Like many moviegoers, both of us are Clint Eastwood fans, and never more so than during the halftime of the 2012 NFL Super Bowl game in Indianapolis, when the automaker Chrysler paid for a commercial, narrated by Eastwood and seen by more than 100 million people, entitled “It’s Halftime in America.”
In two minutes Eastwood summed up the major themes of this book: We have been slipping as a country—our version of a bad first half of a game—but we have all the resources and talent to come back. We have done this before and we can do it again, but only if we pull together and do what is both right and hard. Here’s what Eastwood said:
It’s halftime. Both teams are in their locker rooms discussing what they can do to win this game in the second half. It’s halftime in America, too. People are out of work and they’re hurting. And they’re all wondering what they’re going to do to make a comeback. And we’re all scared, because this isn’t a game. The people of Detroit know a little something about this. They almost lost everything. But we all pulled together. Now Motor City is fighting again. I’ve seen a lot of tough eras, a lot of downturns in my life, times when we didn’t understand each other. It seems that we’ve lost our heart at times. The fog of division, discord, and blame made it hard to see what lies ahead. But after those trials, we all rallied around what was right and acted as one—because that’s what we do. We find a way through tough times, and if we can’t find a way, then we’ll make one. All that
matters now is what’s ahead. How do we come from behind? How do we come together? And how do we win? Detroit’s showing us it can be done. And what’s true about them is true about all of us. This country can’t be knocked out with one punch. We get right back up again and when we do the world’s going to hear the roar of our engines. Yeah, it’s halftime, America. And our second half ’s about to begin.
We agree—and we intend this book to be a game plan for America’s second half, a road map for rising to the challenges and opportunities that will determine whether we remain a country that can continue to pass prosperity from one generation to the next, as we always have, and can continue to play the role of global stabilizer, as we surely must. These challenges are staring us in the face and they have not changed—or been addressed—since this book was first published in 2011. Nor have the solutions changed: Without collective action we cannot fix what needs fixing. America desperately needs a series of grand bargains between the country’s two major political parties and among the major stakeholders in finance, energy, and education.
For starters, we need a short-term plan that helps to stimulate job growth through targeted investments that upgrade U.S. infrastructure—roads, bridges, school buildings, bandwidth, and mass transit. But to get such a short-term plan through Congress, and ensure that it doesn’t exacerbate our broader deficit, it must be paired with a long-term plan that addresses our structural fiscal imbalances at the real scale of the problem. This will require a grand bargain between Democrats and Republicans involving entitlement and tax reform, including the raising of additional revenue.
At the same time, we need a grand bargain on energy between environmentalists and the oil and gas industry. Such a deal would establish the highest environmental standards for extracting natural gas through fracking, as well as oil from remote locations, so America can take advantage of its bounty of both oil and gas. In the past five years, thanks to better drilling techniques, rising biofuel contributions to gasoline, and improving mileage standards for automobiles, America has reversed a twenty-year increase in energy dependence on other countries. In 2011, the United States was meeting more than 80 percent of its energy
needs from domestic sources. If we continue to exploit these resources properly, energy experts estimate that America could be the biggest, and cleanest, oil and gas producer in the world by 2020. This would raise more tax revenue and decrease our concern about the Middle East while increasing our leverage there. It would also enable us to reduce our emissions of greenhouse gases by replacing the coal that fires many of our power plants with much cleaner natural gas and moving our truck fleets onto natural gas as well. But we must make certain of two things. The first is that we are drilling the oil and extracting the natural gas by the safest, most environmentally sensitive means possible. And the second is that we are gradually but steadily shifting our economy to cleaner energy systems—be they nuclear, wind, solar, wave, or natural gas—and a more efficient use of resources. To do that we need to tax the things we don’t want (oil and coal) and subsidize and provide incentives for the things we prefer—systems that give us more heating, cooling, lighting, and mobility with fewer, cleaner, and more renewable resources. Not only is there no reason such a grand bargain cannot be reached—the technology exists and the additional costs are eminently manageable—but failing to do so would leave America at a competitive disadvantage in what will surely be the next great global industries: clean power and energy efficiency. As the world moves from seven billion to more than nine billion people by 2050, getting more growth from more-sustainable and less-polluting resources is going to drive the next great wave of innovation. America should lead it.
We also need a grand bargain between generations. We need to augment the health-care plan signed into law by President Obama, which expanded access to health-care coverage to some thirty-two million uninsured Americans, with an equally credible, ambitious plan to contain health-care costs, which will crowd out everything else in the federal budget if left unchecked and make us a society that spends far too much money on nursing homes and far too little on nursery schools. We, as a nation, must invest in the future as well as in the past.
Finally, we need a comprehensive approach to job creation, one that focuses both on how we get more people starting companies—if we want more employees we need more employers—and on how more Americans can acquire the skills and education that twenty-first-century industries and services demand. This will require a grand bargain
among labor, capital, and government. Capitalists need to look for more opportunities to invest in America, every community needs to make sure it is producing the skilled workers for the jobs of the future, and government policy has to enable both.
The Bureau of Labor Statistics tracks not only unemployment in America but also the number of jobs employers can’t fill. In early 2012 it found that there were more than three million jobs vacant in America, despite general unemployment of around 8 percent. That tells us that far too many American workers don’t have the math, reading comprehension, or technical skills that are now required by companies engaged in advanced manufacturing—the only manufacturing we’re going to be doing in America in the future.
Rahm Emanuel, the mayor of Chicago, told us that on a good day he’ll read in his local paper that a firm such as Accenture has announced it’s adding five hundred jobs in Chicago. On a bad day he finds himself “staring right into the whites of the eyes of the skills shortage.” His city has thousands of job openings going unfilled. He says, “I had two young CEOs in the health-care software business in the other day, sitting at this table. I asked them: ‘What can I do to help you?’ They said, ‘We have fifty job openings today, and we can’t find people.’” One hears this complaint from employers, blue-collar and white-collar, all across America today.
We cannot remain a manufacturing power unless we—labor, capital, and government, both Republicans and Democrats—agree to reenergize and reinvest in what we call America’s traditional five-part formula for success: providing access to postsecondary education (vocational, liberal arts, or science and math) for more Americans; upgrading our infrastructure; admitting more talented and energetic immigrants; putting in place regulations that encourage risk-taking without abetting recklessness; and spending more on research and development that expands the boundaries of physics, biology, chemistry, energy, and material sciences.
In that vein, it was hard not to notice the mixed emotions with which Americans greeted the untimely death in 2011 of the Thomas Edison of our age, Apple co-founder Steve Jobs. On the one hand, there was overwhelming praise, rightly showered on a man who personified America’s spirit of invention. After dropping out of college in the 1970s,
he went on to develop iconic products over the course of four decades—from the Mac to the iPad and from computer-animated movies to an online music store. There was something quintessentially American about him. And yet laced throughout so many of the obituaries and paeans to Jobs was a certain melancholy, a gnawing anxiety that America can no longer produce people like him.
We do not believe that is the case. But to ensure that America produces more companies like Apple and more visionary entrepreneurs like Steve Jobs requires seriously addressing the national agenda we have described above. That, in turn, depends on politics, and politics today is America’s Achilles’ heel.
Our political system is not rising to this moment. It is not only that we are too polarized. Things are worse than that. We are polarized over the wrong issues. What is depressing about American politics today is not just that it is dominated by hyper-partisanship but that it is often beside the point. As we write these words, in the heat of the 2012 presidential campaign, a Martian landing in the United States could be excused for thinking that the biggest issue in America is who should pay for contraceptives, whether Satan stalks our land, and whether President Obama is a closet Kenyan anticolonial socialist. We don’t just need more civility; we need more reality. In the past, America and its leaders have always been at their best when they combined radical empiricism and flexibility, not radicalism and a refusal to compromise. We are never going to have complete consensus on how to get where we are going, but we had better have consensus on where we want to go. And right now, we don’t—although the desirable destination for America ought to be obvious. The central question in our national political life today should be: How do we create enough jobs and economic growth to pay off our debts and pass on a higher standard of living to our children without despoiling the environment, while also supplying the global leadership that the world needs?
Unfortunately, too many Republicans today think the answer is simply to go back and do what Ronald Reagan did. There are two problems with that. Reagan didn’t do what they think he did; and what he actually did took place thirty years ago, and since then the world has fundamentally changed. As we show in this book, when Reagan confronted severe imbalances in the government’s budget due to his tax
cuts, he approved tax increases, or “revenue enhancements” as he preferred to call them, on multiple occasions, including a boost of the federal gasoline tax. Everything being equal, it is better to see the government lowering taxes, not raising taxes, but everything today is not equal. We have a national debt of more than $15.7 trillion—which is larger than our entire annual economic output and amounts to about $138,000 per taxpayer—along with a roughly $1.5 trillion annual deficit.
President Obama has, to his credit, shown at least a rhetorical willingness to embrace the budgetary changes we need. But it is still not clear whether he can bring his party’s base to accept long-term structural reforms in Medicare and Social Security—or how hard he will try.
In short, too many Republicans want to go back to a previous era that did not exist as they imagine it and, in any event, is not all that relevant to the present. And too many Democrats, while acknowledging the need for change, still want more government than they are willing to pay for or that the country can afford.
What we desperately need is a political debate on the real issues of the world in which we’re living. That is why we expressed our hope in this book that if the two parties didn’t give us the debate we needed, we would see the emergence of an effective centrist independent candidate who would challenge—and keep honest—both parties. A model of such an such independent thinker is David Walker, who served as the country’s comptroller general, its chief auditor, from 1998 to 2008 and is currently CEO of the Comeback America Initiative, a nonpartisan group dedicated to getting America’s fiscal house in order. We agree with Walker when he says the American people today are “starved for three things—truth, leadership, and solutions.” Unfortunately, the two parties are just offering “laggardship—waiting for something to hit the fan” so they can again react “without adequate due diligence.”
The grand bargain that needs to be made on the budget is hiding in plain sight, insists Walker. He praises President Obama for emphasizing the right metric—our overall debt-to-GDP ratio—and for offering short-term ideas to enhance economic growth and address unemployment, such as investments in infrastructure. But these ideas, he argues, have to be “coupled with a credible and enforceable plan to address the structural deficits that threaten our nation’s future position in the
world and our standard of living at home”—and there Obama has continued to fall short in his first term. Democrats, argues Walker, have been “in denial about the need to renegotiate our social insurance contract.”
As for Republicans, says Walker, “they don’t have a plan to restore fiscal sanity either. They’re in denial that we can solve our structural deficit problems with either our current level of taxation—between 15 and 16 percent of GDP—or even with our historical average, about 18 percent of GDP.” We need more revenue. Our deficit problem is primarily a spending problem, but it is not only a spending problem. “We need $1 in new revenues for every $3 or $4 in spending cuts,” says Walker—and that should be accomplished through reform that makes our tax system “simpler, fairer, and more competitive,” while generating more revenue. “The Republicans are simply in denial about this,” he repeats.
As Bill Gates said to us in an interview about American politics today:
[The] big thing that’s missing is a technocratic understanding of the facts and where things are working and where they’re not working. And I do think when things were less partisan there were people in the Congress who would say, “Okay, my committee is where I’m going to spend my time. I’m going to get to know transportation or housing.” And they were competent. And they weren’t put to some acid test of party loyalty. And experts would come into their committee. Now you get very simplistic views: “No, government shouldn’t be in this at all” or “Yes, government should be in it massively,” as opposed to “Well, give me how much you want government to be in and here’s the best way to spend this money.”
Gates adds that his foundation is trying to help schools experiment with the use of more facts and data. “We know that unless the teachers and the students like it in the end, and the results are better, it won’t get broad adoption.”
It may sound naive in today’s hyper-partisan atmosphere, but we need to bring the same intelligence to politics, Gates argues. He said,
“Political systems are supposed to adjust when things are wrong, and that’s why the country’s gotten through so many crises … It’s easy to think when we look at the budget, when we look at energy, that right now we’re particularly short on a common view of the crisis and adopting a common solution. If government screwed up, is the answer to have less of it or to fix it? Well, area by area you have to look at it.”
That is why it would have been beneficial to have had a responsible third-party candidate in the race and, particularly, participating in the debates. As Gates put it, it could be valuable to have someone saying: “It’s all nice to hear what you two guys say but what you said doesn’t add up. Let me tell you, voters, how even if you cut spending a lot you have to raise taxes. And unfortunately you can only get some portion from the very richest. You’re going to have to raise taxes a bit more broadly than that and cut spending.”
A lot more is riding on our getting this right than just America’s future. Since this book first appeared in 2011, the need for a strong, stable, and vibrant America has grown even more urgent. In East Asia, the world’s fastest-growing region, China’s relations with its neighbors have become more strained, and the closed, secretive, aggressive, nuclear-armed communist dynasty ruling North Korea has begun an uncertain transfer of power. In the Middle East—the site of the largest readily accessible deposits of the world’s economically indispensable mineral, oil—a set of political upheavals has removed from power long-ruling governments in Tunisia, Egypt, Libya, and Yemen and threatened others in Bahrain and Syria. The nature of the regimes that the Arab Awakening will ultimately bring to power remains unknown. Meanwhile, the radical anti-Western rulers of Iran continue their efforts to develop nuclear weapons capability. In the European Union, the world’s largest economic unit, financial crises in several participants in its common currency, the euro, threatened to drag Europe and other countries into an economic downturn as severe as—and conceivably even deeper and longer than—the one the world experienced from 2007 to 2009 as the result of the subprime debacle in the United States.
East Asia, the Middle East, and Europe are places where American power has for decades helped to foster stability and prosperity. American strength alone will not suffice to fix the problems in these regions, but
without an economically robust, socially cohesive, and politically confident United States these problems will all surely be far more difficult to manage. America is hardly irrelevant in the making of the new world that’s taking shape today, but it isn’t as all-powerful and so cannot be as “present at the creation” as it once was. How could it be after fighting two trillion-dollar land wars in the Middle East and running up its deficit to levels at which we can no longer avoid making trade-offs between the retirement needs of boomers and the military’s demand for bombers?
So the grand bargains that America needs are just as important for the future security and prosperity of billions of people living far from the continental United States as they are for those living within our borders. If our political system continues to produce only suboptimal policy responses or, worse, no responses at all—because it remains paralyzed by hyper-partisanship and fails to ask and answer the most important question of all for public policy: What world are we living in?—people all across the globe will feel the effects.
In sum, the stakes in America’s capacity to come back, to come from behind, to have, in Clint Eastwood’s words, a good second half, is a matter of high stakes. Is this possible? For all the difficulties involved, and despite the discouraging political trends, we, the authors, continue to believe that it is. Our optimism about America’s future still rests on America’s past. We, as a nation, have risen to challenges even more formidable than the ones we face now. We have succeeded at tasks even more daunting than striking the bargains on which our national well-being depends. The America that recognized, confronted, and mastered those challenges is the country that used to be us. We still believe that it can be again.
Thomas L. Friedman
Michael Mandelbaum
Bethesda, Maryland, April 2012