THE DISCONNECT

Why is it that just about everybody with authority in the realm of business and public communication has spoken out on the miserable failure of our legislative and executive branch of government to deal with the fiscal challenges this nation is facing, and neither Congress, nor the White House shows any signs of remorse and redemption?

How can it be that just about every columnist in the national newspapers (except Nobel Price Winner Paul Krugman) has decried the dismal failure of the White House and Capitol Hill to use the lever of the fiscal cliff to move the paralysis on the deficit reduction off dead center and yet, no one steps forward to pick up the gauntlet?

Isn’t it pathetic to have the fight about raising the debt ceiling coming at us over the next few weeks without any attempt by the President to move that discussion out of the purely partisan and ideological arena to a platform for a grand bargain that addresses deficit control, entitlement reform, tax reform and simplification and support for economic growth?

For sure there is no lack of guidance for our politicians on what steps to consider in an effort to put our fiscal house back in order. Just about every Think Tank in the nation has proposed a pathway out of the morass. The Deficit Commission of Simpson/Bowles has provided a detailed blueprint for recovery.

The National Commission on Fiscal Responsibility and Reform has spelled out a pathway to reduce the National Debt to 60% of GDP by 2023 and has on its web-site www.crfb.org even created a tool that lets everyone create their own preferred pathway to debt reduction from a wide selection of reforms, spending cuts and tax modifications.

In business we have learned that when reality deviates from the expected outcome, the reason for the disconnect is more often than not found in the process rather than the people involved in the process.

Might that be the case here too? Or are we dealing with a set of politicians who are just too dumb and blind to see the obvious course of action?

Glenn Hubbard and Tim Kane in a well reasoned article in National Affairs titled “Regaining America’s Balance” argue that the main characters in the Beltway behave rationally and are very much in tune with popular demand as to be expected in a democracy.

While just about every serious student of the predicament of the future funding of the major social programs - Social Security, Medicare and Medicaid - knows that the future obligations under these programs are unfunded under current rules, AARP and other interest groups have made it clear that changing the rules equals political suicide. Similarly, Grover Norquist has instilled the fear of God into all Republicans who otherwise might think that raising revenues by tax increases might be required for a balanced and lasting solution to our debt problems.

Can we really expect from our chosen representatives that they jeopardize their whole political career by going against the popular demand?

The disconnect, I’m afraid, is with us. We allow interest groups like AARP, NRA, Chamber of Commerce, Americans for Tax Reform and others to speak for us with broad statements that typically equate to “over my dead body”. How are elected officials going to ignore that pressure? Aren’t they supposed to represent us?

The disconnect is between a general consensus that something needs to be done to bring our fiscal house back in order and an individual refusal to contribute to the solution by giving up something that seemed to have been secured ( be it a tax advantage, an entitlement or cherished government program).

The nation is in the same dilemma that the Big Three auto makers were in only a few years ago. They were confronted with the realization that they had made insupportable long term promises to their workers that were threatening to putting them out of business. In business, the way out of this type of predicament is bankruptcy. That is the path the GM and Chrysler had to follow; Ford escaped but benefitted from the concessions that the UAW had to make in the bankruptcy proceedings of its competitors.

The nation is bankrupt in the sense that its future obligations under the entitlements it has created far outstrip its capacity to raise revenues. For years now it has had to borrow more than a trillion dollars per year to meet it current obligations. But nations can’t go to the bankruptcy court and ask for a reset. Nations have to find a political solution. So do the States. The State of Illinois has near one trillion dollars in unfunded pension obligations – literally bankrupting the State – but the only way out is a political solution.

The disconnect stems from the “not at my expense” attitude of the voting public. It is not dissimilar to the dilemma of nuclear waste disposal or the location of a maximum security prison: it needs to be done but not in my backyard.

Will enough of us speak up and break the disconnect? Will enough of us step in line and support that one courageous politician who may stand up one day - hopefully sooner rather than later – and ask from each of us the sacrifice required to put the nation’s finances back on solid footing?

(Frans Jager is Principal of Castnet Corp. (www.castnetcorp.net) a Business Consultant for the Green Industry and an Executive Coach. He frequently writes about matters pertaining to the Green Industry and of general interest. He can be reached at castnetcorp@gmail.com)

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