Downplaying and Misrepresenting the Debt

It is bad enough that our political leaders make light of the unprecedented levels of government deficits and debt, as pointed out in a New York Times covers story October 20: "Deficit Rises, And Consensus Is to Let it Grow." The problem is compounded when The Times’ story on the subject totally misrepresents the scale of the problem.

The reporters use a strange method of calculating the burden of the debt, contending that it constitutes “a relatively modest 40.8 percent of the nation’s national income.” In fact, the current federal debt is about two-thirds of gross domestic product, according to official budget figures. The story asserts that the current debt burden is much less than during the 1990s. In fact, The Fiscal Year 2009 Budget estimates the debt at 69.3% of GDP, which is the highest figure since 1955.

The story also misrepresents the size of the current debt when it states that the federal government increased the national debt “to the present $5.8 trillion.” In fact, the current debt is over $10 trillion, and with the bailout bill, Congress raised the ceiling on the debt to $11.3 trillion.

The Times' story does a disservice to its readers with this misinformation, and contributes to the national problem of discounting the gravity of the situation, which could well lead the country into bankruptcy

U.S. Ranks Low on Health Care

Chapter 3 of The End of the American Century, titled "Torn Social Fabric," focuses especially on the relatively poor levels of health care in the U.S., and how badly it fares in comparison to other wealthy countries. As I point out there, this is surprising in many ways "because the United States indeed does have available the best medical care in the world and spends more on health care than any other country." But "because there are so many poor people in the United States and so many people without access to health care, the average level of health and medical care in the United States is among the worst in the developed world" (bold added). In the late 1990s, the World Health Organization ranked the U.S. at 37th in the world in the overall performance of the health system. This was the lowest ranking of any country in the OECD.

New data reported in the New York Times confirms these disturbing trends. The United States now ranks 29th in the world on infant mortality rates which, as the Times points out, is "one of the most important indicators of the health of a nation and the quality of its medical system." The U.S. ranking has declined sharply since 1960, when its ranking was 12th in the world.

This international gap has widened even though the U.S. spends far more on health care than most other wealthy countries, on both a per capita basis and as a percentage of GDP. In 2006, according to the Times, "Americans spent $6714 per capita on health--more than twice the average of other industrialized countries."

Grace Marie Turner, president of the Galen Institute, a conservative research organization, told the Times "infant mortality and our comparison with the rest of the world continue to be an embarrassment to the United States."

The dismal state of health care in the U.S. reflects broader trends of social and economic decline in the U.S.--compared both to our own past and to other countries in the world. It is the major theme of The End of the American Century: that the U.S. has lost ground as other countries have gained; and that we can no longer claim special privilege as the richest, or the most successful, or the most powerful--on almost any dimension.

The poor state of health care, and education, and infrastructure in the U.S. result from inadequate attention and resources to these areas of our domestic health. They pose the second horn of the U.S. dilemma: our economy is collapsing at the very time when we most need resources to rebuild the country at home, and reestablish our reputation abroad.

(See also my 9/23/09 post "U.S. Health Care Compares Badly to Others")

BBC wonders if this is The End of "The American Century"

BBC "Newsnight" recently had a 10 minute segment entitled "The End of the American Century?" inadvertently (I think) employing the title of my book. The segment begins with a reference (as my book does) to Henry Luce's 1941 "American Century" essay. The opening segment, by Paul Mason (no relation), wonders if the recent financial crisis is "the start of a wider American decline." The broadcast includes commentary by economists Joseph Stiglitz (winner of the 2001 Nobel prize) and Irwin Stelzer, and Gillian Tett of London's Financial Times. The link here is to the youtube posting of the BBC segment, in two parts.

Facing Reality

Rosa Brooks, columnist for the Los Angeles Times, sees the U.S. economy in the same situation as The Titanic bearing down on the iceberg (Obama's, and Our, Iceberg). She faults both McCain and Obama for underestimating the seriousness of the economic situation and the long term prospects for recovery from the crisis. Addressing the October 7 debate, she writes:

And when asked by Brokaw if the economy will get "much worse before it gets better," Obama's response was quick: "No. I'm confident about the American economy."

Really? I'm not.

The main problem, as I see it, is the inability or refusal of our political leaders to recognize what all this means for the United States and for its citizens. We have reached the end of a long period of prosperity--but it was a prosperity built on debt. The current crisis signals the end of the line. As Rosa Brooks astutely points out, nobody "yet" knows how to solve these problems. But the first step in solving a problem is recognizing it. Only then can we begin to fix it.

(Thanks to Vivian Deno for sending this column to me).

A Power That May Not Stay So Super

New York Times economist David Leonhardt, who is one of the few economists to raise alarms about the long-term structural problems of the U.S. economy, had a column on Oct. 11 that compares the decline of the British empire to the current situation of the U.S. His story raises many of the issues I address in The End of the American Century, including the long-term growth of deficits, debts and excessive consumption, as well as the pressing needs for spending on infrastructure, health, Social Security and Medicare.

Is the bartender finally presenting us the bill?

Washington Post columnist Eugene Robinson has a column today in the Indianapolis Star entitled "A Rude awakening from the American dream." He, like most of us, is bewildered by the economic upheavals and wonders if this means that the U.S. will become poorer and if the "next generation of Americans [will] lead lives of less affluence and comfort."

"I want to know if this is some kind of financial reckoning for the way we've been living so far beyond our means. Is the bartender finally presenting us the bill for our tab?"

He worries, as we all do, that this economic crisis "may be more than just an episode."

"I'm worried that what's at stake is not just a few years of lost economic growth, but our traditional notion of the American dream."

He wants straight talk from Obama and McCain.

"Don't give me empty words about American exceptionalism. Tell me in plain language what our new place is in the world and how we're going to give our children the good life that we've enjoyed."

I second all of these sentiments by Mr. Robinson, but I fear the answers are not what he would like to hear. We do need straight talk and truthtelling from our leaders, but it will mean facing up to the reality that the U.S. place in the world will be diminished, and our children will not have the affluence that we have enjoyed--mostly on borrowed money. But a good life can be built on other things than consumerism and instant gratification.

Reality and Hope

Last spring, I delivered the annual "Last Lecture" at Butler University, in which I reflected on the challenges of remaining hopeful in the face of relentless, dismal news. The transcript of that talk appears here.