“Is your future better off now than it was four years
ago?” With this twist on Ronald Reagan’s 1980 campaign
slogan, Peter G. Peterson enters a frank discussion about the state
of our nation’s finances. In his latest book, “Running
on Empty: How the Democratic and Republican Parties are Bankrupting
Our Future and What We Can Do About It,” The chairman of the
Council on Foreign Relations and former Secretary of Commerce
paints a stark portrait of a nation without fiscal
responsibility.
- Book Reviews
This criticism is leveled particularly at Social Security and
Medicare, which will soon start to pay out more in benefits than
either program can expect to receive in tax revenue, as the baby
boom generation begins to retire. The trend will only increase over
time or the changing demographics of our nation. Peterson also
highlights the dangers posed by America’s current-account
deficit, and that the amount of foreign capital invested in our
markets, which is at a historic high.
If the nations that are currently invested in the United States
for some reason have less savings — which, Peterson argues,
is likely to occur because of their own aging populations —
or experience a loss of confidence in the strength of the dollar,
this flow of capital could quickly dry up. Such a loss of foreign
capital could be compounded by the fact that U.S. household savings
have reached historic lows; therefore, there is less and less
domestic capital available to stimulate business growth.
When discussing the forces behind these issues, Peterson does
not vilify one particular law, administration or political party;
rather, he cites historic trends, contemporary mindsets and
generational differences that have conspired to create this mess.
In a clear, coherent style, he explains the complexities of the
current-account issue and the history of Social Security —
how spending on benefits got out of control in the ’50s and
’60s, and how the problem got worse with the tax cuts of the
’80s and of the current Bush administration.
Peterson casts these deficits in a moral light, arguing that it
is unfair for members of his generation to provide more expansive
benefits for themselves by creating debt — essentially
sending the bill to their kids. Politicians are aware that spending
levels are unsustainable, but they see no advantage in leading a
reform movement for something that is not a problem yet and could
cost them the next election.
However, reform they must, and the sooner the better. Peterson
offers several concrete solutions that he believes will halt
deficits and help put the nation back on track to a balanced
budget. Some of his suggestions appear reasonable, like indexing
Social Security benefits to inflation rather than to wages. Others
are more controversial, such as re-evaluating the
cost-effectiveness of medical care.
Peterson also advocates de-polarizing the nation by adopting
structural changes in the way that political parties and elections
are organized, and urging Congress to set priorities for spending
and create a budget process that is more transparent.
Clear and concise writing help move the reader through this
fact-laden book. Peterson gives enough detail to explain how
deficits were formed and why they matter without losing the bigger
picture. Sprinkled here and there with witty remarks, Peterson
tells it like it is, but the tone of the book is not overly
pessimistic.
“Running on Empty” is a call to arms, an effort to
shock Americans out of apathy and urge them to demand that their
government represent their true interests. This book is especially
relevant for our generation, and for the children of today, who,
unless decisive action is taken soon, will have to pay for the sins
of their fathers.
Rating: 4 out of 5 stars.