Editor Gideon Rose interviews Foreign Affairs author Fareed Zakaria about the policies and investments that prepare a nation for the future.
For the U.S. economy to reach its full potential, argues Edward Conard, Washington should decrease federal spending and ease government regulation. Fareed Zakaria demurs, contending that structural reform and government investment are what the U.S. economy needs most.
We built that: President Barack Obama visiting the Hoover Dam, October 2, 2012. (Kevin Lamarque / Courtesy Reuters)
In November, the American electorate, deeply unhappy with Washington and its political gridlock, voted to maintain precisely the same distribution of power -- returning President Barack Obama for a second term and restoring a Democratic Senate and a Republican House of Representatives. With at least the electoral uncertainty out of the way, attention quickly turned to how the country's lawmakers would address the immediate crisis known as the fiscal cliff -- the impending end-of-year tax increases and government spending cuts mandated by earlier legislation.
As the United States continues its slow but steady recovery from the depths of the financial crisis, nobody actually wants a massive austerity package to shock the economy back into recession, and so the odds have always been high that the game of budgetary chicken will stop short of disaster. Looming past the cliff, however, is a deep chasm that poses a much greater challenge -- the retooling of the country's economy, society, and government necessary for the United States to perform effectively in the twenty-first century. The focus in Washington now is on taxing and cutting; it should be on reforming and investing. The United States needs serious change in its fiscal, entitlement, infrastructure, immigration, and education policies, among others. And yet a polarized and often paralyzed Washington has pushed dealing with these problems off into the future, which will only make them more difficult and expensive to solve.
Studies show that the political divisions in Washington are at their worst since the years following the Civil War. Twice in the last three years, the world's leading power -- with the largest economy, the global reserve currency, and a dominant leadership role in all international institutions -- has come close to committing economic suicide. The American economy remains extremely dynamic. But one has to wonder whether the U.S. political system is capable of making the changes that will ensure continued success in a world of greater global competition and technological change. Is the current predicament, in other words, really a crisis of democracy?
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