Anthony Liveris | The fall of the American empire
Liberatus | liberatus | Warring ideologies and a complacent electorate have created an unsustainable goverment
February 17, 2013, 11:34 pm·
The future of the United States is in your hands and you are failing.
By voting for, endorsing or pacifistically allowing unsustainable growth in debt due to the high costs and liabilities of entitlements partnered with minimalist income sources, you have supported a government that can no longer carry its own weight.
But why moan, grumble, write an op-ed? … So goes the story of the rise and fall of empires.
In “The Decline and Fall of the Athenian Republic,” by Alexander Fraser Tytler, Mr. Tytler detailed what has famously become known as the Tytler Cycle:
“A democracy cannot exist as a permanent form of government. It can only exist until the majority discovers it can vote itself largess out of the public treasury. After that, the majority always votes for the candidate promising the most benefits with the result the democracy collapses because of the loose fiscal policy ensuing.”
Social Security, Medicare and Medicaid are not just campaign talking points. They are expensive programs that ensure improved living standards for an aging American demographic. The United States, however, is on course for a tipping point much more potent than the so-called “fiscal cliff.”
The United States needs to reverse the rising ratio of debt to Gross Domestic Product. Debt is now 73 percent of GDP. If debt gets higher than 100 percent, all of our revenues will be directly spent on covering the interest on debt.
If the United States is to prevent the Tytler Cycle, it needs a productive growth economy that creates jobs and new sources of revenue. In essence, we need to continuously over-perform the desires of our democracy.
Do not be deterred. Despite these burdens, America still has a young and diverse population, a productive work force, great universities (some, like Penn, better than others, like Harvard) and its unique entrepreneurial history.
So why can’t we simultaneously reduce costs and raise revenues?
The United States is at war with itself and the masses are directly reaping the spoils. Our two major political parties are ideologically gridlocked at opposite ends of the fiscal spectrum.
In essence, the Democrats model the modern European welfare state by aiming to raise taxes on the wealthy in order to fund social programs geared at helping the poor, unemployed or aging.
The Republicans want to lower the cost of government and stimulate the economy by reducing entitlements and lowering taxes. The best examples of this phenomenon are today’s Singapore, or other East Asian economies.
The answer is that neither can be achieved overnight or on their own. After all, if you don’t remember hearing it during the campaign season, you should recall it from last Tuesday’s State of the Union: “[Americans] know that broad-based economic growth requires a balanced approach to deficit reduction, with spending cuts and revenue and with everybody doing their fair share.”
The compromise I subscribe to follows the prevention sort of medicine seen in the Simpson-Bowles proposal: $4 trillion in total, including $3 trillion in entitlement cuts and $1 trillion in new tax revenues. This is known as the “Grand Deal,” was rejected by Washington.
Of course Washington rejected it. The proposal is too moderate for any public figure on either side to agree on. Representative and former vice presidential candidate Paul Ryan, who had a history of chastising President Obama for no economic proposals, played politics by rejecting the commission during the election season (I’m guessing this means he won’t come speak to Penn College Republicans now…).
So we turn to a compromise inside the compromise, perhaps a “small Grand Deal”: $2 trillion in cuts and $1 trillion in taxes.
The irony is that President Obama has offered $1.8 trillion in cuts already — and the Republicans have argued they have offered $650 billion in revenues already.
So if you believe these numbers, we are only $550 billion away from reversing Tytler’s Cycle. More so, this is over a 10-year period.
That makes it $55 billion a year in a $13 trillion economy. Are you hearing me, America?
We have the opportunity to turn Tytler’s prediction over on its head. We don’t need a complete systematic overhaul. We need one deal.
Anthony Liveris is a College junior and vice president of College Republicans from Brisbane, Queensland, Australia. His email address is firstname.lastname@example.org. Follow him @AnthonyLiveris. “Liberatus” appears every other Monday.