There’s a fitting psychological term for the American public’s reaction to the sequester cuts: “learned helplessness.” My profession came up with the phrase based on an experiment with rats in a cage. Essentially it means that if after repeated attempts to lessen a negative stimulus nothing works, then rats (and humans) eventually give up trying new ideas to rectify the problem. For the rats this involved a cage, an electric shock and no escape routes. After a time they gave up. Even when clearly obvious escape routes were added, they chose not to take them. They had accepted the status quo.
Faced with repeated examples of Washington’s incompetence and self-serving politicking, the financial world’s malfeasance, and continued high unemployment, Americans are in a similar state of learned helplessness. After so many shocks, with the failure of one “solution” after another, it’s a psychological defense mechanism to throw your hands in the air, sink into denial, ignore the problem and simply try to get on with your own life.
In effect, we have become desensitized to the constant onslaught of doom and gloom economics. No one wants to hear about the deficit, the debt or the Fed anymore and who can blame them? From the debt ceiling crisis of 2011 to the dreaded fiscal cliff, to this latest slash and cut deadline of the sequester, pundits and politicians have been trying to whip us up into a frenzy of fear, with much posturing and finger pointing as each side tries to blame the other for forcing us to swallow this latest bitter pill. But they’ve cried wolf too many times, and we aren’t listening.
The latest deadline has come and gone without action or compromise and, guess what, nothing happened. It’s enough to make you want to leave Washington to play a round of golf with Tiger Woods.
With the new March 27th deadline on the horizon to avoid a government shutdown, the pressure is on once again. The one point House Speaker Boehner and President Obama seem to now agree on is that there’s nothing further to be gained from more saber rattling on government finance, because the righteous posturing can only lead to a deeper sense of public disgust, and both political parties will suffer.
So once again, nothing of any real significance will get done. Technically, we won’t feel the effects of the sequester cuts for months (if at all), many of us won’t be taking a direct hit (least of all members of Congress), and those who do will have forgotten this business and won’t be able to connect their suffering to its true source.
Meanwhile, we’re seeing that the Dow is approaching an all-time high (while not seeing that the Fed is buying $500 billion a year of Treasuries), and noticing that the property market is coming back (while conveniently forgetting the Fed’s $40 billion a month purchase of mortgage-backed securities). We’ve been living with an enormous deficit and getting away with it for so many years that we’ve chosen to ignore the doom and gloomers. After all, nothing they have predicted has come to pass.
After five years of recession, hearing about the deficit, the debt and unemployment year after year, the public is ready to get back to the way things are supposed to be, a la pre- 2008, when annual raises were a foregone conclusion, changing jobs was about “personal fulfillment” or more vacation time and owning a big, big house was an integral part of every American’s dream.
It’s a classic case of denial which, as a psychiatrist, I’ve seen hundreds of times in my practice and which yields the most important treatment mantra: you can’t help someone who doesn’t think they have a problem. Consider the alcoholic and his family. Just like our government is addicted to borrowing and spending, and our financial markets have become junkies for cheap money, the alcoholic can’t let go of his bourbon, and the family, after several failed interventions, finds it easier to give up and sweep the uncomfortable facts under the rug. After all, their drunk father is still functioning, still working and he’s not drunk all the time. Somehow, he just keeps on going and one day he’ll quit -- we just know he will.
Professionals warn the family that they need to do something about it, or he will die of alcoholism, but they ultimately decide it’s not that bad, because most of the time it isn't. The absence of immediate catastrophe belies the fact that Dad is on a steady downhill spiral heading for disaster, and he’s going to bring the rest of the family down with him, but denial is so much easier than confrontation.
This mindset doesn’t change the reality that we are on an unsustainable path, spending, borrowing and manufacturing too much money. The sequester barely touches the problem. We are talking about cuts of less than 100 billion a year, when government spending for 2013 will be 3.5 trillion, the budget deficit has topped a trillion a year for the last four years, and the national debt is approaching 17 trillion. If we don’t get our financial house in order in the near term, the average person is going to feel the effects far beyond the dire warnings of special interest groups that we’ve been hearing for the past month: "this will turn the US into a second tier military power," "this will add an hour to airport security screening," "we will have to close national parks."
No, going bust will feel much, much worse as our complacency, learned helplessness, and denial result in a subsequent absence of pressure on Washington, which means there is no incentive for our leaders to make tough choices or take swift action. After the sequester deadline passed, the president stated the obvious: “What’s important to understand is that not everyone will feel the pain of these cuts right away. The pain, though, will be real.”
That is likely a gross understatement because we are dealing with so much more than the sequester, but you can only say the world is coming to an end so many times before no one will listen.