WHEN Main Street bails out Wall Street, angry voters aren’t far be hind.
Any short-term euphoria from avoiding economic meltdown will soon be replaced by the harshest taxpayer hangover of all time. The S&L bailout cost Americans a quaint $124 billion – far less than the trillion-dollar package now debated in Washington. And it’s still unclear what if any accountability the plan will impose.
Once past this crisis, Americans need to recommit across party lines to an idea that has gone out of fashion in Washington: fiscal conservatism.
Fiscal conservatism used to be synonymous with fiscal responsibility. Then the Bush administration came to town. A hard-won budget surplus of $128 billion was turned into a record projected deficit of $438 billion.
Nondefense discretionary spending grew by 72 percent – outpacing even Lyndon Johnson’s Great Society. Fueling this was the supposedly conservative Congress’ cynical attempt to buy a permanent majority. Pork-barrel spending boomed, as the number of congressional earmarks soared from 1,000 a year to nearly 10,000.
Now Republicans who’d normally scream, “Socialism!” about the takeovers of Fannie Mae, Freddie Mac and AIG are left shrugging their shoulders and clinging to the hope that President Bush’s mantra of “temporary, targeted and timely” will prove true – and that taxpayers won’t be left shouldering the burden of this unprecedented bailout for decades.
It doesn’t have to be this way – and it wasn’t always.
In fact, the last presidential race run in a period of economic anxiety (tame compared to today’s) offers some useful lessons as to how a combination of public pressure and bipartisan cooperation can unite the country around fiscal conservatism.
It was 1992, when Texas businessman H. Ross Perot mounted an independent candidacy for president. He ran as a populist deficit hawk, promising to balance the budget, pay down the debt and reform the corrupt partisan system in Washington.
Perot didn’t win the election – but he did pull 19 percent of the vote. And he won the debate – forcing centrist Democrats and Republicans to refocus on fiscal responsibility under the threat of an angry electorate.
So Bill Clinton, having won the White House, didn’t pursue the massive new spending that many Democrats had anticipated. And when he did launch a big-government plan, – a bid to remake the US health-care system, it triggered the GOP takeover of Congress.
Creative bipartisan tension between Clinton’s administration and the GOP Congress brought something of a fiscal golden age. The economy grew, the dollar was strong and the federal workforce shrank. Within six years, a $203 billion-dollar deficit had been turned into a $236 billion surplus.
Of course, today’s situation is far tougher than what America faced in 1992. Beyond the record deficit the next president was scheduled to inherit even before the Wall Street meltdown and the bailouts, the nation faces the coming retirement of 78 million baby boomers.
That translates to a tsunami of rising spending on Medicaid and Social Security – translating to a long-term projected national debt of $53 trillion. Each American family’s share of that debt is $455,000 – 10 times the median family income.
This problem was predictable. The nation’s former top accountant, Comptroller General of the United States David Walker, has been sounding the alarm for years with his Fiscal Wake-Up Tour. This evolved into the documentary “IOUSA,” which aspires to be an “Inconvenient Truth” for the economy. Released last month, it has already disappeared from New York City movie screens – but its message has taken on new urgency with the events of the last week.
John McCain and Barack Obama must recognize that every crisis contains an opportunity – and that the opportunity of this fiscal crisis is to return our nation to a path of fiscal responsibility.
Of course, no one should underestimate the difficulty of getting Congress to comply, but America has pulled it off in less urgent situations. And now we can’t kick the can any farther down the road.
Fiscal conservatism has demonstrated appeal across the political spectrum – uniting many Republicans, independents and Democrats in the past. It can provide the basis of a new governing coalition for a new president who recognizes the opportunity and the obligation to bring a sense of generational responsibility back to American politics.
JPA@independentnation.org