I recently visited downtown Chicago. The city is spiffy, cheerful, and on the weekend I was there, events were abundant, the restaurants were crowded, cranes were sprinkled around town even with workers on overtime setting windows on a Saturday. Compared to the other big city I am in often – New York – Chicago shone. New York’s dark narrow streets, litter, and general bedlam make it seem like a third world country sometimes.
However, in terms of financial health, NYC far outperforms Chicago. Chicago is now junk rated by Moody’s and barely investment grade over at Standard & Poor’s, with a negative outlook at both. NYC is high investment grade, so far out of Chicago’s league that it’s not even comparable. Chicago’s schools, pensions, and city services are suffering on a scale rarely seen in the U.S. Crime is up substantially as at-risk populations feel the pinch.
This is a microcosm of so many things in life, where we see one thing, but the reality is different. Fish populations are plunging, but when humans look out at the endless ocean and then see vast arrays of fish at the fish market, we think everything is fine. We see cranes in the sky in many cities now, and housing prices rising, and unemployment falling, but those bits of evidence belie the huge debt we have accumulated in the last few years. Our national debt has risen from roughly $10 trillion eight years ago, to $20 trillion now. Should interest rates rise even a little, we will find that much of our national budget must be used to pay interest, crowding out social services of all kinds. That’s a sickness for which there is no fast cure, and every one of us will feel the consequences. We already have one of the slowest recoveries on record partly due to our fiscal situation, but in the future we will notice our deficit more acutely. Most notably, the next President will be have very limited room to maneuver, economically, no matter which party comes to power. Yet this is a problem which many argue is not a problem at all, completely contradicting math, which we all learned in grade school.
We don’t generally delve very deeply behind headlines or what our eyes show us, but we must begin to, as we forge ahead to solve today’s problems.