The great story of 2011, however, was crushing public debt and how it was incurred -- and how it is to be paid back. The imploding European Union, the contrast between blue-state California and red-state Texas, and the record $16 trillion in American debt offered lessons that even the most zealous Keynesians could not explain away. Whether in the case of European state jobs, or California pensions, or out-of-control Medicare and Social Security costs, the results of voters voting themselves entitlements were all too familiar.
So were the common patterns of blaming "them" for our own self-created messes. Abroad, the insolvent European nations faulted the thrifty Germans as too greedy. Here at home, the "1 percent," millionaires and billionaires, corporate jet owners and fat cats were supposedly responsible for making too much money at the expense of others. But even if the 1 percent of top earners paid half, rather than nearly 40 percent, of all income taxes, we still could not afford to spend as before. Relief will not come from printing more money or explaining away the debts as an accounting problem, but by tightening our belts and encouraging individuals to create wealth for themselves, and in the process for others, too. Paying back each billion in debt will prove far slower and harder than was eagerly borrowing each trillion we now owe.
In 2011, President Obama expressed a desire to be re-elected on the grounds that he inherited a mess from George W. Bush that he needed more than four years to clean up. That story requires believing that growing the government, putting far more regulations on businesses, and forgoing new sources of gas and oil are making things better rather than worse. But Barack Obama's last federal budget was almost $1 trillion larger than was Bush's in 2008. We owe over $4 trillion more than we did in 2008. And the unemployment rate for the last year of the Bush administration averaged 5.8 percent, but in 2010 averaged 9.6 percent. Never have more Americans been on food stamps. Presidents are rarely re-elected on the grounds that "otherwise it could have been worse."
The year 2011 taught us that when things logically should not go on, they usually don't -- though they end not with a bang but with a whimper.