Borrowing instead of reform sinking America

Friedman and Mandelbaum’s powerful new book, That Used To Be Us, tells us that the nation has blundered badly with respect to our ballooning deficit and our energy crisis.

Regarding deficits they tell us that either we will cut spending, increase taxes, and start investing in our economic future all at the same time or we will lose our supremacy, transfer crushing debt to our children and grandchildren, and literally mortgage our future.

Seventy-seven million baby boomers have begun to retire.  Without reform of both Social Security and Medicare the costs of those two entitlement programs are on course to rise by 70% and 79% respectively by 2020.  These growth rates will kill our economy.  They will kill the American dream.  They will kill hope.   

But instead of facing the necessity of entitlement reform the nation has chosen to adopt a course of action that invites catastrophe—borrowing from countries like China.   That perilous strategy has enabled America to overborrow and China to overconsume.  Friedman and Mandelbuam state that, “we’re like two drunks leaning on each other without a lamppost”.

The authors tell us that America must reduce our use of fossil fuels significantly and rapidly. They also tell us that rather than debating HOW to do this, we are mindlessly debating WHETHER to do it.  Rather than accepting the reality of settled science, we are denying the fact that our addiction to fossil fuels harms our economy, our air, and our national security.

They believe that clean energy will follow information technology as the next industry upon which economic growth will depend.  And in this respect China is already far ahead of the United States.  They have made huge investments in solar energy, have surpassed us as the largest builder and installer of wind turbines, and are building more nuclear power plants than the rest of the world combined.

The authors believe that we have no choice but to put a price on carbon—that’s right, Cap and Trade.  Did you know that Cap and Trade was introduced by President George H. W. Bush in 1989? That’s right, a Republican, introduced Cap and Trade!

But since then we’ve gone backwards.  Pricing carbon has been held hostage to the politics of paralysis that dominate Washington. For example, 70% of Tea Party Republicans believe there is no solid evidence of global warming.  And, according to the authors, with the 2012 election approaching, President Obama “chose to read the polls, not try to change them” on this issue.

We need to price carbon, increase energy efficiency standards, and raise the tax on gasoline.  Doing those things will create the conditions in the private marketplace that will enable the United States to lead in the creation of the world’s next major industry—clean energy.  And that creates jobs—lots of jobs.

Instead, according to Friedman and Mandelbaum, “the Democrats were cowardly, and the Republicans were crazy.”  They’re right.

LeRoy Goldman

September 30, 2011

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