I. The Disconnect
All of the manufactured budget crises of the past few years—the fiscal cliff, the debt ceiling, sequestration—have made it easy to think of our deficit problems as merely a case of partisan politics. Many people are left to wonder why Democrats and Republicans can’t simply be sensible, make some compromises and stop the silliness. And there certainly has been silliness.
Yet the very real fiscal problem facing the country is not silly, manufactured or simple partisanship. The problem is us—the voters. We have not managed to figure out what kind of government, and what kind of economy, we want. The seemingly irrational politicians in Washington are, to some extent, responding rationally to their own confused constituents.
For a long time, we didn’t have to make tough choices. Our population was fairly young, and much of the rest of the world was hobbled by war damage, poverty or Soviet-style control, if not all three. Strong economic growth in the United States filled Washington’s coffers with tax revenue, while the small number of elderly held down the costs of Social Security and Medicare. The relatively basic state of medicine helped, too, restraining health-care costs. Thanks to all those friendly forces, the country could afford to cut tax rates while expanding government benefits.
The two political parties adopted their modern forms in response. Starting in the 1970s, especially in California, Republicans built their party around the idea of lower taxes. The past th...