After the failure of the 1973 Geneva Peace Conference, the Israeli diplomat Abba Eban sighed that “The Arabs never miss an opportunity to miss an opportunity.” In recent years, the same could be said of Americans.
Two months ago, the U.S. marked the 10th anniversary of the Sept. 11 attacks. Sadly, we commemorated a tragedy without celebrating much triumph. The post-9/11 moment was an unheralded instance of national -- even global -- unity. The Bush administration could have used it for almost anything. And, to be fair, it did. The nation burned trillions of dollars in two wars and a budget-busting round of tax cuts. The president told us to go shopping, and the Federal Reserve held interest rates at extraordinarily low levels. The result? Deficits and a credit bubble. That was missed opportunity No. 1.
Three years ago, Lehman Brothers Holdings Inc. fell. The ensuing financial crisis dwarfed anything seen since the Great Depression. But there was, for the U.S., one silver lining. In a world of risk, the markets deemed us dependable. The real yield on five and seven-year Treasuries is, even today, negative. Investors will literally pay us to keep their money safe.
For a country with more than $2 trillion in unmet infrastructure needs, this is a remarkable opportunity. But it gets better. Weak global demand means raw materials are cheap. And the bursting of the housing bubble means unemployment in the construction sector is high. We can borrow at a bargain, buy at a bargain and ease the unemployment crisis in the hardest-hit sector of our economy, all while making desperately needed investments in our future competitiveness and quality of life.
Plus, if we don’t do it now, we’ll have to do it later. Delaying a dollar of bridge repair just means it’s a dollar we’ll have to pay later. And by that time, it might be more than a dollar, because it’s cheaper to repair a bridge than rebuild one that has crumbled.
An Extraordinary Offer
So are we taking advantage of this opportunity? No. Are we seriously discussing it? No. Are we doing anything else with the market’s extraordinary offer -- say, wiping out the payroll tax for the next two years to give consumers a boost and our economy some insurance against further deterioration in Europe? No. That’s missed opportunity No. 2.
Right now, the only thing the two parties in Washington appear to agree on is the need for deficit reduction. Viewed correctly, even that is an opportunity. Everywhere you look in the federal government there are overdue reforms worth making. The tax code should be cleaned of loopholes and extraneous deductions. The cost controls in the recent health-care reform bill should be strengthened. The Defense Department, bloated after 10 years of war, should be pared down.
We could go further still. The tax code, for instance, could be shifted to tax consumption more and investment less. Economists of all stripes agree that, if correctly constructed, that would be a good idea. We could shift some of the taxes we currently impose on work and put them instead on dirty energy. That would boost the clean energy sector and cut down on pollution. After years in which it has been all too clear that moneyed interests are able to buy a seat at the legislative table and influence federal spending, campaign-finance reform could be passed to ensure that the next round of deficit reduction and tax reform will not be so easily undone. After a decade in which we fought conventional wars against an unconventional enemy, America’s military posture could be reimagined.
But that won’t happen, either -- due to missed opportunity No. 3. The so-called supercommittee looks increasingly unlikely to reach a deal. If it does reach one, it will certainly not be an ambitious one. Given the curve on which we grade our politicians now, a curve on which paying our bills and keeping the lights on counts as success, even the most modest agreement will be celebrated. But if you look back to the beginning of this process, to the days when the Bipartisan Policy Center and other groups were putting out detailed and thoughtful proposals to reduce the deficit by reforming government and remaking the tax code, it is clear that we have lost whatever opportunity we once had to rise to this occasion.
Even the opportunities we have seized are mostly coming undone. In one of his presidency’s more bipartisan moments, George W. Bush joined with Senator Ted Kennedy to pass No Child Left Behind. The law, though flawed, made some important strides in education reform. Today, Congress is too distracted to pass needed fixes, and so the Obama administration is preparing to grant states waivers from the bill so they do not need to take over thousands of schools that haven’t met the law’s overly stringent requirements.
Similarly, the Obama administration was able to use the aftermath of the financial crisis to pass health-care reform, which made a good start on both covering the uninsured and controlling costs. It also secured a package of financial-regulation reforms to limit the risks of another catastrophic meltdown. Today, Republicans want to repeal both laws, and if they win the next election, they might just get their wish. In the meantime, they’re defunding the implementation of the two laws, and bogging them down in the courts.
It’s entirely possible that we could wake in 2013 only to realize that we have made no durable progress on any of our pressing national problems over the course of the Bush and Obama presidencies, and have, in fact, made some problems worse. That would mean a loss of 12 years during which we could have been moving forward as a country. And we won’t be able to blame it on a lack of opportunities.
(Ezra Klein is a Bloomberg View columnist. The opinions expressed are his own.)
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