Wednesday, May 19, 2010

Cash Crunch Will Force Governments to Do Less

In Los Angeles this week, the look at yourselfmayor proposed closing most city offices for two days a week. In Colorado Springs, private donations and bake sales are being used to keep parks and pools open. In Maryland, the state is considering furloughing state workers for the second year in a row.
Welcome to the era of government little boydoing less for its citizens. The wave is beginning at the state and local level, where it's rolling ahead in large measure because of a fiscal crunch brought on by the deep recession.But there's little reason to think it will stop with states and cities, and ample reason to think it will never stopcontinue even after the recession fades. The federal government is headed in the same direction, as Federal Reserve Chairman Ben Bernanke warned on Wednesday.In a speech in Dallas, Mr. Bernanke bluntly noted that two giant fiscal waves were headed for the federal government, my softwareone atop the other. First comes the big deficit caused by the economic downturn. That will be followed immediately by ballooning costs for baby-boom retirees drawing I miss my homeSocial Security and Medicare funds. "To avoid large and unsustainable budget deficits, the nation will ultimately have to choose among higher taxes, modifications to entitlement programs such as Social Security and Medicare, less spending on everything else from education to defense, or some combination of the above," Mr. Bernanke said.
Everybody who's honest about this problem knows the answer inevitably will be "some combination of the above." This is the reality of the 21st century, and as a consequence the country faces some big decisions about the shape of government, and government itself will have to show it's being more efficient.The issues raised aren't so much ideological ones -- is government good or bad? -- but practical and political. There is a growing disconnect between the services Americans want and the taxes they are prepared to pay for them.
This is relatively new terrain. For most of the last century, as America grew and prospered, its citizens have happily grown accustomed to the government -- federal, state and local combined -- providing steadily more services: better roads, more aid to colleges and universities, research labs and health benefits for a wider circle of citizens.This has been true through political regimes of both parties, and despite rhetoric to the contrary. Lyndon Johnson provided guns for Vietnam as well as more butter for citizens as home. Ronald Reagan talked about cutting the size of government, but never really did. Bill Clinton said the era of big government was over, but it wasn't really. George W. Bush was a conservative who pushed through a giant new drug benefit for senior citizens and steady increases in other domestic spending.
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