There appears to be no long-term solution to the government’s financial woes because baby boomers who now ran the country and their narcissistic constituents are only interested in the “Me” and “Now” with little concern for social responsibility and future generation needs.
Sharing is demonized as socialism and shared sacrifice made synonymous with financial Armageddon. Unlike the greatest generation that valued hard work, savings, and community institutions, today’s electorate is more concerned with instant gratification even if paid with debt. Congress is acting accordingly. Asking everyone to pay taxes is looked upon as taking away that second car, second vacation, and other hedonistic enterprise.
Consumers pay hundreds for a pair of jeans or designer purses and thousands for other personal accessories and they are not only the 1% rich, they are your middle class who elected officials purports to shield from taxes. Meanwhile, the country is headed towards insolvency. The argument is that taxes causes economic recession but it was the great depression that instilled the values on the greatest generation and paved the way to the prosperity of today’s generation.
Perhaps letting the country fall into the financial cliff is the tonic the economy needs. It may cause temporary economic dislocation but would cause the populace to rethink their resolutions, not only for the coming year but for the many years to come. Maybe they will pay off debts instead of getting a new hot tub. Spending will be more measured.
Any financial advisor would say that the leading cause of debt is having reduced income with the same expenses. In government, if enough taxes cannot be raised then spending must be curtailed. Ideally, when one’s income rises, the additional disposable income should be funneled not only into more spending, but more importantly, into significant savings for a rainy day. But in today’s Me generation, it only signaled more hedonistic spending even beyond one’s means because of false expectation that more income is to come. Financial bubbles are prime examples.
Today’s government falls into the same trap. Spending is out of control to satisfy the narcissistic wants of voters in the form of earmarks, pork barrels, and military buildup and in the belief of unlimited taxing powers. Also, government, justified by classical economic theories, cut taxes during budget surpluses instead of funneling them into savings in the form of research and infrastructures. In fact, it is during boom times that government should layoff workers so the private sector could absorb the much needed skilled labor during economic growth. Economic theories all seek the ideal of economic equilibrium and government must serve as the spigot to calibrate the engine of economic prosperity.
The American spirit is born out of a revolution. The president and congress must think in terms of shared sacrifices and of the coming generations. The financial cliff must be looked upon as an opportunity to plunge into another cultural revolution.