STEERING CLEAR

A pox on the House—and on all the houses, writes financier Peterson (The Education of an American Dreamer: How a Son of Greek Immigrants Learned His Way from a Nebraska Diner to Washington, Wall Street, and Beyond, 2009, etc.), that contribute to the “confluence of forces that threatens America’s long-term economic future.”

Those forces are many: a demographic crisis whereby, in just a few years, 15 percent of the population will be over the age of 65; the entitlement program that serves that ever older population; the health care regime that is layered atop the entitlement program, with health care costs projected to be the single major driver of federal spending in the next 35 years; a fundamentally and fatally flawed system of taxation; and, perhaps worst of all, “our dysfunctional political system with its myopic inability to compromise or reconcile rigid ideologies.” That’s a strong diagnosis, particularly the latter characterization, coming as it does from a former Republican stalwart. Yet Peterson writes candidly and refreshingly of the impediments his party has placed in the way of meaningful reform—not that the Democrats get off any easier. The author notes that one impediment is the refusal to raise taxes, particularly corporate taxes; he observes that the nominal rate is already the highest in the industrialized world, but he also correctly adds the rejoinder that usually goes unspoken—that corporations receive significant breaks to drive down their marginal rates. Only a combination of cost-cutting and revenue-raising will get us out of the mess, Peterson writes, since “we can’t simply hope for another economic boom so big that it will let us grow our way out of the problem.” Expectations will also have to change, he adds, since taxpayers say they want to fix the budget but then back away when the changes in costs and benefits look to be more than superficial.

A clearheaded and -eyed argument that will speak to the business community. But can it penetrate the bubble surrounding the political class?