America's Big Problem

In the past few weeks, we've seen the twin personalities of the U.S. government come out: one is impressive, the other deeply worrying. Good news first: we now have increasing evidence that Washington's response to the global financial collapse was effective. Recall the fall of 2008. The financial markets seized up, credit froze, the economy went into a nosedive. Almost every metric by which we judge the economy moved into its darkest territory since the 1930s. And this was happening at the worst possible time. A lame-duck U.S. president faced an opposition party in charge of both houses of Congress. It was a recipe for paralysis, bickering, and inaction.

In fact, the administration and Congress collaborated fast and well, and within two weeks, Congress appropriated a staggering $700 billion to rescue the financial system. As the Bush administration left office, it worked closely with the incoming Obama team, which continued the basic framework of the rescue, modifying some aspects of the Bush programs and adding others. Both groups worked carefully with the Federal Reserve, the lead player in this drama, which acted aggressively and creatively. Democrats like Barney Frank supported the Bush administration. George W. Bush put aside his ideological blinders and massively intervened in the economy.

As with any successful policy, it is now easy to say that it was unnecessary or overdone. At the time, of course, the dominant criticism was that the rescue effort was too weak—the banks needed to be -nationalized!—and the fiscal stimulus was too small. As with all emergencies, one can always suggest, in retrospect, that more sophisticated strategies could have been taken. And the measures that were adopted may lead to other problems over time, such as inflation. But faced with the distinct possibility of an economic depression, Congress, the administration, and the Fed all worked together and brought stability to the system. In a crisis, they responded. Why? Precisely because it was a crisis.

There is something about America—the system, the government, the people—that allows us to react to a crisis with astonishing speed. Think of Pearl Harbor, or even 9/11. Whatever one may think of the Bush administration's later strategy, in the weeks after 9/11 both parties came together and put in place important policies—getting international cooperation in making counterterrorism a top priority, improving safety on airplanes and in airports, tracking terrorists and their money, chasing Al Qaeda. These actions have helped to keep terrorists on the run and continue to make it difficult to plan and execute spectacular attacks.

Now, to see the weakness of the American system, consider the past week or two and the debacle of the health-care debate. It is demonstrably clear that the U.S. health-care system is on an unsustainable path. If current trends continue—and there is no indication that they won't—health care will consume 40 percent of the national economy by 2050. The problem is that this is a slow and steady decline, producing no crisis, no Pearl Harbor, no 9/11. As a result, we seem incapable of grappling with it seriously.

It's not as if the problems aren't apparent to everyone, whatever your political persuasion. Costs are rising so fast that every day, more than 10,000 Americans lose their insurance coverage. In 1993, 61 percent of small businesses provided health insurance for their employees. Now that number is down to 38 percent. Larger firms face greater and greater health-care costs. And yet, Americans do worse on almost every health measure than most advanced industrial countries, which spend about half as much on health care per person and have proportionately more elderly people.

The political debate that is taking place is unreal, with conservatives suggesting that Obama is endorsing euthanasia and murder boards, and turning America into Russia. (I guess they haven't noticed that Russia isn't communist anymore.) The lack of serious discussion is a tragedy, because the Democrats' proposals leave much to be desired. They include only a few, vague measures to rein in costs, and the chief one—a medical board—assumes (improbably) that Congress will cede massive powers to five unelected people who would have the power to deny people treatments and drugs. The likely scenario is that expanded coverage and new benefits will be enacted, while the cuts and curbs will be pushed off to be tackled another day.

Health care is the nation's most serious long-term problem. But think of Social Security, government pension liabilities, state--government deficits, and energy dependence, and you face the same issue. Each one of these problems is getting worse by the day, and yet the political system seems unable to take them on and make major reforms. On these very important issues, America is caught in a downward spiral. It makes you wish for a crisis.