The big news last week was what didn't happen. The United States of America didn't default on its national debt.
What did happen was bad enough. The politicians in Washington tied themselves in the usual knot. Out in the country, Americans watched with the usual mixture of boredom and disgust. Some of our politicians drummed up anger, others fear, some both. The usual spectacle played itself out in the Capitol and White House till the knot was untied, and the usual, unsatisfying deal made.
Whereupon U.S. debt was downgraded. The markets opened, then dived off a cliff. The economic news out of Europe was even worse. Investors were told not to panic, which inevitably panics them. Faith was shaken. Perspective was lost.
Imagine the reaction a coupla-three years ago if people had been told, come 2011, Americans would be shaken because the Dow had fallen to "only" 11,000. How soon we forget -- to take the long view.
Last week's crisis was not so much averted as postponed. A super-committee of Congress is to outline still more spending cuts so the government can get its house in order (talk about a millennial vision) and a stalled American economy can start growing again, not just barely recovering.
Behind all the political posturing in Washington lurked the specter of a double-dip recession. As the market veered downward, national confidence followed it.
The president and Congress have proven very good at delegating responsibility to committees of solid citizens (like Bowles-Simpson or the Gang of Six in the Senate) but very bad at following their recommendations.
It's not as if no one knows what to do. Constructive suggestions abound. If you picked a few from Menu A and a few more from Menu B, you'd have the makings of a healthy fiscal diet. All we need do is follow it: Cut and simplify tax rates, especially on capital investment. Eliminate loopholes and sacrifice some sacred cows, not excluding untouchables like the household mortgage deduction. Tax revenue would increase as tax rates decreased, just as it did after the Kennedy-Johnson, Reagan, Clinton and Bush tax cuts.
Then update entitlement programs like Social Security (raise the retirement age, for example) and Medicare (have the wealthiest pay more for their health care while protecting the poorest).
All it would take is a little courage, but of course that's the quality most missing in Washington. So long as it is, this crisis will hang on, going from acute to chronic and back again until that old malaise settles in to stay.
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