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The nonpartisan Congressional Budget Office announced on January 26, 2011 that the U.S. Government’s budget deficit for the year would soar to nearly $1.5 trillion, which represents $414 billion more due to the extension of the Bush tax cuts. The deficit was $1.4 trillion in 2009 and $1.3 trillion in 2010. According to the New York Times based on the CBO, “the deficits of $1.4 trillion in 2009 and $1.3 trillion in 2010 are, when measured as a share of gross domestic product, the largest since 1945 — representing 10 percent and 8.9 percent of the nation’s output.” The budget officials also projected the deficit for 2012 would be $1.1 trillion.” These figures dwarf the budget deficits even of the 1980s. President Obama, called in his State of the Union speech, also on January 26th, for a partial five-year freeze in domestic spending by the federal government — what the New York Times calls “a more gradual imposition of fiscal discipline, while still increasing some spending in education, research and other areas.” Meanwhile, the total debt of the U.S. Government in January, 2011 was over $14.3 trillion—a figure that is scarcely conceivable to a human mind, let alone sustainable. It is not clear that the government will ever be able to get out of that debt, let alone make a dent in paying it off.

One could be forgiven for wondering if President Obama severely understated the weakness in the state of the union, for such fiscal imbalances in the union’s federal government (not counting the deficits and debts of the several states!) can not bode well for the United States as a going concern. The $45 billion deficit in the Social Security fund ought to raise more than a few eyebrows. Even so, the last line of the President’s report included, “the state of the union is strong.” One could point antithetically to the states at odds with Washington on health-care insurance and immigration as cracks “strong” state of the union. Furthermore, one could point to the 3.4 million inhabitants expected to be foreclosed by the end of 2011 or the 9.7 million unemployed on unemployment compensation in January, 2011 (51,000 added the last week of January alone), as well as to the 40 million inhabitants within the U.S. still without health insurance (having to wait until 2014).

My point is that the intractible imbalances in the United States are of such magnitude that they can be reckoned as structural, or systemic, as of 2011. The prescriptions made by both parties, including extending tax cuts (and widening the deficits of 2011 and 2012) and the banal tax vs. cut spending debate pale in comparison to such an extent that one could again be foregiven for wondering whether the elected representatives have not been treating the problems as the status quo variety in need of standard solutions. If we are not careful, decisions borne of necessity will press down on us, and we won’t like them. The economist Carmen Reinhart, for example, has predicted that the U.S. Government will be forced to cut money for social services. Aside from whether we can get off the tax versus spending debate, I’m not even sure any of us know what a systemic or structural remedy would look like even if it jumped up a bit us; we are so utterly (and pathologically) oriented to incremental “solutions” that are oriented to alleviating particular symptoms that I wonder if we can even look the illness in the face and stare it down. Are structural or systemic solutions even possible in a representative democracy, moreover, or are we destined to be poll- and issue-driven? Are we too fixated on the status quo wherein we prioritize our debate on the size and involvement of government (e.g., tax increases vs. spending or tax cuts, rather more revenue and less spending) over the no less important though perhaps less immediately pressing exigency of fiscal balance that we will not take our structural problems seriously and discuss systemic changes before it is too late and our budgetary decisions are taken from us by the brute force of necessity? In short, can we bracket our incremental approach and think big, meaning about the system itself? What would be our thinking, je me demande…

Sources:

http://www.nytimes.com/2011/01/27/us/politics/27spend.html?_r=1&ref=politics;

http://curiouscapitalist.blogs.time.com/2011/01/27/view-from-davos-how-bad-is-a-1-5-trillion-deficit/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+timeblogs%2Fcurious_capitalist+%28TIME%3A+The+Curious+Capitalist%29&utm_content=Twitter