After the failure of the 1973 Geneva Peace Conference, the Israeli diplomat Abba Eban sighed that “The Arabs never miss an opportunity to miss an opportunity.” In recent years, the same could be said of Americans.
Two months ago, the U.S. marked the 10th anniversary of the Sept. 11 attacks. Sadly, we commemorated a tragedy without celebrating much triumph. The post-9/11 moment was an unheralded instance of national -- even global -- unity. The Bush administration could have used it for almost anything. And, to be fair, it did. The nation burned trillions of dollars in two wars and a budget-busting round of tax cuts. The president told us to go shopping, and the Federal Reserve held interest rates at extraordinarily low levels. The result? Deficits and a credit bubble. That was missed opportunity No. 1.
Three years ago, Lehman Brothers Holdings Inc. fell. The ensuing financial crisis dwarfed anything seen since the Great Depression. But there was, for the U.S., one silver lining. In a world of risk, the markets deemed us dependable. The real yield on five and seven-year Treasuries is, even today, negative. Investors will literally pay us to keep their money safe.
For a country with more than $2 trillion in unmet infrastructure needs, this is a remarkable opportunity. But it gets better. Weak global demand means raw materials are cheap. And the bursting of the housing bubble means unemployment in the construction sector is high. We can borrow at a bargain, buy at a bargain and ease the unemployment crisis in the hardest-hit sector of our economy, all while making desperately needed investments in our future competitiveness and quality of life.
Plus, if we don’t do it now, we’ll have to do it later. Delaying a dollar of bridge repair just means it’s a dollar we’ll have to pay later. And by that time, it might be more than a dollar, because it’s cheaper to repair a bridge than rebuild one that has crumbled.
An Extraordinary Offer
So are we taking advantage of this opportunity? No. Are we seriously discussing it? No. Are we doing anything else with the market’s extraordinary offer -- say, wiping out the payroll tax for the next two years to give consumers a boost and our economy some insurance against further deterioration in Europe? No. That’s missed opportunity No. 2.
Right now, the only thing the two parties in Washington appear to agree on is the need for deficit reduction. Viewed correctly, even that is an opportunity. Everywhere you look in the federal government there are overdue reforms worth making. The tax code should be cleaned of loopholes and extraneous deductions. The cost controls in the recent health-care reform bill should be strengthened. The Defense Department, bloated after 10 years of war, should be pared down.
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