As both sides ponder the results of the “Fiscal Cliff” negotiations, one thing is clear. This was not a major reform. It was a short-term fix.
In the opening chapter of Madmen, Ed and I argue that while significant reform often comes about as a result of a crisis, this need not always be the case. (In chapter 6 we discuss airline deregulation as an example of a major reform that did not emerge from crisis.)
Nonetheless, in the case of fiscal reform in the United States — especially in the area of entitlements — many observers believe that significant reform will only happen when conditions force the hands of the madmen in authority.
What’s particularly interesting is the number of commentators who believe such reform need not happen anytime soon. Consider the New Republic’s Noam Scheiber:
Even absent new revenue, rising spending on Medicare and Social Security will be the political path of least resistance in the coming decades. And if the government is determined to bring its books more into balance, it turns out generating new revenue, or freeing up money from elsewhere, won’t be that hard. (Or at least raising enough money to muddle through for a long time even if we can’t balance the budget entirely.) While it may not be economically desirable to let the welfare state hoover up a larger and larger portion of government spending and GDP — and while polls show the public opposes this in the abstract — there will be no political imperative for Democrats to stop it. When actually forced to choose, no one wants their Medicare cut.
Note the key turn of phrase regarding continued spending: “there will be no political imperative for Democrats to stop it.” Is this accurate? Perhaps.
In short, if the majority of Americans reject the idea of reform — perhaps because intellectuals such as Scheiber say there is no rush — then madmen in authority will have relatively little incentive to act. And significant reform will be slow in coming. Of course, Scheiber could be wrong.