By James Kwak
Loyal blog readers have surely noticed the new left-hand sidebar of the blog and may be wondering what this “White House Burning” thing is about. I wanted to give you a bit more background than the jacket flap copy you can read elsewhere.
You don’t have to know a lot of American history to know that the War of 1812 began two hundred years ago. Yet I doubt there will be much celebration, since it’s not a war we’re particularly proud of, like World War II, nor is it one that is particularly controversial, like Vietnam. Its most famous moment is perhaps the burning of Washington in August 1814, although it also gave us the phrase “We have met the enemy and they are ours” (Commander Perry, Battle of Lake Erie), the words to the national anthem, and the political career of Andrew Jackson, victor at the Battle of New Orleans.
Somewhat less well known is that the United States fought the war in an almost continual state of fiscal crisis, barely able to borrow enough money to mobilize and equip an army and navy that had been starved of resources over the previous decade. That crisis was perhaps not as deep as the fiscal crisis of the Revolutionary War and its aftermath, but there at least we had an excuse: it’s hard to muster the resources to fight an anti-colonial war when your country doesn’t exist yet. The War of 1812, by contrast, was a war of choice, and the government’s fiscal problems were largely self-induced.
The same goes for the fiscal problems the federal government faces today. Our economy generates plenty of resources, yet our political system seems unable to make any coherent choices about how to allocate (or not allocate) those resources. Our main goals in White House Burning were to explain our fiscal and political situation and show one path forward for our country.
The first part of the book describes the political struggles that have always surrounded deficits and the national debt, from 1789 through the Gingrich Revolution and the debt ceiling showdown. The second part explains what the federal government does, where the debt comes from, and why it matters (and also why it doesn’t matter). The third part argues for a certain role of government in society and recommends a set of policy changes that could reduce the future national debt while increasing economic efficiency and maintaining the most important functions of the federal government. I’m sure there is something in there for everyone to disagree with, no matter where you are on the political spectrum.
In many respects, I fall into the “unemployment first, deficit later” crowd. But in politics, you can’t always choose what battles to fight when. And like it or not, for good reason or bad, deficits are a major political issue this year. This is our attempt to explain how we got here and what is at stake in these debates.