- The Washington Times - Wednesday, November 7, 2012


The dismal state of our national finances is going to require that the United States downsize the government over the next four years. We don’t have any other options. At the same time, we must fight any expansion of government that will guarantee the bankrupting of our country and mortgaging of our future. Under President Obama, America is well on the way to becoming a mortgage-backed security that not even Goldman Sachs would try to sell.

As the dust settles on the election of 2012, the results are conclusive, but not decisive. America will have Mr. Obama in the White House, a Democrat-run Senate and a Republican-run House. The close split of the popular vote suggests that America is concerned about the economic management of the country and the need for cost reduction (the Romney vote), but is convinced that the president can lead us out of the mess in a way that is “fair” to everyone (the Obama vote). We even retained that “dysfunctional” Republican gang in the House to put the brakes on any really bad ideas.

The problem is that there is a vast store of evidence that the president is excellent at winning elections, but very poor at political leadership. For the past three years, he has submitted budgets that have been rejected by both the House and Senate by nearly unanimous votes. His concept of federal budgeting is completely out of touch with political reality and the U.S. fiscal crisis, and his ability to bring Congress together to pass his economic legislation has been non-existent. Even former House Speaker Nancy Pelosi was said to have put him on “mute” while he lectured the House Democratic leadership team on the budget crisis.

Now comes the imperative that America deal quickly with its fiscal crisis before we become the next Greece. The president has already, predictably, formed a committee (Simpson-Bowles), received their recommendations and promptly ignored their results because they were politically inconvenient as well as counter to his personal ideological views.

We must immediately address the “fiscal cliff” — all the tax increases slated to hit in January — and the impending bankruptcy of the country. The solution will require major cuts in discretionary spending, reform of Medicare and Social Security and some form of revenue generation. It will require unprecedented economic insight, policy vision and very skilled political leadership — all qualities in short supply in this administration.

What will the president do? Most likely, he will propose that the Bush tax cuts on the “wealthy” expire and perhaps even propose new tax increases under the rubric of fairness. He will form a committee on Social Security and Medicare reform and give them a year to produce proposals. He will submit a budget with few real cuts in discretionary spending. He will lecture but not listen.

The House will respond with a flat “no.” Mr. Obama will scream, “dysfunctional.” That is totally fine.

To paraphrase Milton Friedman, “Thank God for dysfunctional government.” The economic issues America faces are daunting and very important. What was labeled “dysfunctional” during the heated debate over the debt ceiling was not only essential, it was American democracy at its best. It presented an opportunity for refreshing, honest and tough argument over critical issues. The last thing America needs is for the president to try to continue to “kick the can down the road” (his words).

The public political split over how to address our current crises requires a rigorous and difficult debate. Disagreement, rather than being an inconvenience, is an essential reflection of the public mood. Hard-nosed bargaining is necessary and to be welcomed in a democracy like America. Leadership and compromise are essential. The president has been averse to either. Sen. Majority Leader Harry Reid has made it clear he will have none of it. We are heading for an ugly deadlock that must be avoided.

The House should immediately seize the initiative and work with the Simpson-Bowles recommendations with input from business leaders, union leaders serious about real reform and policymakers to address our economic crisis. The House should also take the initiative in reaching out to a bipartisan coalition in the Senate to negotiate a deal. Then, let’s have a really dysfunctional fight to arrive at real solutions for the country.

Grady Means is a businessman, former assistant to Vice President Nelson Rockefeller and former economist at the U.S. Department of Health, Education and Welfare.

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