Rudderless

America is suffering a leadership vacuum in debt crisis

People around the world might be horrified if they really knew the extent of the leadership vacuum in the most powerful nation on Earth.

The void can be observed in a number of areas, but is most noticeable, and most ominous, in America's debt crisis.

The Congressional Budget Office last week warned that the national debt is on pace to be bigger than the gross domestic product -- the value of what we produce in a year. In fact, the debt could someday be double the size of the nation's economy.

"Most ominously," writes the Associated Press, "the report warned of a 'sudden fiscal crisis' in which investors would lose faith in the United States government's ability to manage its fiscal affairs. In such a fiscal panic, investors might abandon United States bonds and force the government to pay unaffordable interest rates.

"At that point, it warned, policymakers would have to win back the confidence of the markets by imposing spending cuts and tax increases far more severe than if they were to act now."

Absent from the news story and the CBO report is the pertinent little nugget that racking up a debt that surpasses World War II's burden is an immoral blow against future generations by a nation that has somehow become much less stout than its reputation.

It's our young who are likely to be in the streets if, as the CBO report warns, the fiscal crisis leads to a "European-style crisis."

With an economy that is already battered by an incessant housing recession, chronic high unemployment and a financial and business community wary of Washington's next move, the nation's looming debt crisis is a storm cloud over already rain-soaked ground.

America is paralyzed today by a lack of certitude and a dearth of courage. None of us can be certain what taxes and regulations and restrictions Washington will drop in our laps, because few in the nation's capital are courageous enough to do what's necessary.

The first step is to drastically reduce federal spending. Then we need to know what the rules will be going forward: The new health-care law, Dodd-Frank financial regulations, EPA plans to regulate carbon emissions, Democrat urges to tax the wealthy -- these woeful children of the Washington bureaucracy are both overly demanding and utterly unpredictable.

Uncertainty, much of it due to the vagaries of a vague Washington, is killing the economy, says Carnegie Mellon professor Allan Meltzer.

"You just don't know from day to day what the administration is going to come up with next," he said in a recent video interview. "The sensible thing to do is hold onto your cash and don't invest it."

Meanwhile, so-called leaders in Washington can't agree on even a modest $2 trillion cut over 10 years. Indeed, key GOP negotiators left bipartisan talks over the budget late last week after the group led by Vice President Joe Biden reached an impasse. It seems Democrats insist on higher taxes and more spending.

Headed for the cliff, Democrats want us to press down on the accelerator.

Moreover, they want to let Republicans suggest cuts in entitlement spending -- as the CBO says will be absolutely required to get the budget under control -- so they can scare Americans and perhaps make gains in next year's elections.

This is a group -- congressional Democrats -- who failed to write a budget last year or approve one this year.

Where is the Democratic plan for budget sanity? For cutting future entitlements, as every expert says must be done?

Moreover, where is the president? He says the economy is Job 1, but sends surrogates to deal with it.

As for Democrats building their Alamo out of higher taxes, how wrong can that be? Just when the private economy needs an infusion of cash, they want to take more out of it?

We've let this problem go on so long, and get so bad, that higher taxes may have to be part of the solution down the road. Now is not the time. It shouldn't be an option unless and until substantial cuts are made in federal spending. And if taxes are raised down the road, the split between spending cuts and higher taxes ought to be something close to 90 to 10.

For now, it's suicidal to entertain either higher taxes or more spending.

Where's the leadership?

For instance: Was anyone else slack-jawed at Federal Reserve Chairman Ben Bernanke's assertion that he just didn't see this slow-moving economy coming? What world is he living in?

Whatever it is, don't tell the rest of this world. They don't need to know how rudderless we are.

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