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Whenever there is a deadline in Congress, short-term considerations generally gain more importance than long term goals. Politicians have a tendency to focus on fixing whatever is broken through a piecemeal and temporary approach rather than taking a look at how the quick fixes will affect generations to come. In other words, the can gets kicked a little further-eventually becoming the next generation's problem.
Former hedge fund manager and proactive philanthropist Stanley Druckenmiller and Geoffrey Canada, President of the Harlem Children's Zone, headlined a panel at USC last month to discuss this very same issue. The discussion narrowed on the massive transfer of wealth from the younger generation to the older. This generational inequality shows the drivers of the national debt are entitlements, but the part of the budget that receives the most damage is the discretionary spending, from education to investments in infrastructure.
Whatever happens in Washington over the next several weeks will decide the future of America. It should entail a full-scale budget at best or a continuing resolution at worst; but at least something in the way of progress as opposed to sense of malaise. That term may remind your parents of President Carter's speech in 1979, and there are similarities between then and now. That is, a lack of confidence in government's ability to solve our fiscal problems.
Once fiscal problems get to the point where they are now, it impacts how other countries view the United States. Take a look at the recent economic summit in Asia. President Obama sent Secretary of State John Kerry instead of representing the U.S. himself, deciding to stay and work with Congress. America's loss is China's gain. Foreign policy has become affected by the lack of confidence in Washington after a partial shutdown and a fast approaching debt limit.
Any attempt to imagine what possible outcomes of a deal will be is like trying to play a guessing game with nobody knowing the answer. The concepts behind a real grand bargain such as spending cuts, entitlement reform, full-scale tax reform, and a debt limit hike are complex. The greater debate should be narrowed on the role government plays in individuals' lives.
Partisanship aside, Democrats and Republicans need to realize how their responsibility is to America as a whole and not merely their constituency. Their votes impact more than those who vote for or against them. Rep. Paul Ryan (R-WI.) put it best when he said "This is our moment to get a down payment on the debt and boost our economy. But we have to act now."
Rep. Ryan was not referring to a grand bargain, but a good starting point. The down payment would be what Democrats and Republicans can agree on. Without a grand generational bargain, everyone will lose.
With Democrats and Republicans preferring to stand tall on their principles rather than negotiate, either a government shutdown and/or a default can take place. Playing the blame game before something happens is not only childish, but irresponsible. This is real life and what Congress and the President decide upon will impact not just mine and my parent's generations, but future ones as well.
Published: Oct. 17, 2013 - Volume 12 - Issue 27