What Should We Cut?, Ctd.

A reader offers some sane points about the difficult and complex task of tackling long-term debt:

Although asking the question is not totally worthless, any suggestions must be coupled with an analysis of the implication of any proposed cuts. To do otherwise ignores the huge role government spending has on our overall economy. For example, if we cut military spending significantly, which I would support in the abstract, what happens to the people who otherwise would be employed in the military or by the military? What happens to the thousands of companies that make weapons, equipment, gear and other goods used by the military?  If we cut spending, do we just assume that the private economy will step up and create other jobs for these people?

The same question can be asked about transforming our health care system.  As Obama said when he was running for office, the health care industry constitutes 16% of our GNP.  Overhauling that segment of the economy cannot be done without other consequences.  Suppose, for example, that we suddenly adopted a single-payer, government operated program in order to hold down the outrageous administrative costs passed along  by private insurance companies.  Good idea in the long run perhaps, but what happens to all those people employed in the private insurance companies?  Do our unemployment compensation rates increase, thereby eliminating the savings realized by cutting the programs?

The problem we have today is an inability to think and act cohesively about the long term.  Virtually the only time we do so is in times of genuine crisis, and we do not yet perceive the events today as a crisis.  Obama’s message is a long-term, not a piece meal message.  Large sectors of our economy are utterly broken, health care, the banking system, and our addiction to non-renewable sources of energy to name three.  And global warming presents a problem the world as we know it has perhaps never faced before.

We have to move gradually yet forcefully in new directions to create new private markets while the government simultaneously takes on responsibilities for old private markets that have failed.  I am not at all optimistic that we have the national will power and intelligence to make the transition as it will easily take ten years to redirect the ship in a meaningful way, and our life styles during that decade will have to change.  Cutting a few programs, while perhaps one small part of the overall puzzle, does not begin to address what we need to do, and focusing on these small details is missing the forest for the trees.

The discussion should focus only on two, much broader questions.  First, are there parts of our economy that are broken and beyond repair?  Second, if so, how should the government act to fill the voids created by these failures, and help move the economy in new directions?  My belief is that if we cannot create consensus on the first issue and thereby perpetuate the old circular dialogue, we will create the crisis that will result in unimaginable government intervention in the future.  We have been living in a dream and its time to wake up.  The time has come to make big and difficult decisions.