April 26 (Bloomberg) -- When President Barack Obama took his deficit-reduction show on the road last week, he found audiences had more on their minds than spending cuts and tax increases.
“What are you doing about gas prices?” someone at a town-hall-style meeting at North Virginia Community College in Annandale wanted to know.
The reaction of town-hall attendees to soaring gas prices, which hit a nation-wide average of $3.84 last week, probably isn’t much different than that of ordinary Americans, who are devoting a bigger chunk of the household budget to filling the tank.
What exactly do folks have in mind when they ask the president what he’s doing about oil prices, which are set by the market? Do they want him to respond with, “Drill baby drill”?
I doubt it. Environmentalists haven’t warmed up to oil exploration and drilling since last year’s Deepwater Horizon explosion in the Gulf of Mexico.
Maybe the public wants more hydraulic fracturing to extract the vast supplies of natural gas from the Marcellus Shale formation in the Appalachian Basin, which would reduce demand for oil-based products? Not in my backyard, thank you.
Or, was the question about gas prices a sign of support for the administration’s clean energy initiatives? Not unless windmills can power autos.
I’ve got it! Along with life, liberty and the pursuit of happiness, Americans want a guarantee of cheap gas prices. All that stuff about us wanting less government in our lives, the take-away from the 2010 mid-term election, is just a bunch of hooey.
With his approval rating heading in the opposite direction of gas prices, Obama devoted his Saturday radio address to the issue. After accusing politicians of being disingenuous when they create the appearance of doing something about high gas prices, the president leveled with us:
“There’s no silver bullet that can bring down gas prices right away,” he said.
Just two days earlier, he had announced the formation of a task force to root out “cases of fraud and manipulation in the oil markets” -- a favorite presidential tactic that creates the appearance of doing something about high gas prices.
If the current situation adheres to the standard script, the Senate will invite executives of Big Oil to testify about Big Profits at a time when ordinary Americans are hurting.
None of it is likely to alleviate high gas prices, which aren’t the root of the problem anyway. Americans have a fundamental philosophical dilemma over what we want from our government. In good times, we want an arms-length relationship. In bad times, we want a nanny looking out for us. We can’t have it both ways. This mind-set needs to change.
Last week, after Standard & Poor’s lowered its outlook to negative for America’s AAA long-term sovereign credit rating, I asked Nikola Swann, the primary credit analyst on the report, about recent parallels. He told me that, in the mid-1990s, both S&P and Moody’s downgraded Canada’s credit rating (from AAA to AA+ and Aa2, respectively), as a result of the country’s deteriorating fiscal situation, the lack of a plan to deal with it and a reliance on external borrowing.
Canada’s deficit as a share of gross domestic product had, in the early ‘90s, ballooned to 9.1 percent, and public debt had risen to 68.4 percent of GDP. By comparison, the U.S.’s publicly held debt is expected to reach 72 percent of GDP this year, according to the White House Office of Management and Budget.
Canada worked hard to regain its AAA status in 2002.
“Canadians felt embarrassed by the downgrade, which helped build grassroots support for fiscal discipline,” Swann said.
The groundswell of public support to do whatever it would take to get Canada’s fiscal house in order started with the ouster of the ruling Progressive Conservative Party and the installation of the Liberal Party. Prime Minister Jean Chretien and Finance Minister Paul Martin slashed federal spending by 20 percent. Provincial and local governments came to see balancing the budget as a virtue. By 1998, Canada went from chronic budget deficits to a surplus.
I’ve heard a lot of emotions expressed about the U.S. fiscal stalemate, but embarrassment isn’t one of them.
Instead, opinion polls consistently show that Americans don’t want cuts in their Medicare and Social Security benefits. They don’t want to pay higher taxes. The one thing most Americans favor is raising taxes on the rich.
The trouble is, there aren’t enough rich folks to provide for our unlimited wants. Once people accept this, then the government can proceed with a deficit-reduction plan. If we can’t send a message to Washington that we are willing to accept sacrifices, then we’re the ones who should be embarrassed.
(Caroline Baum, author of “Just What I Said,” is a Bloomberg News columnist. The opinions expressed are her own.)
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