As early as tomorrow, and certainly in the next fortnight, the Republican-led House and the Democratic-led Senate is delivering an announcement of their virtuous intention to hit us with a whopping tax increase coupled with patently inauthentic promises of some spending “cuts” someday. The fact that Republicans appear to be planning to connive at class “millionaire tax” warfare makes it worse, not better. It’s not a zero sum game. You don’t raise those at the bottom of society by fleecing those who have earned a place at the top. Jack Kennedy understood. A rising tide lifts all boats.
Big Government has become the grotesque man-devouring giant Gargantua, skewered by Rabelais half a millennium ago. Those who encourage a “shared sacrifices” compromise are “feed the beast” appeasers rather than responsible officials. In all likelihood, however, avowals of the tax-increasers, frightening and irresponsible as they are, are “weapons of mass hysteria,” rather than of mass destruction.
Republican officials who give aid and comfort to the tax collectors thereby conveniently provide confessions in the open court of public opinion of stupidity and dishonor. Thank you. We, the Tea Party, will (again) court martial and purge these from our national legislature.
Once the great goat rodeos and high melodrama (or, perhaps, farce) in which Washington excels die down the most likely result will be… nothing. Washington lives to preserve the status quo. It feels a need to theatricalize preserving that status quo by flamboyant gestures worthy of Tom Sawyer professing determination to mend his rascally ways. Not really. The Christian Science Monitor’s Gail Russell Chaddock shrewdly observes:
If the super committee fails, will there be any real consequences? Or will a future Congress take one look at the draconian automatic cuts set to take hold in 2013 – $600 billion to defense, $600 billion to entitlements – and say, no way. That’s the latest rumor in Washington this week, as the 12-member joint deficit reduction committee struggles to find a $1.2 trillion package of cuts that can pass the panel and the Congress.
So expect some Wagnerian opera from the “Other End” of Pennsylvania Avenue this week. But…there is another way. Call it “The Pattison Plan.” The late Rep. Ned Pattison used to say “Don’t do something, just stand there!” What does “just standing there” represent? It represents letting the sequester happen: accepting the pre-programmed $1.2 trillion dollar spending cut.
Draconian? The Republicans are having mass hysterics at the prospect of defense cuts even of such modest proportion. The service chiefs, shrewd bureaucrats all, are calling such cuts “catastrophic.”
Catastrophic? $600 billion … spread over 10 years, amounting to $60 billion a year… . The 2010 military budget, including the wars winding down in Iraq and Afghanistan, (but not including taking good care of our veterans, or maintaining our nuclear weapons arsenal) totaled around $700 billion. So a $60 billion cut, very roughly speaking, represents something like an 8.5% reduction. A scaleback of this magnitude would leave America with a military budget very slightly smaller than that of the entire rest of the world, friends and foes, combined.
One is reminded of Mencken’s acid observation:
Civilization, in fact, grows more maudlin and hysterical; especially under democracy it tends to degenerate into a mere combat of crazes; the whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by an endless series of hobgoblins, most of them imaginary.
The Washington Post fulminates that “Now it is time for Republicans to untangle themselves from their self-imposed straitjacket of anti-tax pledges and negotiate for the greater good.” Well, their “self-imposed straightjacket” was an unequivocal promise to those who sent them here not to set up permanent troughs from which to feed the voracious, Gargantuan, monster that the federal government has become. Not raising taxes was what they were sent to Washington to do. The Post just calls going native “the greater good.” Sure it’s the greater good for Washington, which gorges at this trough. And which sanctimoniously sticks us with the tab.
Yes, it is bad to borrow from our children to placate this beast’s gluttony. No, it isn’t any more virtuous to tax ourselves — and our prospects of economic recovery — into oblivion instead. What the Post seems incapable of grasping (itself representing Gargantua’s monstrous son, Pantagruel) is that the people of America are tired of insatiable, inept, privileged officials sucking their honest labor dry.
The Post’s way lies madness. As previously observed in this column Peter Drucker nailed it in The Effective Executive: “In every area of effectiveness within an organization, one feeds the opportunities and starves the problem.” Our permanent government is as fixated by the federal deficit as was Ahab by the White Whale.
Obsession comes to similar, tragic, ends. The solution is starving the problem — spending — and feeding the opportunity — instituting growth policies.
Washington again will finish its latest exercise in sound and fury signifying nothing. There’s still time to get down to business: feeding opportunity. If government policy had not strangled growth rates for two generations the U.S. GDP would be north of $20 trillion rather than around $15 trillion.
Each of us, on average, would have an income a third higher, and wealth a third greater, than we do. Federal tax revenues would be a third greater, the deficit non-existent, and the social insurance programs such as Social Security solvent. Cut? Certainly! But cut out of a healthy Engelsian impulse to speed the universally-desired “withering away of the State” – in a context of a thriving economy. The truly critical priority (for those who like Gargantua as well as for those of us who detest him) is to start making up for lost time on that growth.
Bring on the American Economic Miracle! How? One “miracle” was engineered in Germany, in 1948, by Ludwig Erhard; another, in 1958 France, by Jacques Rueff. The miraculous growth of the Reagan era (continuing through and ending with the Clinton administration) was founded in part on strengthening, rather than rubbishing, the dollar.
Reagan and Clinton bequeathed us a clear recipe: low tax rates, sensibly light regulation, liberal trade, work not welfare, and, the currently most neglected element, healthy money. Currency reform, adroitly done, is the common thread of all these economic miracles.