WHERE’S ALEXANDER?

The kingdom of Phyrgia in what is now western Turkey was leaderless, and wracked by civil unrest.  The elders consulted an oracle, who told them their next king would come riding in a wagon. 

As the elders were discussing the prophecy, a peasant rode into town in an oxcart.  They made the bewildered man, named Gordius, king.  In gratitude, he dedicated his oxcart to the god Zeus, tying it with an intricate knot to a pole in front of the temple.

There the oxcart remained for many years, and another legend arose.  Whoever could loosen the Gordian Knot would rule all of Asia.  Thousands tried, none succeeded.

Then, in 333 B.C., along came Alexander the Great.  According to yet another legend, instead of trying to untie the knot like all before him, he simply drew his sword and cut it apart.  (Aristobulus, a contemporary, said Alexander actually loosed the famous oxcart by pulling the pin out of the pole to which the yoke was tied.)

Whatever.  Alexander went on to conquer Asia, and ever since the Gordian Knot has been a metaphor for how to solve the apparently unsolvable.

Many think our economic problems are intractable. In a CNN poll last week, 59 percent of respondents said the economy will be just as bad next year as it is this. That’s the first time a majority was pessimistic since CNN began asking this question 14 years ago.

"That’s a very significant, and very discouraging change in public attitudes," said polling director Keating Holland.

There’s reason for pessimism, thinks the founder of the world’s largest hedge fund.  An economic crisis is likely in "late 2012 or early 2013," Ray Dalio told the New Yorker.

Our economic problems were very small half a century ago.  The national debt in 1960 was $290.5 billion, 56 percent of the gross domestic product. Our $13.4 trillion debt today is 95 percent of GDP.  The unemployment rate then was 5.5 percent.  It’s 9.2 percent now.

The swelling of these problems to monstrous proportions coincided with an exponential growth in the size, power and cost of government.  The federal government spent just $92.9 billion in 1960 (and had a $300 million surplus), 18 percent of GDP.  Federal spending this fiscal year of $3.82 trillion is 24 percent of GDP.  The projected deficit of $1.65 trillion is one of the largest ever.

In 1960, there were just 14,479 pages in the Code of Federal Regulations.  There were 165,494 pages in the CFR at the end of last year, an increase of 1,043 percent.

The explosion in federal spending and regulation hasn’t helped ordinary Americans much.  The annual incomes of the bottom 90 percent of American families, when adjusted for inflation, have increased just 10 percent in the last 38 years.

This statistic understates the gain, because health and pension benefits have increased much faster than inflation.  But even when you include benefits, the lives of ordinary Americans were improving much more rapidly before the arrival of all this government "help."  Between 1950 and 1970, the median income of a married couple family increased 93 percent after adjustment for inflation, according to the Census Bureau.

If the standard of living of workers hasn’t risen much since government became obese, the taxes they pay for benefits have.  In 1960, the Social Security tax was 3 percent on just the first $4,800 of income.  Today, it’s 6.2 percent on incomes up to $106,800, plus 1.45 percent for Medicare.

President Barack Hussein Obama and Democrats in Congress have responded to the fiscal emergency chiefly by ignoring it.  They don’t want to reduce spending, or cut back on job-killing regulations.

Republicans in Congress do, but they keep trying to untie the Gordian Knot.  They propose slowing the growth of spending, but not reducing it.  When the EPA or the NLRB propose a particularly egregious rule, they try to block it, but the fundamental problem of regulatory overreach remains.

America in 1960 was in most ways a freer, happier, stronger, more prosperous and more respected country than America is today.  The plethora of boards, bureaus, agencies and Cabinet departments created since then have done more harm than good. 

We produced more energy before we had a Department of Energy.  Our children learned more before we had a Department of Education.  There was less urban blight before we had a Department of Housing and Urban Development.

Washington has made an art form of papering over problems and kicking the can down the road.  But our economic troubles are now so massive and so urgent that tinkering around the edges will not do.  We must actually reduce — pronto, and by a lot — the size, cost and intrusiveness of government.  We must cut the Gordian Knot.  Where’s Alexander?

Jack Kelly is a former Marine and Green Beret and a former deputy assistant secretary of the Air Force in the Reagan administration. He is national security writer for the Pittsburgh Post-Gazette.