Is America a shining beacon of democracy and prosperity? Or have its days of greatness already passed? If the latter, can they be restored once again?
These conflicting visions of our nation's future pervaded economist and Urban Institute fellow C. Eugene Steuerle’s presentation at Cowles Auditorium on the University of Minnesota campus on May 28, 2014. Hosted by the Humphrey School of Public Affairs, the Public and Nonprofit Leadership Center, Greater Twin Cities United Way, and the Minnesota Council of Nonprofits, Steuerle’s lecture and Human Capital Research Collaborative Director Art Rolnick’s commentary explored how past fiscal policy has limited America’s options for future prosperity.
Asserting that “we live in a time of extraordinary possibility,”Steuerle’s thesis from his current book, “Dead Men Ruling” attributes the country’s apparent fiscal malaise to the “Two Santa Claus Theory” whereby both political parties have sacrificed future well-being for present entitlements through tax cuts or increased spending. To “remove [America’s] fiscal strait jacket” and restore political flexibility, Steuerle called for budgetary restraint and a reallocation of resources toward children and young people. Reducing mandatory entitlements for the elderly and baby boomers also would help.
Rolnick agreed that America is a “really quite rich country,” but felt Steuerle’s goal of political flexibility might be undesirable. The constraints imposed by rules and restrictions inhibit the excessive risk-taking exhibited by bankers and investors during the recent Great Recession. State government inducements to lure businesses from other states only moves jobs around without strengthening the economy overall. They also show how poor government is at picking economic winners and losers. He agreed the long-term “public return is huge” for government investment in programs like early childhood education.
The nub of the problem seemed to center on how much flexibility the government should be allowed. In the question-and-answer session, Steuerle observed that the bottom 60 per cent of eligible home loan applicants receive only 20 per cent of the benefits. The Mall of America’s recent $300 million loan underscores the public policy need to “supply money evenly.” That and the confidence engendered by government enforcement of current regulations would enable the American economy to meet current and future needs.
These observations are not new. The National Commission on Fiscal Responsibility and Reform called for similar budgetary restraints, particularly in regard to such entitlements like Social Security. Targeting investment toward young people may be a worthy long-term objective, but the needs of the nation’s senior citizens, veterans, and fiscally disenfranchised still must be addressed. Definitions of greatness and prosperity change over time as do their opposites. The average 1930s lifestyle, for example, would be considered substandard today. What remains constant is that both gentlemen’s longitudinal assessments to restore America’s greatness appear inconsequential when viewed from the bottom of today’s economic pile.