Our economic problems are supposed to be solved by a “super committee” of six republicans and six democrats, which is supposed to meet and prepare a plan for fiscal reform. If a plan is not approved, medicare reimbursements to healthcare providers will decrease and defense spending will be cut. These built in spending reductions are intended to hold politicians’ feet to the fire and make a deal more likely.
Will a deal be achieved?
As Congress currently is out of session and our political leaders are on vacation, I suggest that they buy a copy of the movie “The American President” and spend a few hours watching it. They may find that the movie provides valuable lessons and it is much more entertaining than the “debt ceiling debate” the public watched this summer.
Here are the top five questions our political leaders should ask while watching the American President.
#1 - Can Americans Afford to Pretend That They Live in a Great Society?
At the beginning of the American President, President Andrew Shepherd is walking to the Oval Office and his advisors ask why, he ended a speech with “Americans can no longer afford to pretend that they live in a great society.” Our Constitution guarantees freedom for all citizens, our political system is open to everyone and our form of democracy ensures that everyone has a voice. Despite these bedrock principles, we are in trouble. China owns more than $1 trillion of our debt, our entitlement system is unsustainable and our cities and towns have been cutting spending and services to the bone, with our children’s education taking the brunt of the cuts. The world is watching to see if we can put together a realistic, long-term fiscal plan. As voters, we can no longer afford to pretend that we live in a great society; we must demand that our political leaders keep our society great.
#2 - We Have Serious Problems to Solve, Do We Have Serious People to Solve Them? We do. But will our political process let the problems be solved. We tried once. On February 18, 2010, the President established the National Commission on Fiscal Responsibility and Reform (Bowles-Simpson). The purpose of Bowles-Simpson was “to improve the [U.S.’s] fiscal situation in the medium term and to achieve fiscal sustainability over the long run.” After seven months of work, Bowles-Simpson released its report. In a prelude to the “debt ceiling debate,” the report failed to receive the necessary votes. As a result, the Bowles-Simpson report was tabled and has never been debated. Will the “super committee” plan end up any differently?
#3 - Should Our Political Leaders Make Us Afraid of Things and Tell Us Who to Blame for Things? Voters are tired of it. Remember when the only thing we had to fear was fear itself? The political blame game needs to end. There is plenty of blame to go around. Focusing on blame will not solve our economic problems. Strong leadership and compromise will do that.
#4 - Should Our Political Leaders Be So Busy Keeping Their Jobs That They Forget to Do Their Jobs? We send our politicians to Washington to do the right thing for our country. We want them to analyze complex issues, compromise when necessary and vote for the policies that will benefit the entire country. Americans are fed up with votes that are cast with the next election in mind rather than the best interests of the country.
#5 -Do You Need to Be An Economist to Know the U.S. Needs to Restructure? In the American President, there is a threatened airline strike over Christmas. President Andrew Shepherd says tongue in cheek to his Chief of Staff, A.J., “You know, I studied under a Nobel Prize-winning economist, and you know what he taught me?” A.J.’s answer, “Never have an airline strike at Christmas?” I never studied under a Nobel Prize-winning economist, but I have been a restructuring lawyer for 15 years. You know what that taught me? You can’t fix a debt crisis by adding more debt.
Our political leaders need to focus more on leading and less on politics. Hopefully a little time off will put things in the proper perspective.
Jon Henes is a partner in the restructuring group at Kirkland & Ellis LLP where he has led some of the most complex restructurings in the United States and abroad across a variety of industries, including media, chemicals, energy, manufacturing, real estate, retail and telecommunications. Jon has also frequently appeared on CNBC's "Worldwide Exchange" as a guest expert on various financial and economic topics, federal, state and local fiscal issues.