At the present time, what should the federal government be focused on the most?
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There are lots of things that the government should be concerned about. But anyone who has read my comments on this site over the years should know what I consider to be the most overriding, pressing concern we have as a country right now:
The National Debt.
This is a problem that has repercussions on almost every aspect of national life, especially with regards to funding our short term and long term obligations, including social security and other essential government programs. It impacts our level of taxation, the value of our currency, our standard of living and indeed our standing in the world.
I recall back in the 1990's, there was a sense of American triumphalism throughout the halls of power and of academia. Authors issued calls of a new "American century", an end of history and the triumph of global democracy. Many were saying that the United States was the world's remaining superpower. Neo-Conservatives and some neo-liberals too especially wanted to cash out on the moment, but they squandered it instead on a costly war in the Middle East that will ultimately cost the United States over $3 trillion total.
Folks we're in trouble. Deep trouble. The debt we're incurring is simply unsustainable in the long term. Forget about paying off the principal on the debt--the problem I see, if we continue on this path, will be paying the compound interest on the debt. If we cannot meet our yearly interest payment, the country goes into formal default. Don't believe me? Ask Argentina, Zimbabwe, Russia or any other host of country whose central banks have gone through a formal bankruptcy and how it comes about.
Our tax dollars goes towards paying the interest on the debt. That's why we will inevitably see higher taxes over the next few years. We are already seeing the erosion of the purchasing power of the dollar, which I view as an underhanded form of taxation via monetary inflation. Printing our way out this won't solve the problem. Furthermore, we've reached the point where I can only foresee that the Federal Reserve's only solution to the debt problem will be to devalue the currency as a means to cleanse the system of its debts. It will be costly for America's position in the global economic system, but the crisis is so large that they will need to meet the problem of excess liquidity in the system by only such means.
Since we are so dependent on imports, such a policy will be disasterous for the country, as it will mean a spike in the price of consumer goods, along with a loss in the value of the dollar, which will hurt savers everywhere.
Whether it is the cost of bailing out failed banks by buying up their worthless assets (which will weigh upon the country's balance sheets for at least 10 years, thus contaminating the quality of our currency) or the cost of interminable wars in Asia, used largely as a means to prop up a failed neo-imperial model of growth, America is struggling to establish a clear strategy. Then we have massive fixed expenses, whether it be pension costs, Social Security, Medicare, Obamacare, etc. that will cost the government trillions over the next few years as the Baby Boomers retire and overwhelm the system. There are so many different trends coming to a heads in the next decade that it simply overwhelms the mind.
What's so interesting about studying the rise and fall of civilizations is how fast relative declines can occur. Throughout history, the great empires always fell in the span of a few decades. In fact, many begin their decline only 10 or 20 years after reaching their peak of wealth and influence. Empire lose their influence because they begin to rely on short term, tactical thinking; they become indulgent and believe that they are invisible. But such arrogance has consequences--decision-makers develop a blind spot and fail to acknowledge the problems within their midst. All failures start and end at one point: overexpansion which leads to debt, which then leads to the debasement of the currency and loss of global influence. You see it repeated time and time again, from ancient Rome through today.
The only difference is that we live in a technological, globalized era, which means events move much faster. Processes that might have taken decades to mature can happen in the twinkling of an eye.
I'd be more hopeful if I saw that there was some visionary leadership in Washington, but unfortunately that's not the case. The times require long term, strategic thought, courageous and forward thinking policies that realistically considers the United States's position both economically and vis-a-vis other world powers. Instead, we continue to act as if our "superpower moment" never ended. The policy elites are victims of their own biases and myopic assertions and they cannot honestly assess the true state of the American project, or they don't want to come to grips with the problem. They'd rather plug holes and hope that the problem is resolved, rather than systemically rethinking their positions.
This isn't a revolutionary thought--I am making these suggestions as a means to recenter the country and its central institutions, to prevent it from collapsing under a cloud of hubris.
As for Wall Street, they also operated under the assumption of short term thinking. People thought that the party will never end and that overleveraging in debt would be a self-sustaining process. This false ideology lead to the downfall of finance in this country. When the country was in the "bubble" stage of wealth and power, the financiers took out (and lost) vast sums of wealth in fraudulent derivitatives and securitiization schemes that can only be described as Ponzi schemes, along with elements of the underground financial market, where pools of high frequency trading and other exotic financial tools reside.
An overreliance on finance created this mess, along with a childlike and overly ideological faith that these markets where self-regulating and self-sustaining. These are ideologies that spread only in times of irrational exuberance and of over complacency, when an empire is at its peak and people can fool themselves into believing that growth ad infinitum will solve all the country's problems. Well, what happens when the growth stops? You need a base from which to fall back on. If all your wealth is transitory paper money that evaporated because it was illusory, then what? This is the KEY QUESTION our nation faces today. It's time to end our illusions of grandeur and get back to reality.
America can emerge from this a strong and healthy nation. But it can only happen if we starting thinking honestly about our challenges and not be so motivated by greed and the pursuit of a unipolar moment in world history that never was in the final analysis.