A veteran of four administrations and longtime commentator gives his insight into the problems facing our country. Great nations, he warns, can fall quickly. Excerpted from “David Gergen: Will America Remain a Great Nation?,” July 28, 2010.

DAVID GERGEN, Senior Political Analyst, CNN; Director, Center for Public Leadership, Harvard Kennedy School

It’s a privilege for any citizen to work in the White House, so I’ve been unusually blessed by working for a series of four presidents. I must tell you that from those experiences, I see what is now facing us as a people. I cannot remember a time when I thought our problems were as big and our capacity to solve them was so small. It is deeply troubling where we are as a people.

I must say we’ve had a history, in the time at least that I’ve been in politics, of being pretty good at responding to national emergencies: something that happens on the spot – boom, we’ve got to act. We rally together as a people. Go all the way back to Pearl Harbor up through 9/11, or look from the Great Depression to the Great Recession. In all of those cases, the nation responded well, and indeed I believe both President Obama and his economic team, as well as President Bush and his economic team, deserve more credit than they get for stopping us from going over a cliff here a couple of years ago. We came very close, but in general we’ve been pretty good. The Gulf spill, I think, is an exception.

In general we’ve been very, very good at responding to emergencies. Where we’ve had real trouble is in responding to chronic conditions that build up over time. A sage once said that America is excellent when we have a wolf at the door; we are pretty terrible when we have termites in the basement. That has been my experience to a significant degree in politics and what I continue to see happening today. I was in the White House in the early 1970s, with President Nixon and then President Ford. I ran the speechwriting team for President Nixon for a couple of years. You may remember, that was a time when OPEC reared its head and tried to strangle us. We had these long gas lines and the country was very aroused about what we were facing over time about energy. I wrote some of those early speeches for Presidents Nixon and Ford calling for energy independence. That was our mantra: energy independence. We vowed that this country would end its addiction, end being hostage to other countries. Well, at the time we were 30-percent dependent on foreign oil. Today, some 40 years later, we are 60-percent dependent on foreign oil. I am very proud of the contributions I have made to American public life through my speech writing; they obviously worked very, very well.

I was in the White House again in the early 1980s, when a national commission reported to President Reagan that we were a nation at risk because our K-12 education was deteriorating rapidly, especially in contrast to other nations. President Reagan saw that report, was alarmed by it, went barnstorming the country calling for education reform, by overhauling our K-12 schools. Some of the best governors in the country heard that same call, saw the problem and devoted themselves to it, whether it was Democrats like Bill Clinton in Arkansas or Jim Hunt in North Carolina, to Republicans like Tommy Thompson in Wisconsin and John Engler in Michigan. Many, many governors have worked on this problem. Where are we? We’ve made some progress. We have some encouragement with what’s going on right now in the Department of Education. I happen to think Arne Duncan is one of our best cabinet secretaries, doing a good job for President Obama. But the truth is, our scores are up only modestly, while other nations are moving ahead rapidly, and we [are] the nation that rose up in  very large degree because of the quality of our education.

There is a book out that is well worth reading, by two Harvard economists, Claudia Goldin and Larry Katz, two labor economists. They make a compelling argument that the reason America became the number-one nation in the world was that we had the best educational system in the world. As of 1900, we were the most educated people in the world, and we continued to improve the quality of education in this country right through the first decades of the 1900s. Every generation went to school on average two years more than their parents did, and that happened generation after generation after generation. As of the 1960s, we were number one in college graduation rates in the world, and we had and continue to have the best universities in the world. But since the 1960s and ’70s, since that “Nation at Risk” report, we have actually gone downhill very rapidly. We are now number 15 in terms of college graduation rates. And a third of our kids are not finishing high school, another third finish but are not ready for college, not ready for 21st-century jobs; only a third come through the system. We talk about No Child Left Behind – it’s a joke; we are leaving millions of children behind. That’s because we haven’t come to deal yet with this chronic condition.

Now, I was also in the White House when president after president said the baby boomers are going to retire in the early part of the 21st century. The costs of health care are going up and up; they’ve been going up faster than the rate of inflation since the 1950s. The cost of pensions are going up and up. We have to overhaul the Medicare system, we have to overhaul Social Security, we have to overhaul Medicaid. President after president pleaded with us to do that. Year after year nobody would do it. We kept kicking the can down the road. Today what do we have? We have these entitlement programs, which are now ready to explode. They have already grown so much that every dollar we send to Washington in federal taxes now is necessary to pay for the entitlement programs. Everything else in government is done on borrowed money. All federal revenues are just enough to cover the cost of entitlements, and they are growing without reform.

Over time we have allowed all these problems to build up, and now they are all falling on us at the same time. All this postponement is coming home to roost at the very moment when our political system seems so polarized and paralyzed. Many of us thought that President Obama could turn the page, that he could open a new chapter in American politics. We still hope that, but frankly that hope has waned for a great number of Americans, and if anything we are more polarized today than we were before he was elected. It’s a sad thing to see, and it’s troublesome about where we find ourselves.

Now I have a valued colleague, who is a world-class historian by the name of Niall Ferguson. He teaches an entry-level history class for freshmen and sophomores at Harvard; it’s entitled The Rise of the West. We had dinner not long ago, with several others, in Cambridge. We got into a debate about what he would entitle the course if he were teaching it 30 years from now. Would he still call it The Rise of West? To borrow a phrase from Fareed Zakaria, might he rename it The Rise of the Rest? After all, China, India and Japan are all going to be at the table of power in 30 years, whether we like or not. I think we should welcome it, but they are going to be there.

But then there was a third possibility that is more chilling. That is he might call the course The Rise and Fall of the West. Now, we haven’t had to worry about that issue very much for most of our lives, but I will tell you that that question is now in play seriously. It is on the minds of many Americans as well as many people overseas. It is already clear, when you talk about the West, that Europe is struggling to keep up. We’ve seen that for some time, long before this recession hit, the European growth rate was about a percentage below the growth rate of the United States year in, year out, on average. Now with the recession and the trouble they’ve had, and we see what’s coming out of Greece and some of the fears that have been spreading across other parts of Europe and their inability, the hard time they’re having to compete with Asia. I think it’s already pretty clear that Europe is declining from what it once was, and the real issue is, What’s going to happen with the United States? I don’t think anyone yet knows the answer to the question of whether America is going to enter a period of decline, but I will tell you the danger is very real, very real.

Now, what do we know about nations and decline? It’s worth starting to have that conversation. There are three things that stand out when you look at questions about decline. First of all, the decline of a great nation isn’t pleasant. If you want to take an extreme example, remember what happened after the Roman Empire collapsed. We went into the dark ages and they lasted 400 years. Now in this case, we are obviously going to be in relative decline in the sense others are catching up with us, but the question regarding real decline, if we started to go into real decline, we don’t know what the world is going to look like. It may well be that China will emerge as a superpower. It could be that the 21st century will be the “Chinese Century.” It’s also possible that China will stumble internally. It’s got a lot of its own internal problems; we can’t be sure where it’s going to go. After all, it was only 25 years ago that we thought Japan was going to buy up everything. Then we sold them Rockefeller Center, we sold them a few golf courses, and they went down.

But we don’t know what’s going to happen. If China does not reach the peaks, we could have what’s called a polar world, [in which] there’s no supreme power. Whatever way it goes, if we decline, I can guarantee you that American influence is going to decline around the world and we are going to find it a more unruly place. We can already see psychologically the shifts that are going on. China’s flexing its muscles in new ways, you can see nations in the Middle East beginning to reorient themselves – after all, China has just passed us as the number-one consumer of energy in the world, and in 2027 their economy is likely to pass ours, so we could go either way on that.

Here at home, the decline of America could also mean significant suffering for a lot of people, especially in the middle class. A few years ago Andy Grove, who lives right down the road here and was so important as an immigrant coming to this country helping to found Intel, was by this time retired and was teaching a graduate course at Stanford. They have made calculations, he said, [that] unless we become more competitive, unless we pull our socks up in our schools, keep great universities, become more innovative and have an environment in the country that encourages greater R&D and innovation and drop inertia – unless we do that, by the time our grandchildren reach their peak earning years, he said, their income will go down on average 25 percent from today’s standards. Now as it happens, I had the privilege of seeing Dr. Grove this afternoon in Los Altos and spending some time with him, and I asked him about that. He said, I have revised my estimates and I think it could be a little deeper than 25 percent. According to a new study [cited in] Bob Herbert’s column this morning in The New York Times, just two years ago, 20 percent of the people in this country suffered a 25 percent decline in one year, and they are devastated by the results. So, the economy isn’t pretty.

The second thing is that decline can come very quickly. Niall Ferguson says conventional wisdom is that it took a thousand years for the Roman Empire to fall. If you read Edward Gibbon, that’s essentially the time frame that he looks at. Ferguson looks more closely, said that actually happened much more quickly, it happened within less than 100 years. His argument is that great empires have often collapsed within a generation. The Ming dynasty went down in a generation, the Ottoman dynasty went down, the Romanov dynasty went down, they all went down like that. So if America goes into decline, it could happen very quickly. It is very important to understand that this is not something to be complacent about; this is not 25, 50 years down the road. This could happen in the lifetime of our children.

Money Problems

The third thing to understand about declines is that they are often the product of financial mismanagement by a country. Economists Carmen Reinhart and Ken Rogoff’s recently published book [looks] at 800 years of financial crises around the world. What they have found is a common pattern, and that is when a serious, severe financial crisis is hit, great nations tend to throw a lot of money at them, just as we have. After the crises eases, what follows frequently is they then have a fiscal crisis. The fiscal crisis, if they don’t manage it well, in turn leads not only to them cutting back on their security, cutting the size of the military, but they often try to inflate their way out of it, they try to do a lot of other things, their debt gets too high, and they start to crumble. It has happened time and again. It happened to Spain, it happened to prerevolutionary France, it happened in the Ottoman Empire, and it also deeply affected Britain. The debt load in Britain between the wars was so high that they couldn’t afford to rebuild the military to face the rising German threat. It really undercut them.

So, where are we? Rogoff and Reinhart have written that the tipping point often comes when a nation’s debt load – what’s called its gross debt – grows big enough that it exceeds 90 percent of the annual GDP, and then they begin to start going down. Well, guess what? We are already at 60 percent, and we are on course now within a decade to break the 90-percent barrier. That’s why this is important. That’s why we have to be serious about where we are.

Now, what do we need to do? There are a ton of things we need to do, but most obviously and near-term, what’s paramount is to deal with our fiscal crisis that’s building up. Not immediately; we have to be protective of people this year, we may have to be protective of people the next year as the economy sort of gets its footing, but there’s no question that when the economy is on more solid footing, we have to do some significant work to get the deficit under control. These things are going to eat us up if we aren’t careful.

Fortunately, President Obama has appointed a national bipartisan commission, headed by Erskine Bowles and Alan Simpson, a Democrat and a Republican, to deal with the deficit and give us a report after early December. Erskine Bowles was the chief of staff for Bill Clinton in the latter part of the Clinton years, and he negotiated a balanced budget with Newt Gingrich and Republicans who were in control of the Congress back in 1997. Very significant. We had under Bill Clinton four years of surpluses. People forget that this can be done; it is not impossible, and Erskine was the guy who negotiated it.

He’s back at it again, and he wants to do some of the same kinds of things we did then. It is not impossible, and very important, what they have recognized and what they are working toward is trying to cut spending more than they raise taxes. Some of you may disagree with that; I happen to think it’s the right way to go. [Considering] the spending that it should be, taxes need to come up, but we need some sort of ratio on that. The Cameron government in Britain cut three dollars, in effect three pounds, for every one pound of increase in taxes. I don’t think that’s where we are going to wind up, but I think the Simpson-Bowles commission may well wind up with a two-to-one break on spending and taxes.

That would cause significant political tensions and resistance, because it means doing some very bold things and, for a change, sacrificing. All of us are going to be called upon to sacrifice, including all of us in this room, in some fashion. But if it can be done wisely and it can be done with enough boldness, it actually has some real merit. But please understand that it does mean going back and reopening the heath-care bill to cut back on the costs of Medicare; we’ve got to get those costs back under better control. It means revisiting Social Security. It likely means raising the retirement age. It likely means cutting back benefits some. It likely means somewhat higher taxes. It means going into what we call tax expenditures. We all have deductions now for our home mortgages, we get deductions for what our employers pay into health care, we get deductions for charities. We are going to have to visit some of those; those are big spending items. The Defense Department is not going to be immune to this. It has got to participate in significant cuts, and we are going to have to raise taxes, not necessarily a [value-added tax], but we are going to have to raise taxes. This is all going to be very hard to do, but we have no choice. The choice is, either we are going to sacrifice or go into decline. As far as I’m concerned, it’s a pretty stark choice, but I think there’s only one answer to that.

Now, that’s the near term. Long term, there are a whole host of things like creating a better economic environment, dealing with immigration so that we have smart people coming in through our borders, and we get rid of the porous borders we have now.

It means a lot of other things, but I would just center on one other thing, and that is public education. If we don’t get this right soon, I don’t care what we do, the rest of it’s not going to work. It’s particularly important that we pay attention to minority education in this country, because right now the minorities in this country are growing rapidly, and what we are going to find is the minorities are going to become the majority and a lot of our challenges at breaking through are in the minority community. We have to dedicate ourselves to ensuring Hispanic kids and African-American kids close the achievement gap. A lot of people in this country think you can’t do it. You get poor kids from broken homes, whatever they are, and they can’t learn. That is a myth. That is a myth and we are learning now that we can educate these kids, it is not the kids who were at fault; it was the rest of us who were at fault in not providing better schools. It’s something we are going to have to work on, and I have seen it happen.

These problems are very daunting, but we should not be discouraged. Instead we should buck up here and realize that the country has faced tough challenges in the past; we went through a financial crisis and a fiscal crisis, we owed one hell of a lot of money when the republic was first created. That’s why Alexander Hamilton was so important, because he figured a way out of that. We have come through tougher problems than this and we can come through this one. But we have to recognize that we’ve got to stick to our values, appreciate what American values are, appreciate the kind of optimism it takes, the contagious optimism it takes, to create a sense of momentum that we can get ourselves out of this.