And it's not just in foreign policy. The same thing has been happening in economic policy, where we've also got another huge and threatening mess on our hands. I'm convinced that one reason we've had so many nasty surprises in our economy is that the country somehow got lots of false impressions about what we could expect from the big tax cuts that were enacted, including:
(1) The tax cuts would unleash a lot of new investment that would create lots of new jobs.
(2) We wouldn't have to worry about a return to big budget deficits -- because all the new growth in the economy caused by the tax cuts would lead to a lot of new revenue.
(3) Most of the benefits would go to average middle-income families, not to the wealthy, as some partisans claimed.
Unfortunately, here too, every single one of these impressions turned out to be wrong. Instead of creating jobs, for example, we are losing millions of jobs -- net losses for three years in a row. That hasn't happened since the Great Depression. As I've noted before, I was the first one laid off.
And it turns out that most of the benefits actually are going to the highest income Americans, who unfortunately are the least likely group to spend money in ways that create jobs during times when the economy is weak and unemployment is rising.
And of course the budget deficits are already the biggest ever -- with the worst still due to hit us. As a percentage of our economy, we've had bigger ones -- but these are by far the most dangerous we've ever had for two reasons: first, they're not temporary; they're structural and long-term; second, they are going to get even bigger just at the time when the big baby-boomer retirement surge starts.
Moreover, the global capital markets have begun to recognize the unprecedented size of this emerging fiscal catastrophe. In truth, the current executive branch of the U.S. government is radically different from any since the McKinley administration 100 years ago.
The 2001 winner of the Nobel Prize for Economics, George Akerlof, went even further last week in Germany when he told Der Spiegel, "This is the worst government the U.S. has ever had in its more than 200 years of history...This is not normal government policy." In describing the impact of the Bush policies on America's future, Akerloff added, "What we have here is a form of looting."
Ominously, the capital markets have just pushed U.S. long-term mortgage rates higher soon after the Federal Reserve Board once again reduced discount rates. Monetary policy loses some of its potency when fiscal policy comes unglued. And after three years of rate cuts in a row, Alan Greenspan and his colleagues simply don't have much room left for further reductions.
This situation is particularly dangerous right now for several reasons: first because home-buying fueled by low rates (along with car-buying, also a rate-sensitive industry) have been just about the only reliable engines pulling the economy forward; second, because so many Americans now have variable rate mortgages; and third, because average personal debt is now at an all-time high -- a lot of Americans are living on the edge.
It seems obvious that big and important issues like the Bush economic policy and the first pre-emptive war in U.S. history should have been debated more thoroughly in the Congress, covered more extensively in the news media, and better presented to the American people before our nation made such fateful choices. But that didn't happen, and in both cases, reality is turning out to be very different from the impression that was given when the votes -- and the die -- were cast.
Since this curious mismatch between myth and reality has suddenly become commonplace and is causing such extreme difficulty for the nation's ability to make good choices about our future, maybe it is time to focus on how in the world we could have gotten so many false impressions in such a short period of time.
At first, I thought maybe the president's advisers were a big part of the problem. Last fall, in a speech on economic policy at the Brookings Institution, I called on the president to get rid of his whole economic team and pick a new group. And a few weeks later, damned if he didn't do just that -- and at least one of the new advisers had written eloquently about the very problems in the Bush economic policy that I was calling upon the president to fix.
But now, a year later, we still have the same bad economic policies and the problems have, if anything, gotten worse. So obviously I was wrong: changing all the president's advisers didn't work as a way of changing the policy.
I remembered all that last month when everybody was looking for who ought to be held responsible for the false statements in the president's State of the Union address. And I've just about concluded that the real problem may be the President himself and that next year we ought to fire him and get a new one.
But whether you agree with that conclusion or not, whether you're a Democrat or a Republican -- or an Independent, a Libertarian, a Green or a Mugwump -- you've got a big stake in making sure that representative democracy works the way it is supposed to. And today, it just isn't working very well. We all need to figure out how to fix it because we simply cannot keep on making such bad decisions on the basis of false impressions and mistaken assumptions.
Earlier, I mentioned the feeling many have that something basic has gone wrong. Whatever it is, I think it has a lot to do with the way we seek the truth and try in good faith to use facts as the basis for debates about our future -- allowing for the unavoidable tendency we all have to get swept up in our enthusiasms.
That last point is worth highlighting. Robust debate in a democracy will almost always involve occasional rhetorical excesses and leaps of faith, and we're all used to that. I've even been guilty of it myself on occasion. But there is a big difference between that and a systematic effort to manipulate facts in service to a totalistic ideology that is felt to be more important than the mandates of basic honesty.
Unfortunately, I think it is no longer possible to avoid the conclusion that what the country is dealing with in the Bush presidency is the latter. That is really the nub of the problem -- the common source for most of the false impressions that have been frustrating the normal and healthy workings of our democracy.
Americans have always believed that we the people have a right to know the truth and that the truth will set us free. The very idea of self-government depends upon honest and open debate as the preferred method for pursuing the truth -- and a shared respect for the rule of reason as the best way to establish the truth.
The Bush administration routinely shows disrespect for that whole basic process, and I think it's partly because they feel as if they already know the truth and aren't very curious to learn about any facts that might contradict it. They and the members of groups that belong to their ideological coalition are true believers in each other's agendas.