They say necessity is the mother of invention. But the opposite is also true: Luxury is the mother of neglect. That is where much of the Western world finds itself. In our prosperity, we have spent beyond our means and have neglected the difficult budgetary choices we have been confronted with. This has necessitated a return to fiscal conservatism, brought on by a frantic need to escape the consequences of our abandonment of spending restraint.
The impact of debt and deficits is allowing conservatism to take hold in the strangest of places. From coast to coast, cuts in the size of government have become the preferred policy prescription to deal with deficits. In New York, Gov. Andrew Cuomo used his State of the State address to argue for a fundamental transformation of the government. Cuomo argued, "We have to start with an emergency financial plan to stabilize our finances; we need to hold the line, and we need to institute a wage freeze in the State of New York. We need to hold the line on taxes, we need a state spending cap, and we need to close the $10 billion gap without any borrowing." [Check out a roundup of political cartoons on the economy.]
In California, new Gov. Jerry Brown used his inaugural address to highlight the difficult and unpopular decisions he will be forced to make. "When dealing with a budget gap in the tens of billions, I must point out that it is far more than waste and inefficiency that we have to take out," Brown said. He went on to list things like healthcare, income assistance, and tax incentives that would likely have to be cut to solve the budget crisis. He admitted it will be a "painful" but an "honest" budget.
European nations are finding themselves compelled towards the same reality. After years of overspending on a generous social welfare system, supported by an enormous public-sector bureaucracy, European governments are turning to austerity. For instance, Germany has announced $95.7 billion in spending cuts over the next four years, Spain cut $18.2 billion from its budget this year, and the U.K. slashed the budgets of government departments by 25 percent across the board. They are not alone; almost all Eurozone governments have presented or passed cuts in government spending in an attempt to get their deficits under control.
Fiscal conservatism is not an option because reality isn’t negotiable. A stripped down government may not be pretty; in fact, it may be downright ugly, but reality often is. [Read more stories about the deficit and national debt.]
In an ideal world, every country would have a social safety net that provided quality housing, generous medical care, and a secure retirement, all at a very reasonable cost to taxpayers. Unfortunately, reality is totally apathetic to our vision for utopia.
Governments have always used times of prosperity to experiment with expanding the size and scope of the welfare state. Do not confuse this with "invention," for it is nothing but a neglect of the fundamental tenets of free market capitalism. Inevitably, bureaucracies grow in close parallel with the size of budget deficits, forcing nations, out of economic necessity, to cut budgets, right-size government, and keep tax rates low. This real world may not be the liberal ideal, but history tells us that the social welfare model is unworkable. Individual initiative has proved more effective than governmental meddling at creating and, more importantly, sustaining prosperity.
That is why our states and other nations, regardless of the political party that leads them, have found themselves at default’s doorstop, forced to deal with their deficits by erasing the government’s most recent attempt to buy prosperity. It is why it will not be long until Washington is forced to admit that the liberal experiment has failed as they march, out of necessity, back towards conservatism.