an unconstitutional attack on what remains of American liberty. More than a dozen state attorneys general have filed suit alleging that the measure violates the 10th Amendment. The Sun's editorial page calls this a "misguided attack" and quotes the president commenting, as he signed the bill, "the overheated rhetoric over reform will finally confront the reality of reform." "And the reality is," according to the newspaper, "health care reform is lawful and here to stay."

Too big to fail has become a very familiar phrase over the last year and a half. The Wall Street banks are too big to fail; so are AIG and GM and government itself. But history shows us that nothing is ever too big to fail. Joseph Tainter points out in his book "The Collapse of Complex Societies" that modern, complex societies are a historical anomaly, as hard as that may be to believe. "The common political unit through the several million years that recognizable humans are known to have lived," says Mr. Tainter, "was the small, autonomous community, acting independently and largely self-sufficient."

It's entirely possible that the overriding reality of our time is that we have grown too big not to fail.

Ron Smith's column appears Fridays in The Baltimore Sun. His e-mail is rsmith@wbal.com.

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