Economic policy that's stuck in reverse

By Jeff Sessions
Monday, January 24, 2011

As record levels of federal spending bring us ever closer to a tipping point, the Obama administration blissfully continues business as usual. We have seen no real plan, no strong leadership, no apparent willingness to confront the growing danger on the horizon.

I fear we are on course to repeat history.

Before the financial crisis of 2008, then-Treasury Secretary Hank Paulson reassured Americans that he had the "housing correction" under control and had "confidence in our capital markets and in their resilience." Just a few months later, Paulson declared that our financial system was "on the verge of collapse" and that "we have not in our lifetime dealt with a financial crisis of this severity."

For years, Washington officials played down the systemic risks behind the crisis while they pushed policies that hastened its arrival.

Today, we are again rushing in the wrong direction.

Last month, President Obama would agree to maintain current tax rates only if Congress would agree to increase federal deficit spending. We are headed toward a cliff, yet the president hits the accelerator.

Meanwhile, others are moving in the opposite direction. England has a plan to cut its deficit by 86 percent in just four years. New Jersey Gov. Chris Christie has a plan to close his state's funding gap without raising taxes. Even California's new liberal governor has put forward a plan to cut state spending by 9 percent.

The Washington bubble has never been so thick.

Just days ago, former Federal Reserve chairman Alan Greenspan ominously warned that U.S. debt may lead to a bond market crisis in two to three years. A debt crisis continues to spread through Europe that could reach our financial markets any moment.

Now is the time to act. Yet the president continues to resist any meaningful steps to secure our financial future.

Perhaps most disturbing were comments from Obama's chief economic adviser, Austan Goolsbee, who lashed out at Republicans for trying to lower the deficit as part of the effort to raise the debt ceiling, which we are on track to hit in March. He scolded Congress: "Do not tie the discussion about the budget to a thing that is fundamentally about the trustworthiness of the U.S. fiscal system."

Yet our excessive spending is central to the discussion of our debt. If Goolsbee's chief concern is the trust of investors, then he should join Republicans in addressing the problems that are eroding that trust in the first place. No one gains confidence in this country - or in this administration - by delaying needed action yet again.

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