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Spinning Begins In Earnest: The Power Elite Warn on Debt Crisis

• EconomicPolicyJournal.com
 
The current issue of Council on Foreign Relations newsletter, This Month in Geonomics, is all about the debt crisis. It features five separate articles warning on the debt problem (Five!): Roger C. Altman and Richard N. Haass argue that if U.S. leaders do not rein in government debt, global financial markets will ultimately force a solution. The result would be an age of American austerity that shrinks America's global role and leads to a less safe and less free world. CFR Co-Chairman Robert E. Rubin writes that if we don't make tough decisions on deficit reduction now, we will be forced to act more harshly and with less time to thoughtfully set priorities in the future. Sebastian Mallaby says that in the State of the Union President Obama was too optimistic that he can achieve new public investments and deficit reduction at the same time. He will have to choose between the two. Peter R. Orszag warns that it may take a crisis to get U.S. policymakers to address the unsustainability of the federal government's fiscal trajectory. A topic which was once the exclusive terrain of goldbugs and small government types is now being discussed openly by the power elite. What gives? These are very smart guys. My guess is they know the crisis is coming and they know they can't stop the crisis, so they want to get out in front of it. If they are out with warnings now, they will be in a better position to shape what follows the crisis. It's not exactly clear what these insiders view as a solution to the crisis, just know that is should not include more bailouts of banks or deadbeat state and local governments. The only real solution is a severe shrinking of government. Rand Paul's proposal is a start. The solution should also include restructuring (read:bankruptcy) at the federal, state and local levels. The crisis will come. The elites aren't trying to get in front of this for any other reason. The only question is: Who will pay for the crisis, "the people", which is probably on the mind of the elites, or those that have supported the reckless regime spending by buying this government debt in the first place?

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