Peter G. Peterson is founder of the Blackstone Group and founding president of The Concord Coalition, which is a bi-partisan citizen’s group organized in 1992 for the purpose of building a constituency of fiscal responsibility.
In this New York Times book review, Financial Times and Weely Standard columnist Christopher Caldwell reviews Mr. Peterson’s new book entitled “Running on Empty” in which Mr. Peterson lays out the case that politicians in both political parties have abandoned any pretense of fashioning responsible fiscal policy. That has resulted in the highly-leveraged state of various government entitlement programs such as Social Security and Medicare:

How we reached this pass can be stated simply: Republicans undertax, while Democrats overspend. For decades, Mr. Peterson writes, Democrats ”labored patiently to purge America of its traditional aversion to deficits,” bribing voters with jobs and social-service programs that the country could not afford. Starting with the Emergency Recovery Tax Act of 1981, though, Republicans have learned that tax cuts and write-offs can be used as bribes in exactly the same way. Dependent on deficit spending, both parties have blown through every institutional constraint erected against reckless tax cuts and benefit expansions, from the Gramm-Rudman deficit ceilings of the 1980’s to the Budget Enforcement Act of 1990. And they have blown the Social Security-tax surpluses meant to offset predictable future shortfalls.

And although he blames both political parties for this fiscal debacle, Mr. Peterson takes dead aim at the Bush Administration:

While Mr. Peterson blames both parties for conniving against fiscal common sense, he puts the present administration in a class of its own. George W. Bush has discarded traditional Republican qualms against big government, replacing the old Democratic model of tax-and-spend with his own model of borrow-and-spend. Thanks to three unaffordable tax cuts and an unfinanced Medicare drug benefit that will eventually cost $2 trillion a decade, Mr. Peterson writes, ”this administration and the Republican Congress have presided over the biggest, most reckless deterioration of America’s finances in history.”

But even more interesting is why politicians continue to ignore these clear warning signs of fiscal disaster? Mr. Peterson has a theory:

”[O]ur national leaders are providing the American people with precisely what they want.” Debt, he notes, is particularly alluring in periods of partisan intransigence. If the two sides cannot compromise on priorities, each can take what it wants while dumping the bill on future generations. Americans used to understand this temptation and flee it. Thomas Jefferson warned: ”To preserve our independence, we must not let our rulers load us with perpetual debt. We must make our election between economy and liberty, or profusion and servitude.”

Mr. Peterson’s book highlights the watershed nature of this year’s Presidential election. The Bush Administration has done precious little during its first four years to merit the support of voters who yearn for prudent fiscal reform of government entitlement programs. On the other hand, the Democrats have nominated a candidate with an extraordinarily weak record on the same issues.
Is Peterson correct that most voters simply do not care anymore about fiscal responsibility of government? Or has the public simply given in to the dark side of using debt to pay for our government’s lack of fiscal responsibility? Interesting questions with no easy answers.
And to get a good idea of just how far the Bush Administration has strayed from sound economic policy, Tyler Cowen over at Marginal Revolution outlines what he believes the Bush Administration’s economic platform should be.