The Government We Deserve

Americans are sick and tired of Washington's dysfunctional politics. But it's not Congress they should be angry at -- Americans got exactly the system of government they asked for.

Something is rotten in these United States, and Americans know it. As usual, the focal point of their anger is Washington's dysfunctional politics and partisan bickering. But the problem isn't just the decline of civility in the halls of the Capitol. It's much bigger. Today the country is reaping the foul harvest of policy decisions it has enthusiastically endorsed over the last 30 years.

How mad are Americans? Just look at this chart. For the last 30 years, Gallup has polled Americans about whether they are satisfied with the direction in which their country is heading. This chart shows the gap between the percentage that is satisfied and the percentage that is not. When the chart heads north of the zero line, most people are satisfied. When it heads south, most aren't. And it's fallen off a cliff.

In fact, the numbers have been sliding southward for a decade. There have been some brief upticks -- the post-9/11 launch of the war on terror, the 2003 Iraq invasion, Barack Obama's 2009 inauguration -- but the trend is clear. And there's no simple, short-term explanation. Earlier periods of intense dissatisfaction, such as the early 1980s and early 1990s, were closely tied to sharp economic downturns. But the recent decline was already in full swing when Americans seemed to be living large, well before the 2008 Great Recession.

Why? Because over the past few decades, Americans eagerly supported a series of decisions aimed at rolling back government's influence in daily life. They were popular at the time. But now the country is paying a heavy price.

Call it a hangover from America's neoliberal binge of the late 20th century, a massive political project aimed at limiting government's role in everyday life. Americans wanted "a minimum of government authority," Ronald Reagan said while campaigning for the presidential nomination in 1976. "Very simply, they want to be left alone." And that was exactly the program enacted over the next quarter-century: Marginal tax rates were reduced, especially for the wealthy; social programs were restricted; controls on commerce and finance were removed. By the time 2000 rolled around, Reagan was remembered as one of the greatest presidents in modern history.

By then, the project of restricting government and liberating market forces was a bipartisan one. It was a Democrat, President Bill Clinton, who famously conceded in 1996 that the era of big government was over. Clinton signed the North American Free Trade Agreement in 1993 and a trade agreement with China in 2000, saying that this was "the only way we can recover the fortunes of the middle class in this country." He also signed laws that loosened federal control over the financial sector, promising they would actually "enhance the stability of our financial services system." Despite all his personal baggage, the American people heartily approved of this agenda: Clinton ended his presidency with a 65 percent approval rating.

Clinton merely followed what was, by then, the conventional wisdom about the virtue of the neoliberal project. Federal Reserve Chairman Alan Greenspan helped set the tone, promising that free markets would generate wealth and regulate themselves effectively. The United States, Greenspan said in 2005, had a "far more flexible, efficient, and hence resilient financial system than the one that existed just a quarter-century ago." Yes, Greenspan's credibility took a beating after 2008, but before the crisis, he was one of the country's most highly regarded policymakers. A 1998 Gallup poll showed that 57 percent of Americans had a favorable view of the Fed chairman, while only 9 percent had an unfavorable view. "With Greenspan, we find comfort," journalist Bob Woodward wrote in his 2000 book Maestro. "He helps breathe life into the vision of America as strong, the best, invincible."

Unfortunately, the decades-long neoliberal project had a price, which became increasingly obvious in the new millennium. The removal of trade barriers put U.S. jobs at risk, while lowering top tax rates and loosening the social safety net aggravated problems of inequality. Lighter regulation encouraged overexpansion and recklessness in the financial sector. Even before the 2007-2008 crisis, Americans were uneasy about the effects that followed from policies they had once enthusiastically endorsed. In 2004, according to an ABC News poll, a majority of Americans believed that they were no better off than when Reagan was inaugurated. In a 2006 CBS poll, two-thirds of respondents doubted that the next generation would be better off than they were. And in an April 2007 Gallup poll, a similar share said that wealth in the United States was unfairly distributed.

Then came the crash of 2008. The collapse of household wealth and the spike in unemployment were bound to produce widespread popular anger. In a sense, though, the United States was again realizing the consequences of its earlier choices. History showed that loose regulation of the financial sector would encourage cycles of boom and bust. Such crises had been commonplace in the decades before the New Deal and less frequent in the four decades afterward. Turbulence in the financial sector intensified after 1980, and each crisis demanded a vigorous governmental response. U.S. authorities were forced to intervene during the savings and loan crisis of the late 1980s, after the Black Monday crash of 1987, during the Long-Term Capital Management crisis in 1998, and after the dot-com collapse in 2000. The 2008 crisis was the same thing, just much, much bigger.

Popular attitudes about the handling of the crisis also reflected a deep ambivalence about the role of government in economic life. There was widespread anger at not just the rating agencies, predatory lenders, and fat-cat bankers, but also at the apparent cost of bailouts for the financial sector, along with opposition in principle to interventions like the takeover of General Motors. And as the government took on these onerous, unwanted economic necessities, many also worried about the rising federal debt. But there's little doubt that the public would have been equally outraged if the Obama administration had actually followed a strict neoliberal path of nonintervention and deficit reduction. It would have been seen as cruel and inhuman.

The confusion that characterized economic policy generally was also evident on specific issues such as health care. Public ambivalence about the proper role of government was evident in a March 2010 Gallup poll about Obama's 2010 Affordable Care Act, in which a majority complained that the law expanded government's role in the health-care system too much -- and also that it failed to go far enough in regulating the health-care industry. Now the country is stranded in a no man's land: The system is predominantly private, but it lacks the key virtue of private provision-efficiency. At the same time, there is an extensive governmental role in regulating the sector, but this is frequently ineffective in achieving regulatory objectives such as cost containment. The U.S. health-care system is now so deeply entrenched, accounting for one-seventh of the national economy, that a radical overhaul is difficult, if not impossible, to imagine.

Americans' ambivalence about the role of government also infects foreign policy. Consider the wars in Iraq and Afghanistan. As the Gallup satisfaction chart above shows, both campaigns produced an initial frisson of satisfaction with the country's direction. The public mood, however, soon turned sour. Majority support for the Iraq war evaporated quickly, yet the engagement dragged on for eight long years. Similarly, it has been years since Americans had confidence in the Afghanistan mission, yet that fight continues.

Why is there such a disconnect? In part, because that's the way the American people wanted it. After the Vietnam War, the U.S. military was transformed, relying more on technology and abandoning the draft. Today's active-duty military represents a smaller proportion of the U.S. population than at any point since the eve of the Pearl Harbor attack. Moreover, today's soldiers are volunteers. We don't often think of these military reforms as part of the neoliberal project, but they undoubtedly were. The commission that recommended eliminating the draft included not only Greenspan but also America's intellectual godfather of the unfettered free market, Milton Friedman. In 1962, Friedman had included the draft as one of those activities that was indefensible in a free society, along with tariffs, Social Security, and "detailed regulations on banking." The commission's report concluded that abolition of the draft would "minimize government interference with the freedom of the individual."

And it did. But the military's transformation had an unexpected effect. Americans might have won greater freedom from governmental interference, but the military complex gained some freedom too. Wars could be launched more easily because they did not impose a substantial burden on the American people. As the armed forces went to war in Afghanistan and Iraq, the rest of America followed President George W. Bush's injunction: They went shopping. But a military divorced from its citizens also meant that wars could grind on long after the public had turned against them.

The neoliberal reforms launched 30 years ago did not come out of thin air. They were a response to a stodgy, feckless government, and they offered a fresh start after a decade of drift and uncertainty in national politics. That's what Reagan meant in 1984 when he said that it was "morning again in America." The slate was being wiped clean. But that was a generation ago, and now the limitations of the neoliberal project have become painfully clear. At that time, most Americans approved of smaller, more hands-off government. The question now is whether they will accept the consequences.



How to Avoid a War With Iran

It won’t be easy -- but it sure beats the alternative.

Observers would be forgiven for dismissing negotiations over Iran's nuclear program as Kabuki theater. Despite years of on-again, off-again efforts, after all, fears of war continue to simmer.

Such frustrations are understandable -- but they may not be entirely justified. Despite real obstacles, there is a serious chance for progress if both sides come to the table willing to compromise and focused on a step-by-step approach that gives each side real gains, builds confidence, and allows more time for talks on the harder issues. The next round of negotiations between Iran and world powers, slated for May 23 in Baghdad, is crucial -- though only the start of a long road.

No one could claim these negotiations will be easy. Iran and the United States have been locked in mutual hostility since Iran's 1979 Islamic Revolution, and this enmity has produced deep mistrust and tough political constraints on both sides. In a U.S. presidential election year, compromise will be difficult, as no candidate can be seen as "soft" on Iran -- and in Iran, which has a presidential election next year, no faction can be seen as advocating retreat in the face of Western pressure. For a deal to work, both sides have to see it as genuinely serving their national interests.

Nevertheless, as an American and an Iranian, both of us patriots, we believe that a negotiated deal is possible. Although genuine clashes of interests are at stake, we believe our countries would be better served by such a pact, however imperfect, than by continued stalemate or military conflict. For Iran, the status quo means ongoing sanctions, limited access to foreign investment and technology, and the looming danger of military strikes. For the United States, stalemate means no negotiated limits on the Iranian nuclear program, continued high oil prices (reflecting the risks of conflict), and no resolution of U.S.-Iranian disputes over terrorism, Israel, and more.

If the confrontation deteriorated into a military conflict, it would be a disaster for both countries' security. Strikes by the United States or Israel would risk an unpredictable regional conflagration and could convince Iran to redouble its nuclear efforts and build covert sites that would be hard to find and strike.

To open the path to an accord, the parties must combine the realism of small initial steps with a vision of a long-term rapprochement. Early steps should be designed to build confidence on both sides that it is worth continuing the process, and to buy time for further talks.

There are a number of ways both sides could bolster confidence in the negotiating process. Iran should offer to halt its enrichment of uranium to 20 percent U-235, its buildup of larger stocks of 5 percent enriched uranium, and its acquisition of ever-more centrifuges as long as the talks are making progress. As in past proposals, the United States and Europe should offer to provide low-enriched fuel for the Tehran Research Reactor in exchange for Iran's agreement to ship a substantial portion of its enriched uranium out of the country. And Iran should agree to implement the International Atomic Energy Agency's Additional Protocol, which allows for broader international inspections of nuclear facilities, as long as cooperation is moving forward.

At the same time, the United States and Europe should offer to lift the new oil and banking sanctions now going into effect -- again, as long as the talks are making progress. Such initiatives would allow each side to say to skeptics in its own camp: Things are no longer getting worse; give us more time.

As an early gesture, the United States and Europe could also allow the shipment of desperately needed spare parts for Iran's civilian aircraft, which have been blocked under sanctions for decades, and allow Iranian airliners to refuel and receive normal services in Europe. Iran could commit to prevent any arms or other assistance from flowing to armed groups in Iraq or Afghanistan. The sides could also negotiate a pact to prevent inadvertent clashes in the Persian Gulf and work together to stop the flow of heroin from Afghanistan into Iran.

None of these interim steps, of course, will be able to produce a breakthrough unless both Iran and the United States share a long-term vision of forging a more productive relationship. The nuclear deal that would be a part of this vision would inevitably involve some level of continued enrichment in Iran under agreed-upon constraints. Iran would agree to far-reaching inspections and transparency, including resolving concerns about past work that the West suspects may have been weapons-related. The United States and its negotiating partners would agree that Iran's admissions about past activities will not be punished.

As part of a nuclear agreement, the United States and Europe should help Iran replace the aging Tehran Research Reactor with a modern facility outside densely populated Tehran -- and Iran should agree to suspend construction of the Arak heavy-water reactor, which the West fears is well suited for plutonium production, as it would no longer be needed.

It's not only the nuclear issue that divides Iran and the United States. The two countries will have to talk directly to address the many other issues that divide them, including terrorism, sanctions, regional security, and more. All participants, including the United States, should assure Iran that they will not attack or threaten to overthrow Iran's government as long as Iran complies with the nuclear deal and does not commit or sponsor aggression. Iran, for its part, proposed a nonaggression pact with its Persian Gulf neighbors after the Iran-Iraq War.

Both sides are likely to fear that the other will cheat on its commitments in such a deal. Both will have to take some risks for peace, while seeking commitments that are clear and verifiable. But there may be a chance to build a virtuous cycle: Once the benefits begin to flow, it will likely be harder for those who would call for ripping up the deal and returning to confrontation to win the argument.

As difficult as it is, both sides must come to Baghdad this month ready to offer clear, verifiable first steps on the path toward compromise -- and away from the abyss of armed confrontation.

Mark Wilson/Getty Images