The Fiscal Crisis and Its Roots in Fiscal Language

The United States is presently moving toward a possible catastrophic fiscal collapse. We may not get there, but the risk is unmistakable and growing. Whether we get there or not depends on whether our political system can generate responsible decisions. Like a car headed for a cliff, our present course is clear, but the driver could still turn the wheel.

It might seem that our economy is too strong, and our political system too stable, for us ever to face the sort of discredited-debtor purgatory that has recently plagued nations such as Brazil and Argentina, complete with hyperinflation, high unemployment, and recurrent bank failures. We can indeed afford a lot of mistakes, and our political system has never entirely failed us since the Civil War. But if our policies are foolish enough for long enough, default or hyperinflation can and will happen here.

Our march toward government insolvency is a complex historical event with multiple causes. The central causes involve health care technology and demographics, and are being faced by countries around the world. Improved but costlier health care and the aging of our population have made Social Security and Medicare ever more expensive, and are expected to keep on doing so.