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That now describes American politics. Each party is competing to win votes by providing the presents. The more the better.
Democrats now promise free health care, free college education (and the elimination of all student loans), free childcare, discounted public transportation and housing, wage subsidies for tens of millions of workers, and tax credits if you have kids.
But as the famous U.S. TV infomercial says, "but wait, there's more." If you order now, we will even cut your taxes as long as you don't make more than $400,000 a year. That is what the Senate and House $3.5 trillion spending bills promise.
Not to be outdone, the Republicans say that their Santa Claus is better. Instead of Uncle Santa Claus picking out which gifts you get (and not giving them to the naughty kids ― people who for one reason or another do not qualify for the programs), the Republican Santa simply stuffs your stocking full of cash ― in the form of tax cuts. Yahoo.
None of this might not matter if the U.S. government had been making needed investments in the future and paying down its massive national debt. But it has been doing neither.
Federal funding for R&D as a share of GDP is lower than before Sputnik. Federal funding on helping distressed towns and cities rebound economically is 50 times lower than it was four decades ago. And the U.S. national debt now exceeds $28 trillion, or over 100 percent of annual GDP. Compare that to Korea's 45 percent of GDP.
Most Democrats don't care anymore about the national debt, as they have embraced snake-oil Modern Monetary Theory, which holds that government can simply print money endlessly.
Republicans still remain in the thrall of the equally faulty supply-side economics theory, which holds that tax cuts are the key to spurring growth, and even increasing government revenue (the theory of the so-called Laffer Curve). So both parties can embrace Santa Claus economics to their hearts' content.
It doesn't help that while both parties compete to be the better Santa Claus, most Americans are kids on Christmas morning. Few voters want a lump of coal in their stocking; they want either cash or overflowing presents.
For example, even though the federal gas tax used to pay for highways is less than half its value today than in 1994 (in inflation-adjusted dollars) a significant majority opposes any increase in the rate. In contrast, almost two-thirds of Americans favor free college tuition. Why not, they are not paying for it; the next generation is.
The reality is that most Americans are about as rational about the budget, spending, and taxes as 8-year-olds are on Christmas morning.
Almost 80 percent of Americans are concerned about the declining state of U.S. infrastructure, but a significant majority would neither favor increased taxes to pay for infrastructure or fund infrastructure through debt. Perhaps they think Santa will pay for it.
No one wants to be Ebenezer Scrooge and call for spending cuts and tax increases; that's a path to political oblivion. So voters keep longing for Santa and politicians keep playing Santa.
The problem, of course, is that America needs to not only reduce its national debt ― which at some point will become a national crisis with all the economic carnage that comes with that ― it needs to significantly boost investment in the factors that will drive future U.S. economic growth and competitiveness, particularly vis-a-vis China.
This means significantly more funding for a U.S. advanced industry and technology strategy, including supporting applied research, manufacturing innovation, reshoring of advanced production, and tax incentives for investing in R&D and new machinery and equipment.
And this can only happen by increasing taxes, not just on the rich and corporations (the latter will likely reduce U.S. competitiveness) and reducing spending (which is different than investment in that it does not lead to future growth).
But as long as the U.S. persists in Santa Claus economics, the odds of such investment at the levels needed are slim. America will continue to struggle along, hoping that the private sector alone can be the engine of growth.
But at some future date, Santa will come down the chimney, bearing only coal for everyone's stocking, because there is no more money at the North Pole to make the presents.
Robert D. Atkinson (@RobAtkinsonITIF) is president of the Information Technology and Innovation Foundation (ITIF), an independent, nonpartisan research and educational institute focusing on the intersection of technological innovation and public policy.
