The risks of the short view
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David Gergen Editorial in Dec. 8 U.S. News
Editorial 12/8/03
By David Gergen
Editor at large
U.S. News & World Report
Back in 1971, as he approached re-election, President Richard Nixon made a terrible blunder: He slapped controls on wages and prices even as he encouraged the Federal Reserve to print oodles of money. The economy spurted in the short term, which ensured a landslide victory at the polls, but in the long term it went haywire and hurt many people. In his book Seven Fat Years, conservative Robert Bartley castigated Nixon for a mistake nearly as ruinous as Watergate.
The tendency to embrace short-term gains in exchange for long-term pains has become pervasive in contemporary life. In recent years, many U.S. corporations were so addicted to meeting their quarterly numbers that they twisted their balance sheets to hide the truth. For a while, we had a fabulous party. But since 1998, over a thousand companies have been forced to clean up their books. Some have collapsed in scandal.
It is thus with a heavy heart that one watches the unfolding drama of the Bush administration. Its embrace of short-termism first became apparent early on when it canceled--without warning to allies--America's signature to the Kyoto treaty on global warming. The administration promised that it would come up with an alternative; it never has. Instead, it has allowed America to continue blithely on as the world's major polluter and has kicked the problem of global warming down the road to who knows when. And we wonder why other nations are so angry with us.
The administration's decision to impose a steel import tariff of as much as 30 percent was cut from the same cloth: It reeked of politics, as votes were sought in steel-producing states like Pennsylvania and West Virginia. Sure enough, the World Trade Organization has found us in violation of international law, and now we have stirred up a trade row with Europe. No less egregious was the administration's support of farm subsidies--a clear play for the farm vote. Wasn't it the Democrats who were the party of "spend and spend, elect and elect"?
Pump priming. The biggest shock, however, is the administration's cavalier approach to our financial health, capped by last week's passage of the Medicare bill. On balance, the bill is an important advance for seniors. But it is grossly irresponsible for the administration--even as it claims political victory--to secure passage without raising a single dime to pay for the costs. The country is now saddled with at least $400 billion in extra spending over the next decade--and probably a whole lot more.
We learned last week that the economy is growing at the fastest rate in nearly 20 years, and consumer confidence is up sharply. The president rightly claims that his tax cuts and spending increases are partly responsible. He was right to apply that short-term tonic. But nearly every sober voice in the country is warning that his insistence upon continued pump priming puts the economy at serious, long-term risk. Fed Chairman Alan Greenspan has been emphatic about his concerns. An economist from Goldman Sachs said the federal budget is "out of control." The Congressional Budget Office, headed by a former economist from the Bush White House, warns that federal deficits over the next 10 years will reach $1.4 trillion. Already, tax revenues have fallen to the lowest levels in more than 40 years while spending has risen to almost unprecedented levels.
The bipartisan Concord Coalition is even gloomier. It foresees annual deficits of more than $400 billion over the next 10 years, increasing the national debt by some $4.4 trillion--and that's before we help fund the retirement of baby boomers. The president, sadly, says he doesn't read the newspapers, but isn't someone telling him these things?
One worries that the disease of short-termism may even be creeping into foreign policy. At the very time we should be sending a message to terrorists that they can never break our will in Iraq, the administration keeps saying it plans to start withdrawing American forces by next summer. Are we to believe that it's entirely coincidental that the drawdown will come just before fall elections? Is it possible that we will leave without finishing the job?
None of this is to diminish the president's many acts of leadership, such as his visit to Baghdad last week. With events moving in his direction, he carries a strong upper hand into next year's election season. Before they start celebrating in the White House, however, the Bush team should remember that presidents are ultimately judged by their long-term impact, not their short-term gains. Think of Woodrow Wilson winning re-election after promising to keep us out of war; think of Lyndon Johnson with his "guns and butter"; and think, too, of Richard Nixon's wage and price controls. How will George W. Bush be remembered? |
