A New Public Philosophy for Bankrupt Economies

Robert Samuelson writes that the only way that the country will ever successfully tackle its budgetary woes is to develop a new public philosophy (effectively reversing the New Deal and the Great Society):

People who wonder what America's budget problem is ultimately about should look to Europe. In the streets of Dublin, Athens and London, angry citizens are protesting government plans to cut programs and raise taxes. The social contract is being broken. People are furious; they feel betrayed.

Modern democracies have created a new morality. Government benefits, once conferred, cannot be revoked. People expect them and consider them property rights. Just as government cannot randomly confiscate property, it cannot withdraw benefits without violating a moral code. The old-fashioned idea that government policies should serve the "national interest" has given way to inertia and squatters' rights.

One task of the National Commission on Fiscal Responsibility and Reform - co-chaired by Erskine Bowles and Alan Simpson - was to discredit this self-serving morality. Otherwise, changing the budget will be hard, maybe impossible. If everyone feels morally entitled to existing benefits and tax breaks, public opinion will remain hopelessly muddled: desirous in the abstract of curbing budget deficits but adamant about keeping all of Social Security, Medicare and everything else. Politicians will be scared to make tough decisions for fear of voter reprisals.

For years, it was assumed that a rapidly growing economy could pay for added programs. The result was the careless use of government for almost anything that made a good slogan or could support a lobby. The underlying economic assumptions were overly optimistic. Now, an aging society and uncontrolled health costs will automatically expand the size of government well beyond today's tax base. Demographics mean government will become supersized unless we trim its responsibilities.

We need a new public philosophy that acknowledges these realities. Perhaps Bowles-Simpson will start the needed conversation. Government will be big, offending conservatives. But it also should be limited, offending liberals. The social contract will be rewritten either by design or, as in Europe, under outside pressures. If we keep the expedient morality of perpetual programs - so that nothing fundamental can ever be abandoned - then Europe's social unrest could be a prelude to our own.