David Stockman, who served as Ronald
Reagan’s budget director from 1981 to 1985, leveled some harsh criticism
at his former boss as well as at President George W. Bush in an op-ed
he penned about the state of the economy for The New York Times titled
“Sundown in America.”
“The destruction of fiscal rectitude under
Ronald Reagan—one reason I resigned as his budget chief in 1985—was the
greatest of his many dramatic acts,” Stockman writes. “It created a
template for the Republicans’ utter abandonment of the balanced-budget
policies of Calvin Coolidge and allowed George W. Bush to dive into the
deep end, bankrupting the nation through two misbegotten and unfinanced
wars, a giant expansion of Medicare and a tax-cutting spree for the
wealthy that turned K Street lobbyists into the de facto office of
national tax policy. In effect, the G.O.P. embraced Keynesianism—for the
wealthy.”
As The Huffington Post
noted, “Stockman may have a point when it comes to Bush’s policies, at
least. The cost of the wars in Iraq and Afghanistan combined with the
Bush-era tax cuts for the wealthy will account for nearly half of the
debt the U.S. will owe by 2019, according to a February analysis from
the Center on Budget Policy and Priorities, a left-leaning think tank.”
Stockman’s attack extends far beyond just
Reagan and Bush, however; his piece also targets lawmakers, Wall Street,
the Federal Reserve and Treasury officials as he paints a bleak picture
of the American economy.
David Stockman in The New York Times:
Without any changes, over the next decade
or so, the gross federal debt, now nearly $17 trillion, will hurtle
toward $30 trillion and soar to 150 percent of gross domestic product
from around 105 percent today. Since our constitutional stasis rules out
any prospect of a “grand bargain,” the nation’s fiscal collapse will
play out incrementally, like a Greek/Cypriot tragedy, in carefully
choreographed crises over debt ceilings, continuing resolutions and
temporary budgetary patches.
... THE state-wreck ahead is a far cry from
the “Great Moderation” proclaimed in 2004 by Mr. Bernanke, who
predicted that prosperity would be everlasting because the Fed had tamed
the business cycle and, as late as March 2007, testified that the
impact of the subprime meltdown “seems likely to be contained.” Instead
of moderation, what’s at hand is a Great Deformation, arising from a
rogue central bank that has abetted the Wall Street casino, crucified
savers on a cross of zero interest rates and fueled a global commodity
bubble that erodes Main Street living standards through rising food and
energy prices — a form of inflation that the Fed fecklessly disregards
in calculating inflation.
These policies have brought America to an
end-stage metastasis. The way out would be so radical it can’t happen.
It would necessitate a sweeping divorce of the state and the market
economy. It would require a renunciation of crony capitalism and its
first cousin: Keynesian economics in all its forms. The state would need
to get out of the business of imperial hubris, economic uplift and
social insurance and shift its focus to managing and financing an
effective, affordable, means-tested safety net.
