Raise taxes? Sure. Necessary evil. But you can't raise them to close the gap (it's a joke) because you're going to need to raise them to pay for our health care entitlement obligations we have incurred. And how are you going to grow an economy against the backdrop of rising taxes? Lower interest rates? They're already essentially at zero. Our ability to provision long-term growth is virtually non-existent at this point. The states will of course shoulder much of the burden for this healthcare program, putting further strain on California, New Jersey and other states already on the brink of insolvency.
For the first time in my adult life I have zero optimism that this nation's fortunes will improve over time. The best we can hope for is a muddle-through that accepts 1-2% growth for a generation, punctuated by the failings of other states occasioned largely by our economic weakness. Demographics will accelerate this for us as the percentage of the population at work declines and the percentage receiving entitlement checks grows; this problem is even worse for Western Europe and East Asia.
There is no one single cause, just the mixture of political cowardice and political opportunism of this generation and the ones that preceded it. Democratic (and Republican) Administrations swelled entitlement obligations knowing they would not have to pay for them while Republicans pushed tax cuts uber alles. Interest rates were lowered to stimulate growth and then lowered again to keep it going. In time of plenty these actions don't seem objectionable, but now that the inevitable downturn has occurred we find meaningful choices so curtailed that we can do nothing to get the economy going again. It is an economic, fiscal and foremost a political trap from which there is no escape.
