necessary to eliminate such an imbalance.
very deep recession, which would further de-
press revenues and increase demands for gov-
ernment services and transfer payments (for
example, unemployment insurance and food
more vulnerable the next time our debt hits
President Obama and his senior advisers are
clearly concerned about the long-term budget
situation, and recent opinion polls suggest
that the public would support a more prudent
fiscal policy at least until the sacrifices the
change entailed were spelled out. Jens Hen-
riksson, who served several ministers of fi-
nance in Sweden as that country dealt with its
own debt crisis, advises that liberals could sig-
nal commitment by offering to cut spending,
and that conservatives could do likewise by
offering to support tax increases. For example,
the president could offer to pare spending by a
dollar for every dollar that taxes increase. But
for better or worse, America is not Sweden.
tions on deficit reduction. The idea is to pro-
tax increases and spending cuts. But most
ber of Democrats) have already rejected the
idea of setting up a deficit commission, and
Republicans have vowed to reject the recom-
mendations of any commission the president
sets up on his own.
countries. Some would argue that this is al-
ready happening: President Obama soft-
pedaled human rights issues during his first
day and decide that enough is enough that
treasured entitlements, including Medicare
and Medicaid, must be trimmed and that
taxes must be raised in order to protect the
economy (and our grandchildren's living
standards) from deep decline seem very
plausible. That suggests it might take a trau-
matic event a debt crisis that delivers a one-
two-three punch in the form of inflation,
deep recession and the collapse of the dollar
to alter the politics of deficit reduction.
rises, Americans seem terrifyingly unwilling
to act until the pain of debt can no longer be
ignored. As the frog learns in its final mo-
ments, by then, it's too late.