Navigating the journey to sustainable government.

• Author: Eggers, William D.
• Position: COMMENTARY - Column

The road to fiscal sanity requires the kind of big, changes that our current democratic system makes difficult,

The numbers do not lie, States, the federal government, and many nations around the globe are facing an existential threat in the form of massive fiscal imbalance between expected revenues and promised expenditures. Nations, states, and cities alike are bracing before a tidal wave of red ink. Our current trajectory has all the trappings of genuine monetary crisis--complete with defaults, financial meltdown, and even the potential for political instability

The underlying threat is something we call "the gap." The gap is a twofold problem, consisting of a fiscal gap between revenue and expenditures, and a performance gap between the way government currently operates and the realities of the new economy In a world of mobile capital, trans-border exchange, heightened competition, and exponential technological change, democratic governments are mired in bureaucratic-age thinking. To close their fiscal gap, governments will also need to address the associated performance gap.

The road to fiscal sustainability won't be easy. Many of the expenditures baked into current forecasts are part of the established social contract between citizens and their elected government. Steadily rising costs for Social Security, old-age pensions and health-care benefits, together with significant demographic shifts, mean that incremental changes will prove insufficient. The kind of big changes that are needed, however, are difficult to achieve in light of the check-and-balance constraints of a democratic political system.

Getting from here to there will require concurrent navigation of three distinct phases that comprise one long, grinding journey: the conceptual stage, the political stage, and the bureaucratic stage. These segments of the overall journey aren't entirely sequential--in fact, they need to be considered in parallel--and there is no sure-fire recipe or step-by-step roadmap for reaching the desired destination.

Nothing is inevitable about the outcome of this journey One thing is clear: our current path will lead us to a place no one wants to go.

THE CONCEPTUAL STAGE

Reality it has been said, is the thing that keeps on happening even if you don't believe in it. The first stage in the journey to fiscal health is to move past historical misconceptions about why the United States and a host of other western democracies face such a daunting fiscal...