The United States faces a fundamental disconnect between the services that people expect the government to provide, particularly in the form of benefits for older Americans, and the tax revenues that people are willing to send to the government to finance those services. Changes of the magnitude required to make fiscal policy sustainable could have important economic and social effects—but they also provide an opportunity to address existing concerns about tax and spending policies. Given the time required to implement significant policy changes, determining those changes is an urgent task for policymakers.Then this from New York Times columnist Ross Douthat:
If Robert Rubin’s mistakes helped create an out-of-control financial sector, then naturally you need Timothy Geithner and Lawrence Summers — Rubin’s protégés — to set things right. After all, who else are you going to trust with all that consolidated power? Ron Paul? Dennis Kucinich? Sarah Palin?I wanted to title this post Depressing Things I Read Today, but thought that would be grossly irresponsible. Reminders of the challenges ahead that come in the form of thoughtful analysis are far more difficult to dismiss than talk radio antics designed to generate ad revenue. If these aren't the kind of wake-up call we desperately need, then I don't know what is.
This is the perverse logic of meritocracy. Once a system grows sufficiently complex, it doesn’t matter how badly our best and brightest foul things up. Every crisis increases their authority, because they seem to be the only ones who understand the system well enough to fix it.
But their fixes tend to make the system even more complex and centralized, and more vulnerable to the next national-security surprise, the next natural disaster, the next economic crisis. Which is why, despite all the populist backlash and all the promises from Washington, this isn’t the end of the “too big to fail” era. It’s the beginning.