Fiscal Collapse Is The New Normal

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Like it or not, fiscal crisis is the new normal.

Projections are bleak. A December 2009 report from the National Association of State Budget Officers found that “Fiscal conditions significantly deteriorated for states during fiscal 2009, with the trend expected to continue through fiscal 2010 and even into 2011 and 2012.”

At the federal level, the long term projections are even worse. A new report from the Peterson and Pew Foundations found that: “Over the past year alone, the public debt of the United States rose sharply from 41 to 53 percent of gross domestic product (GDP). Under reasonable assumptions, the debt is projected to grow steadily, reaching 85 percent of GDP by 2018, 100 percent by 2022, and 200 percent in 2038. However, before the debt reached such high levels, the United States would almost certainly experience a debt-driven crisis…”

Governments at all levels face a tidal wave of red ink.

The consequences for public budgets and policymakers are immense. The scale of these deficits and the expected duration of the downturn will require a fundamental, transformational re-alignment of the way that governments choose their tasks, define success and generate the revenue to fund their work.

Fortunately, there are new approaches to rethinking the public sector that show promise. But before looking at those, it is important to examine some strategies that have been employed in the past, but which not only won’t work today, they will actually be destructive. We need to break out of our old patterns of thinking and break some old habits.
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