State Fiscal Crisis

The Latest Fiscal Denialist: E.J. Dionne

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There is no crisis. These are not the droids you're looking for.

Following the dubious lead of Rachel Maddow, the New York Times editorial page (when it's talking about federal and not state public finances), Michael Moore and countless others, Washington Post columnist E.J. Dionne has embraced the "nu-uh" counter-argument to the cold hard fact that We Are Out of Money. "We're not broke," Dionne claims, bizarrely:

Yes, nearly all levels of government face fiscal problems because of the economic downturn. But there is no crisis. There are many different paths open to fixing public budgets. And we will come up with wiser and more sustainable solutions if we approach fiscal problems calmly, realizing that we're still a very rich country and that the wealthiest among us are doing exceptionally well.

There is no crisis. OK, let's take a quick tour around the allegedly crisis-free fiscal landscape:

We've got top men working on it. Top. Men.

* The town of Prichard, Alabama, population 27,000, has not been paying pensions to retired public employees for 18 months. Why? "The pension fund had been hemorrhaging money for years before it finally went broke in 2009." Note the word "broke."

* The bankrupt city of Vallejo, California, population 120,000, is choosing between canceling $45.9 million worth of public property leases and cutting $100 million in services and public sector payouts. Note the word "bankrupt."

* The most respected bipartisan chin-stroker in the deep blue state of California, the Little Hoover Commission, issued a report late last month [PDF] that began like this: "California's pension plans are dangerously underfunded, the result of overly generous benefit promises, wishful thinking and an unwillingness to plan prudently. Unless aggressive reforms are implemented now, the problem will get far worse, forcing counties and cities to severely reduce services and layoff employees to meet pension obligations." Note the word "dangerously."

* The president of the United States of America, Barack Obama, said last October that "we're facing an untenable fiscal situation." Note the word "untenable."

* Noted non-libertarian Ben Bernanke that same month issued this colossal buzz-harsh of a prognosis:

If current policy settings are maintained, and under reasonable assumptions about economic growth, the federal budget will be on an unsustainable path in coming years, with the ratio of federal debt held by the public to national income rising at an increasing pace. Moreover, as the national debt grows, so will the associated interest payments, which in turn will lead to further increases in projected deficits. Expectations of large and increasing deficits in the future could inhibit current household and business spending--for example, by reducing confidence in the longer-term prospects for the economy or by increasing uncertainty about future tax burdens and government spending--and thus restrain the recovery. Concerns about the government's long-run fiscal position may also constrain the flexibility of fiscal policy to respond to current economic conditions. […]

Our fiscal challenges are especially daunting because they are mostly the product of powerful underlying trends, not short-term or temporary factors. Two of the most important driving forces are the aging of the U.S. population, the pace of which will intensify over the next couple of decades as the baby-boom generation retires, and rapidly rising health-care costs. […]

[P]rojections by the CBO and others show future budget deficits and debts rising indefinitely, and at increasing rates.

It was a nice gig while it lasted, Ezra

Note "unsustainable," "increasing pace," "especially daunting," "powerful underlying trends," "will intensify," and on and on.

The headline on Dionne's fantasy is "What if we're not broke?" Which is a lot like saying, "What if there was a million-dollar bill in my pants?" Only it's much worse–the consequences of this dream not coming true are truly terrible, at least as bad as Bernanke outlines above. And the defiant can-kicking by Democratic dead-enders is only tacking a premium onto our future pain.

Was Dionne attacking Obama's Republican predecessor for jacking up spending and deficits? You have to ask? Is alleged policy wonk Ezra Klein hi-fiving Dionne's dubious findings? Base your community on reality!

Nick Gillespie wrote in more detail about our broketasticness last week. Related Reason.tv content below.