Avoiding a Greek Tragedy

The trajectory of America's fiscal situation has made this a potentially transformative political year and a bad omen for incumbents of both parties.

Republicans who are smug enough to measure the drapes six months before the November midterms might take notice of two things: the gradually improving U.S. economy that could mitigate the Democrats' anticipated Congressional losses, and the Utah GOP's dumping of U.S. Senator Robert Bennett, who sinfully (in the eyes of Utah Republicans and tea partyers) voted for the Troubled Asset Relief Program.

TARP has become synonymous with the reviled bailout culture in the nation's capital, but it's a bailout an ocean away that has some portent for America's economic future. The European Union has put together a $1 trillion (Euros) bailout of Greece, whose own financial meltdown serves as an early warning sign for a U.S. government awash in red ink and unfunded liabilities. The unfolding Greek tragedy is the result of an orgy of spending and borrowing and taxing that some want to replicate here.

Whenever I hear an American politician favor the Value Added Tax, or VAT, I know they are more interested in continuing the nation's spending binge than balancing the budget. European nations have levied the VAT at varying levels; they also have a history of sluggish economic growth and now a debt crisis on their hands. Billed as a way to solve fiscal problems, the VAT is more likely to feed our addiction to the kind of government spending and Bernie Madoff-like accounting that has Greece in a tailspin economically and socially. Witness recent riots in that country in response to painful but necessary austerity plans.

There should be no crowing on our side of the Atlantic. If our government was a movie character, it would be Jabba the Hutt. The national debt of Greece is at 113% of gross domestic product; America's debt now is about 50% of GDP, and it's growing. That brings me to my biggest worry about President Obama; it's not that he's a socialist (he's a redistributionist in the mold of FDR, Truman, and others), it's that he apparently believes the best way to address our economic disparities is by creating a European social state here. I would argue that the best way to address inequities is to improve the educational achievement of economically disadvantaged populations. I'm living proof (as is our publisher) that education is the best way to promote upward mobility.

One of the parts of the federal stimulus bill I applauded, in addition to investments in electronic medical records deployment and improved rural broadband, is Obama's expansion of the Pell Grant program. The President should go to public schools in economically disadvantaged neighborhoods to remind students that if they take their education seriously in grades K-12 and get accepted into a college or university, financing their college education won't be an issue.

I also contend that low tax rates to stimulate business activity and economic growth, combined with curbing the overall growth of government to the rate of inflation or less, is the best way to put us on a sounder fiscal path. It's a path that must cover the future unfunded liabilities of Social Security and Medicare, and allow us to educate and develop the next generation of taxpayers. To afford these things for our children and our parents, the able-bodied people in between the young and the old must be the producers because somebody has to pay the bills. Just ask the European Union as it scrambles to save Greece from its profligate ways.

After his defeat at the Utah Republican Party Convention, Senator Bennett spoke of a toxic political environment. I suppose if you're an incumbent who has just been tossed out of the Senate, you would think the 2010 political environment is pretty toxic. But concern over the nation's fiscal track could well make this a "Hit-The-Road-Jack" kind of election year for anyone deemed to be in Washington, D.C., and part of the problem, for too long.

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