Thursday, November 15 , 2018, 7:04 am | Fair 43º


Mona Charen: Without Swift Change, Financial Crisis Is Inevitable

Indiana Gov. Mitch Daniels lays out a chilling scenario with dire consequences

You might suppose that a political book, appearing less than six months after Indiana Gov. Mitch Daniels indicated that he would not run for president, must have been written as a campaign prop. But that’s not Daniels’ style. Keeping the Republic is a deadly serious, although frequently witty, effort to lay before the American people the perilous state of the nation.

Be prepared — the first few pages of Chapter 2 can turn your blood to ice. America’s decline, Daniels writes, may not be a gradual slide, but instead a sudden plunge into chaos. Sketching what a financial collapse could look like if we fail to control our debt, he writes, “Monday 6 a.m. — a Chinese official issues a statement saying that China will no longer be buying Treasury securities because ‘we see no evidence that the U.S. will take the steps necessary to grow its economy or limit its spending so it can afford to repay’ ... Monday 9:30 a.m. — the dollar drops 10 percent ... New York stock market opens in free fall ... Monday afternoon ... other nations’ central banks begin to sell off U.S. Treasuries.”

It continues that way, with runs on banks, the dollar spiraling down, the Dow Jones crashing, the Organization of Petroleum Exporting Countries denominating oil in something other than dollars, long gas lines, buying panics for necessities such as food, shortages of consumer goods, and finally civil unrest and martial law.

It’s a chilling nightmare scenario, but unfortunately, not far-fetched. The collapse might not happen exactly that way, but unless we are able to reduce our debt and take steps to get our economy growing rapidly, some form of financial crisis is inevitable. “This is not a matter of opinion based on a preference for limited government,” Daniels writes. “It’s a brutally objective fact of life. ... For today, can we agree that the arithmetic here does not work?”

In light of the fuss over Texas Gov. Rick Perry’s use of the term “Ponzi scheme” to describe Social Security, it’s instructive to see Daniels’ description of the entitlement mess (which he, too, calls a Ponzi scheme): “For 70 years, Americans were misled to believe that they had been putting money aside for their own retirement, that there were actual assets being held somewhere that would provide for them in their golden years. This misrepresentation has been aptly named ‘the noble lie’ ... (In fact), the proposed future benefits grotesquely outstrip the future taxes we are scheduled to pay by some $5.4 trillion for Social Security and as much as $46 trillion for Medicare.”

A financial collapse would mean not just economic distress dwarfing what we’ve lived through for the past three years, but also the end of our world leadership. “It’s pretty much an iron rule of history that no one follows a pauper,” he writes.

Daniels has concrete and specific proposals about how we can extricate ourselves from the quicksand, but on the way there, drawing upon his experience in the private sector as well as his two terms as governor, he shreds the pretensions of the Obama administration. Reviving the private sector must be the highest priority until the “Red Menace” of debt is tamed, Daniels argues. So why does President Barack Obama encourage young people, in word and deed, to become government employees or to work for nonprofits? “Where exactly is the money to pay for all those teachers, social workers and community activists supposed to come from? ... Another simple rule: No profits, no nonprofits.”

Obama has shamefully failed to even grapple with the question of debt. It doesn’t require genius, Daniels notes. When he was asked how Indiana overcame a $700 million deficit, he told a reporter, “Prepare to be dazzled. We spent less than we took in.”

In a few swift strokes, the Indiana governor demonstrates exactly why Obamacare is an economic, social and fiscal disaster — hugely exacerbating all of the existing problems with health-care delivery in the United States and infantilizing every citizen.

You can tell that this is not and never was a campaign book because it’s not about Daniels. Yes, he has specific ideas. He would permit the exploitation of America’s untapped energy supplies thereby creating private-sector jobs, keeping prices down and denying funds to terror sponsors around the globe. He favors a radical simplification of the tax code, an economic impact evaluation of all regulations, a negative income tax to replace the skein of overlapping welfare programs and thoroughgoing reform of Social Security and Medicare.

But the real message of the book is the author’s confidence that Americans still have the good sense and strength of character to make the right decisions. The first of those should be to buy and read Keeping the Republic.

Mona Charen of National Review magazine writes for Creators Syndicate. Click here for more information or to contact her. Follow Mona Charen on Twitter: @mcharen.

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