3 Upsides to Lousy Government

Continual letdowns by politicians could make us less dependent on what happens in Washington.

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The last couple of years have been a maddening time for civic-minded Americans.

The people running the country seem more interested in quarreling than in governing. Politicians maneuver for tactical gains while neglecting big problems like education, immigration and the lack of jobs. As the heat and the volume rise in Washington, the government's effectiveness seems to decline.

[See 11 things wrong with Congress.]

But there may be a silver lining. The economy, for one thing, seems to be healing on its own, despite incoherent policies about taxes, on-and-off stimulus measures, and the unrestrained growth of the national debt. Americans are gradually becoming more optimistic, with little or no help from Washington. The growing disconnect between Capitol Hill and Main Street may even signal the start of a turnaround in Americans' overdependence on the federal bureaucracy. Here are three upsides to lousy government:

Reduced expectations. The huge, $800 billion stimulus program that President Obama championed in 2009 was supposed to end the recession and bring the return of better days. It helped, but not nearly as much as Obama and his advisers said it would. Critics blamed Obama, but more than anything, the stimulus plan's underwhelming results highlighted the limited ability of government to turn around a deep recession that basically needed to run its course.

There have been many other lackluster government efforts to fix the economy, such as half a dozen programs to aid struggling homeowners and bank bailouts that were supposed to trickle down to ordinary people but haven't, so much. Then there was last summer's fiasco over the national debt, which destabilized financial markets and led to the first-ever downgrade of the nation's credit rating. Not surprisingly, trust in the federal government has sharply declined, with a huge plunge in Congress's approval rating in particular.

[See how Romney and Obama differ on the economy.]

Washington's incompetence clearly contributes to a growing sense of national decline. One recent survey of economic leaders, for instance, found that 58 percent rated the government's economic policies as "poor." But such low regard for the government also makes basic competence seem like stellar performance, making us grateful for tiny favors we'd take for granted if Washington simply functioned normally.

If Congress, for example, extends the temporary rollback of the payroll tax through the end of 2012, as seems likely, it will cheer the financial markets and contribute to a sense that Washington is helping out. Yet the fact that the issue is even up for a vote is absurd. Congress just voted on the same measure two months ago. But instead of a coherent policy that might last a year or more, providing some predictability, Congress chose to approve the tax cut for just two months, then go through the whole negotiating process all over again. Nobody would run a business that way, or even a book club. Yet Congress will now win a few points for doing the right thing. The bar has fallen so low that we feel pleased when politicians raise themselves a few inches off the curb.

Declining influence of politicians. Last summer, the chaotic last-second agreement to extend the nation's borrowing limit—which ordinarily happens with little fanfare—created a widespread sense that Congress is harming the nation, not helping it. The stock market fell 9 percent between mid-July and the end of August, and only recently regained all the lost ground. Consumer confidence, which had been rising earlier in the year, fell back to recessionary levels for three months in a row. No doubt that reduced spending and hiring, as consumers and business leaders wondered what else Washington might do to wreck the economy.

[See 3 myths about Mitt Romney and the rich.]

Then a funny thing happened: Americans seemed to stop caring about what happened in Washington. The total failure last November of the congressional "supercommittee," which was established to rein in the national debt, was another blow to the economy, since it left a big problem unresolved and seemed to prove that Washington would be unable to deal with it. But consumer confidence rose in November and December, as if ordinary people didn't even notice. The stock market ended 2011 with a mild flourish.

As for 2012, most political prognosticators say that virtually nothing will get done in Washington until the elections. That seems to cheer consumers even more. Gallup's economic confidence readings, for instance, have been rising consistently after hitting a low point last summer. Maybe Rick Perry was right, and Congress should be dialed back to part-time status.

More self-sufficiency. The real question is whether Americans will become so dissatisfied with government that they willingly break ties to it. As the New York Times and others have pointed out, a large and growing portion of the U.S. population—including many middle-class workers—depend on the government for retirement or healthcare benefits, or other subsidies that now form a vital safety net. That's unsustainable, especially since the retirement of the baby boomers will leave a top-heavy population putting an unprecedented squeeze on younger workers. At some point, government spending will have to be slashed, largely in the form of fewer real benefits going to real people.

[See how to reclaim the American Dream.]

Americans will have little choice in the future but to become more self-sufficient, relying more on community resources, professional and personal networks, and their own wiles to help them get ahead or ride out a rough patch. The first step is getting used to the idea that government won't be there to help. That mission may soon be accomplished.

Rick Newman is the author of Rebounders: How Winners Pivot From Setback to Success, to be published in May. Follow him on Twitter: @rickjnewman

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