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Right Turn
Posted at 01:26 PM ET, 04/18/2011

The debt crisis may be sooner than you think

Continetti is guest-blogging for The Post.

I’ve decided the most important guide to our times is the 1992 Robert Redford movie “Sneakers.” The movie deals with cryptography, secrecy, and the nature of power. Redford plays the hero, Martin Bishop, who battles with his former friend Cosmo (Ben Kingsley) over a machine that can decode anything. Cosmo wants to create a world with “no more secrets” — a precursor to Julian Assange and the anarchists at WikiLeaks.

Cosmo says the world is governed by perception. Illusion, he says, can be self-fulfilling. If enough people think a bank is about to fail, they begin to pull their money from the bank . . . and it fails. When enough people believe a government will fall, they start acting as if the government doesn’t matter . . . and it falls. Look at the Arab Awakening: By pledging to “reform,” dictators in Tunisia, Egypt and Syria implicitly conceded that they had no legitimacy. Each concession fed the perception of a weak ruler. The crowds demanded more. Now only Syria’s Bashar al-Assad remains, and his grip on power looks tenuous.

The same rule applies to debt. According to Rep. Paul Ryan, Bill Gross, the CEO of Pimco, believes America’s debt crisis is only years away. But perceptions can change quickly. Today Standard and Poor’s gave a “negative” outlook to United States debt, and stocks and the dollar have plunged. A few more curveballs — botching the debt-ceiling vote, for example — and we’ll be eating gyros and drinking port with our fiscally challenged brethren in Greece and Portugal.

Ryan’s budget aims to prevent draconian austerity measures in the future — big tax hikes and cuts to current retirees — by reforming our entitlement system today. President Obama thinks everything will be hunky-dory if we raise taxes on the rich and let the Independent Payment Advisory Board deny Medicare treatments. If Ben Kingsley’s right, though, neither approach will work. The crisis will be here any day now. And Robert Redford won’t be able to save us.

By Matthew Continetti  |  01:26 PM ET, 04/18/2011

 
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