Americans voted for divided government last week. Democrats retained control of the Senate, and Republicans look set to gain control of the House by the slimmest of margins. Neither party has a clear policy mandate. A partisan stalemate is likely to produce congressional investigations and fiscal brinkmanship. And the 2024 presidential campaign has already begun. What we don’t see in our national politics is a serious discussion about the political and economic challenges the country faces.
The nearly 250-year-old system of American-style self-governance is facing a challenge from China and other authoritarian regimes. Totalitarianism, once thought to be consigned to history after the West’s victory in the Cold War, is back, competing for dominance in the digitized world. Before Western democracies can face down external threats, they have to muster the will to tackle their major internal challenges.
U.S. fiscal policy is on a collision course with monetary policy. The economic devastation resulting from a debt and currency crisis could inflict enormous—possibly irreparable—damage. Predicting precisely when a huge debt and high deficits will unleash economic disaster is difficult. The dollar’s status as the world’s reserve currency gives the U.S. unique advantages, but no country can defy the laws of economic gravity forever. The U.S. has run up large budget deficits and debts before, but those moments of national emergency, such as world wars or global financial crises, were usually—at least until recently—followed by periods of fiscal repair.
The difference now is that various factors—demographics, health, inflation, declining labor-force growth and declining productivity—have built in an unsustainable rise in the national debt. The federal government is making promises to citizens that it can’t keep. The social contract to help the neediest is at risk, as is the implicit promise of the American dream—that each generation will have the chance to do better than the previous one.
The bad news is that our politics are fundamentally unserious. The good news is that a fiscal crisis is still avoidable. But the window of opportunity to prevent it is closing.
We are not powerless. Holding off catastrophe is a matter of summoning the will. In “American Renewal: A Conservative Plan to Strengthen the Social Contract and Save the…
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