Monday, August 1, 2011

Debt Deal: Armageddon?

In the last paragraph of his opining on the debt deal, Paul Krugman suggests that our system of government is broken. His basic argument is as follows: the Republicans "won" the debt limit standoff by being the more ruthless party and threatening to destroy America, and if these tactics work, our system of governance needs to change. I would agree with him if his premises are correct, however, they are not.

Since the federal debt exploded into the national consciousness a few years ago, one thing has been clear above all. Americans do not want to be like Europeans. We don't want our government to spend and spend and take care of every little detail for every person. We were born a capitalist society, and public opinion stays staunchly to the right of socialism. In 2011, the majority of our nation does not want to be told by the government, "you must buy health insurance", and I believe as a nation we will take that sense of freedom and liberty to our graves. This is one half of America's problem with the exploding national debt: the majority of Americans don't want the government to spend money taking care of everything for us.

The other half of America's problem with the debt is the chafing notion that spending beyond one's means cannot be a good thing. Regardless of economic theory that clearly shows nations can spend in ways households cannot, there is a limit to this difference, and Americans sensed that deficit spending was spiraling out of control. This, along with our inherent distaste towards big government programs (aka taxes), is a big part of the reason why the deficit was such a big deal to Americans, even in the midst of the second-worst recession in our history.

This brings me back to Krugman's point. I believe that Republicans "won" the debt standoff because they represented fundamental American interests. They were elected to Congress to reign in spending, they promised to reign in spending, and now they have done so. Krugman can whine and scream all he likes, but economic oracles be damned, Americans wanted to cut spending. Which is why I say: he is right that this is bad for the American economy in the short run. Yes, his theory that this won't help much in the long run may even be correct as well. However, he is incorrect when he claims our system of governance isn't working. We are Americans, and we don't want the government to spend and spend and spend until we all live in the Elysian fields. We want to do it ourselves.

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