Phil-osophically Speaking – October 1, 2010

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Political Resurrection And the Perils Of the Economy

The libertarian author, social critic and theorist Albert J. Nock once postulated that no viable idea ever vanishes because there are echoes that reverberate through the canyons of time to be received and repackaged through the prism of other thinkers.

I thought about this when I considered the unexpected resurrection of both the Republican Party and Conservative thought so soon after it was buried by its not very grief stricken grave diggers. Now in the interest of full disclosure, my political inclinations are conservative. But I take no satisfaction in noting that the eulogists of Conservatism were badly mistaken since some conservatives thought liberalism was dead during the high, holy days of Ronald Reagan.

Politics are rarely settled dogma; so obiter dictums that this is dead or that is dead are spasms of intellectual carelessness best avoided in the political milieu of a pluralistic society. Nevertheless, the time is coming where accounts are going to have to be settled no matter who the majority party is in November. America is in a fix of its own making, ‘drinking its own hemlock’ as one pundit put it.  Federal expenditures flow like the Niagara and if the spigot is not tightened the whole enterprise could be submerged in a sea of red ink, choking off any possibility of economic growth.

Expenditures never enumerated in the Constitution gain traction by the discovery of new rights as if they were hiding somewhere. Obamacare, the idée fixe of the present Administration, is the latest Brobdingnagian scheme set to fleece taxpayers. Health care is important but does that mean it should be regulated by the federal government? We need food to live; yet its production and distribution is not controlled, except to the disadvantage of the consumer when farm subsidies actually increase the cost. Let’s not forget that many Americans without health insurance are either voluntarily uninsured or young and healthy. These costs piled upon Social Security, Medicare and Medicaid are weighing down the American Atlas as it shoulders a world of growing entitlements.

John McCain’s one good idea on social policy was his market based fix for health care: End the tax break for employers who offer coverage and replace it with a tax break for all individuals who buy insurance, whether through their employers or individual markets. It sounds sensible because it is sensible. We used to spend only 3 percent of the GDP and now we spend more than 10 times that. If government finances are turning into one giant Ponzi scheme we might as well pardon Bernie Madoff and appoint him Secretary of the Treasury. Democracies, especially wealthy ones, are disposed to such weaknesses because the largesse of governmental entitlements captures constituencies that empower them. One of the things that gnawed conservatives during George W. Bush’s term was that the government spent more than when Bill Clinton was president.

There were the wars in Afghanistan and Iraq, of course, but there was also the enormously expensive Medicaid bill that the Bush Administration lobbied for and passed. What gives? Politics — that’s what! By 2004, the Iraq war was ruefully unpopular (remember the “Bush Lied, People Died” bumper stickers) and Democratic nominee Senator John Kerry looked as if he was going to sail into the White House. It was then that Karl Rove and other Bush strategists decided to support the Medicaid bill, reasoning that if they could solidify the senior citizen vote, the most reliable voting demographic, they could salvage the election. Their rationalization was if Kerry were elected he would shepherd a more extravagant bill through Congress while making good on his campaign promise to withdraw troops from Iraq, a move the Bush Administration believed radically premature.

I can’t prove that’s exactly what happened but it’s impossible to believe, given the Bush Administration’s philosophical outlook, that political strategy did not overcome the ideological imperative. Look at what happened in the 1996 Presidential campaign. The Clinton Administration tarred and feathered Bob Dole, a senior citizen, as a traitor to his generation for proposing to cut Medicare. But Dole made no such proposal; he was merely opposing the amount of the increase which the opposition called cutting. Dole tried to explain, but with the airwaves flooded with commercials of Dole’s Draconian cuts…well, when you have to explain it, your cause is already lost.

It’s worth noting that the Republican leadership’s recent “Pledge to America” mirroring Newt Gingrich’s very successful “Contract with America,” talks about tax cuts, reducing spending and economic growth but says nothing or very little about cutting the most expensive social programs: Social Security, Medicare and Medicaid. No doubt the popularity of these programs makes them inviolable; but reducing spending without touching any of these programs (much less Obamacare) is like trying to reduce your waistline while dieting on triple thick malteds, chocolate mousse cake and Big Macs.

We know the tax, spend and regulate philosophy has failed to boost the sagging economy and has instead caused capital to flee overseas rather than establishing its roots here on American soil. Lower tax rates on business and capital (provided it isn’t short-lived) will ultimately result in higher levels of employment and greater revenue. That has been the history; but I also contend that not every tax cut will pay for itself if we are profligate with the other side of the ledger — spending. State Senator Emil Jones, in the Illinois State House, spoke joyfully of Federal handouts: “Some people call it pork, I call it steak!”

Whatever you call it, unconstrained spending will have to be reduced or dramatically slowed to ensure the nation’s long-term economic health. What the country desperately needs is hardheaded solutions, not dreamy platitudes. Unless expenditures become more manageable, it is hard to see how we can outgrow our mounting debt. Some Republicans think this could be done by freezing non-entitlement spending to 2008 levels. Perhaps they’re right; but with the per capita cost of health care rising, it seems an awful stretch. My guess is voters, even conservative ones, will resist any major reforms to the most popular entitlement programs and that, in a nutshell, is a real dilemma no matter who ends up controlling Congress.  

 

 

 

 

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