Former Fed Chairman Alan Greenspan was in the news again this morning writing in the Financial Times about how a more austere future awaits America. This item at CNBC appears to have a good summary of the key points (the old trick of Googling the article’s title to access the FT subscriber section doesn’t seem to be working anymore).

In an opinion piece for the Financial Times, Greenspan argued that the political landscape in the United States was more divided than ever, resulting in political paralysis as the Tea Party’s influence had created “an effective veto of new legislation before the current heavily Republican House of Representatives”.

The failure last year of the Super Committee — a congressional committee tasked with finding spending cuts to reduce the United States’ ballooning budget deficit — to reach a deal underscores this shift in U.S. politics, Greenspan said.

“A political tsunami has emerged out of our past in the form of the Tea Party, with its ethos reminiscent of rugged individualism and self-reliance,” Greenspan wrote.

The Tea Party “has so altered the distribution of votes within Republican Party’s House caucus that the party’s center has moved closer to the Tea Party,” he added.

And with an ideological battle raging over the future of the welfare state, “Congress, having enacted increases in entitlements without visible means of funding them, is on the brink of stalemate,” Greenspan wrote.

The only viable long-term solution appears to be “a shift in federal entitlements programs to defined contribution status” — programs that require employees to make a set contribution to their pensions, Greenspan said.

Defined contribution retirement programs have worked so well for the rest of America (that is, until stocks stopped rising a decade ago), it’s only fitting recipients of government benefits have the pleasure of fretting over their future too.

By the way, I’ll try to get in as much Greenspan related material as possible over the next month or so since a new combined blog/investment website will be launching sometime in February sans the TMTGM moniker. (Yes, it’s time…)

It is not entirely clear which is more entertaining this morning – re-reading Paul Krugman’s “Nobody Understands Debt” commentary from yesterday’s New York Times, in which he ignores the flight to safety from the eurozone over the last half of 2011 while arguing that low Treasury yields are a vote of confidence in the dual U.S. policies of record deficit spending and record money printing (the latter also helping to push bond prices up and yields down) … or the many retorts to his recent offering:

• Do We Really ‘Owe It to Ourselves’? – Lew Rockwell
• SOMEBODY Doesn’t Understand Debt – Cafe Hayek
• Debt does not matter. Spending and taxes do. – Fatas and Mihov
• Krugman: Time For A Skullf%c*ing – Market Ticker
• Hallelujah! We Owe It To Ourselves! – Cafe Hayek
• Krugman v. Krugman – Marginal Revolution

I’ve not read through all of these yet and my guess is the third item on the list above might express agreement with Krugman, though the fourth one probably does not.

There are no doubt lots more where these came from and, to be fair, there are probably an equal number of positive reactions as there are negative ones (just have a look at some of the comments on the original commentary). I suppose we’ll be hearing a lot more about the nation’s debt as the election season heats up…