By Steven Pearlstein
Wednesday, January 27, 2010; A12
My fellow Americans, the state of our union is . . . well, quite wretched at the moment. As president, I owe you that honesty and candor.
It would be bad enough that we're stuck in an endless war against vicious terrorists or that we've just been through a financial crisis that wiped out a quarter of our wealth and left one in six adults without a job or underemployed, to say nothing of the fact that our planet is on the brink of an environmental calamity.
What's truly depressing, however, is that as a country we seem to have completely lost the will and the capacity to collectively confront these challenges. Our union has been torn asunder by a clash of ideologies and special interests and brigades of power-hungry partisans that has resulted in a paralyzing political stalemate. In response, our citizens have become angry, cynical, distrustful and dispirited.
Economists have long recognized that what distinguishes successful and wealthy countries from those that are poor and failing is not their natural endowments or even their level of human capital, but rather the quality of their institutions. By institutions, economists refer not only to governmental, business, educational and civic entities, but also the formal rules and informal protocols by which decisions are made, disputes are resolved, commerce is conducted and people interact. It was the quality of its institutions that led our country to become the richest, most powerful and most admired on the planet. Now the deterioration of those institutions threatens our standing in the world.
Hardly a day passes now that doesn't bring further evidence of this institutional deterioration.
Only a year after taxpayers were forced to mount an unprecedented rescue of the financial sector, industry profits and bonuses are back to near pre-crisis levels, and the Wall Street casino is again open for business.
While millions of homeowners struggle to keep up with home mortgages and student loans, highflying financiers and money managers think nothing of walking away from their bad investments and handing the keys over to their creditors.
Our highest court has abandoned all pretense of judicial restraint, allowing itself to become just another political branch doing the bidding of special interests and political factions.
California is now a failed state, financially bankrupt and politically incapacitated, while Massachusetts, which for nearly half a century proudly sent a senator to Washington to fight for social justice and universal health care, has chosen as his replacement someone who campaigned in effect on the slogan "We've got ours, so the hell with everyone else."
No institution, however, has deteriorated more than the one in which I stand now, the U.S. Congress, which has transformed itself into a hyper-partisan swamp that fails to live up even to its most basic constitutional duties -- making timely appropriations, confirming nominees for top positions and declaring when we are at war. You have saddled the country with a monstrous debt and projected deficits that will bankrupt the nation, yet you refuse even to allow an independent commission to draw up a reasonable plan to cut spending and raise taxes. You have spent a year deliberating on the urgent issues of health care, global warming and financial regulation, yet so far you have been able to agree on nothing.
I will be the first to acknowledge that I, too, have contributed to this institutional failure. I was elected to change the way business was done here in Washington, but too often, in my zeal to accomplish great things, I succumbed to the temptation to play the old games just to move things along or gain tactical advantage. As a result, I wound up sacrificing the support of too many of the idealistic and independent voters who provided the margin of victory in my election.
So here is what I'm going to do to try to get things back on track:
I pledge to veto any bill that increases the national debt unless it authorizes a bipartisan commission to recommend a plan to bring down the deficit through spending cuts and tax increases. I will do so even if it means shutting down the government until a commission is authorized.
Next week, I will send to Congress for its immediate consideration a health-care package that blends the best features of the House and Senate proposals while stripping out provisions meant to buy the support of individual legislators or special interests.
Given the urgency of global warming and the political difficulties of passing a complex cap-and-trade bill, I am asking Congress, as an interim step, to impose a modest carbon tax beginning in 2011 equal to 25 cents on a gallon of gasoline, rising to 50 cents in five years, with the revenue to be used to reduce payroll taxes. That will result in no net increases in federal taxes.
Tonight, I am instructing the secretary of the Treasury and other financial regulators to draw up a plan to implement as many of the financial reforms that I have proposed as possible, using the broad regulatory authority they have under existing law. The plan will take effect April 1 unless Congress acts on a broader regulatory reform bill.
I look forward to discussing these initiatives with you. I am open to reasonable and principled compromises. But there will be no more games, no more business as usual -- just straight talk and the hard work of governing. On one thing we should all be clear: The do-nothing option is not acceptable -- not to me, and more importantly not to the voters who sent us here.
Steven Pearlstein will host a Web discussion today at 11 a.m. at washingtonpost.com.