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Participant Garrett Jones, associate professor of economics at George Mason University, is a bit more optimistic, seeing default as being less likely. But he argues that “default is still possible, and the GOP offers a uniquely American path to default: an unwillingness to raise taxes.”
Dr. Arnold Kling is a member of the Financial Market Working Group at the Mercatus Center and tells us that the “U.S. government has made a set of promises that it cannot keep.” He says that the “promises that are most important to change are Social Security and Medicare.”
Joseph J. Minarik is senior vice president and director of research at the Committee for Economic Development. He argues that a “U.S. financial meltdown today is eminently avoidable. The wealthiest nation on earth, despite a painful economic slowdown, maintains the wherewithal to pay its bills. The open question is whether it maintains the will and the wisdom.”
Peter J. Wallison holds the Arthur F. Burns chair in financial policy studies at the American Enterprise Institute. He agrees with Kling that “the most likely source of a U.S. sovereign debt crisis … is a failure of the U.S. political system to address the growth of the major entitlement programs — Social Security, Medicare and Medicaid.”
My translation of the symposium’s conclusions is that it is by no means preordained that our nation must suffer the same decline as have other great nations of the past — England, France, Spain, Portugal and the Ottoman and Roman empires. All evidence suggests that we will suffer a similar decline because, as Professor Cowen says, “the American electorate has dug in against both major tax increases and major spending cuts.”
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