Running on Empty by Peter G. Peterson was written in 2004. It is a book on public policy by chairman of the Blackstone group. It is a good test to read such books on public policy many years later.
The problems that Peterson warns about include the consequences of unfunded commitments in Social Security and Medicare. In 2004, the Baby Boomers were set to retire, birth rates were declining, and average life expectancy was increasing – all signs of an ageing population, that not only the U.S, but much of the developing world had to grapple with. Peterson warned of a catastrophic impact on the federal budget.
Sixteen years later, the U.S has been busy with budget deficits and the never-ending battles between Republican tax cuts and Democratic social entitlements. The Congressional budget process has been chaotic, and the government shut down in late 2019. Peterson’s diagnosis remains pertinent.
The budget process is fundamentally flawed, and politicians are in denial about the long term consequences of deficit spending, foreign borrowing, and unfunded social programs. He has warned about the apocalypse. After the outbreak of COVID-19, large parts of the country have shut down. It remains to be seen if the day of reckoning will come.
A politician must have two sets of characteristics to be able to lead successfully. The first set of characteristics includes charisma and showmanship, this is how they attract voters and get into government. The second set includes substance and competence. There is too often a mismatch between the two, with most politicians being great showmen, but lack integrity and leadership.
But Peterson does not only criticize the bipartisan bickering and government inefficiencies, he accuses politicians of losing touch with essential values that were held in the past. US Governments used to be child centric. They based their decisions on what would be good for their country’s future, even in the most difficult circumstances. American citizens were thrifty and hard-working,unlikely to complain about a lack of self-esteem.
Today’s politicians are a product of modern culture – a softer people interested in short term gains and banalities. Today’s politicians do not care about posterity. They are more interested in their popularity rather than their legacy.
Americans have forgotten the virtues of the past, such as delayed gratification. And their consumerist culture reflects this.People spend more than they save. They don’t produce as much as they should, and they consume far too much. The ballooning debt, and excessive US expenditure on broken social programs and costly military operations in the Middle East have exacerbated the debt burden.
The U.S government is made up of two opposing sides who have petty fights with each other, who each pretend to be the saviors of their people. But neither have been saviors. Instead, with the help of each other, these two parties were responsible for the decline of the United States into a nation that cannot realistically expect to cover its massive debt without major reforms, and a government that has lost the trust of its people.
Peterson outlines the history of how Republican/Democratic policies got the country to this point and offers a list of solutions (such as managed competition in healthcare and social, financial, and legal reforms).
Not only have the two major political sides made the problem worse, but they act oblivious to the trade-offs of their proposals. The Republicans act like decreased taxes will have no repercussions on government spending, while the Democrats act like more social programs won’t be finances by taxpayer money.
What they were both banking on were empty slogans, hoping that growth would take care of everything, but this was never realistic. The debt burden was too large.
The main message of the book is to do the difficult but necessary things.
An interesting point was that Peterson warned about a future democratic government that would implement protectionist policies, yet as of 2020, it is not a democrat president who threatens free-trade U.S trade relationships with the rest of the world.
“So far, the world has managed to avoid an all-out 1930s-style trade war. But with the rhetoric of “fair trade” and “America first” again on the rise, especially among Democratic politicians, many of the wiser heads are holding their breath.” Good prognosis, but he targeted the wrong party to ride the MAGA message!”
Peter G. Peterson
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