海角大神

Imagine your house is burning. You call the fire department but your call isn鈥檛 answered because every fire fighter in town is debating whether there will be enough water to fight fires over the next ten years, even though water is plentiful right now. (Yes, there鈥檚 a long-term problem.) One faction won鈥檛 even allow the fire trucks out of the garage unless everyone agrees to cut water use. An agency that rates fire departments has just issued a downgrade, causing everyone to hoard water.

While all this squabbling continues, your house burns to the ground and the fire has now spread to your neighbors鈥� homes. But because everyone is preoccupied with the wrong question (the long-term water supply) and the wrong solution (saving water now), there鈥檚 no response. In the end, the town comes up with a plan for the water supply over the next decade, but it鈥檚 irrelevant because the whole town has been turned to ashes.

Okay, I exaggerate a bit, but you get the point. The American economy is on the verge of another recession. Most Americans haven鈥檛 even emerged from the last one. Consumers (70 percent of the economy) won鈥檛 or can鈥檛 spend because their major asset is worth a third less than it was five years ago, they can鈥檛 borrow as before, and they鈥檙e justifiably worried about their jobs and wages. And without customers, businesses won鈥檛 expand and hire. So we鈥檙e trapped in a vicious cycle that鈥檚 getting worse.

But the government won鈥檛 come to the rescue by spending more and cutting most peoples鈥� taxes because it鈥檚 obsessed by a so-called 鈥渄ebt crisis鈥� based on budget projections over the next ten years. That obsession 鈥� which serves the ideological purposes of right-wing Republicans who really want to shrink government 鈥� has even spread to the eat-your-spinach media, deficit hawks in the Democratic Party, and a major (and thoroughly irresponsible) credit-rating agency that鈥檚 neither standard nor poor.

Meanwhile, some lazy (or misinformed) commentators are linking our faux debt crisis to Europe鈥檚 real one. But the two are entirely different. Several European nations don鈥檛 have enough money to repay what they owe their lenders, or even pay the interest. That鈥檚 threatening the entire euro-zone.

But there鈥檚 no question that the United States has enough money to pay what it owes. We鈥檙e the richest nation in the world and we print the money the world relies on. The only question on this side of the pond is whether tea-party Republicans will allow America to pay its bills when the debt-ceiling fight resumes at the end of 2012.

Europe is scared of what鈥檚 happening in the United States 鈥� but it鈥檚 not America鈥檚 faux 鈥渄ebt crisis鈥� that鈥檚 spooked them. It鈥檚 the slowdown here (and the likelihood of another recession), made all the worse as our debt obsession prevents the U.S. government from doing what it should. A slowdown and recession here mean fewer exports from Europe to America. When combined with their genuine debt crisis, this could push Europe鈥檚 economy over the edge.

The most important aspect of policy making is getting the problem right. We are slouching toward a double dip because we鈥檙e getting the problem wrong. Despite what Standard & Poor鈥檚 says, notwithstanding what鈥檚 occurring in Europe, and regardless of U.S. budget projections years from now 鈥� our current crisis is jobs, wages, and growth. We do not now have a debt crisis.

Every time you hear an American politician analogize the nation鈥檚 budget to a family budget (as, sadly, even President Obama has done), you should know the politician is not telling the truth. The truth is just the opposite. Our national budget can and should counteract the shrinkage of family budgets by running larger deficits when families cannot.

Americans are more frightened, economically insecure, and angrier than at any time since the Great Depression. If our lawmakers continue to obsess about the wrong thing and fail to do what must be done 鈥� and they don鈥檛 explain it to the nation 鈥� Americans will only become more fearful, insecure, and angry.

We are slouching toward a double dip, with all the human costs that implies. We don鈥檛 have to be. That is the tragedy of our time.

--------------------------

海角大神 has assembled a diverse group of the best economy-related bloggers out there. Our guest bloggers are not employed or directed by the Monitor and the views expressed are the bloggers' own, as is responsibility for the content of their blogs. To contact us about a blogger, click here. This post originally ran on .