Two Russians, Ivan and Peter, struggle to survive in farm country. Eventually Ivan gets a goat. His life improves; he has milk and help with the grasses. A genie comes to Peter and says “I can grant you your deepest wish.” Peter is shocked. “You’re going to kill Ivan’s goat?”
That was always the gallows humor about Russia: the country was made for communism because the population was so consumed with envy that it preferred the company of mutual poverty.
I wonder if we couldn’t use a bit of that pessimism. At least some acceptance of finite resources that was not used as a blind support of the status quo.
On the Republican side, for a year we have been hearing that we are “a center-right country” and that the Obama victory has to be seen as an aberration. There is something sad about hearing this from a defeated party; reminds me of Dick Gephardt referring to his job as “Democratic Leader” instead of “Minority Leader” because “Democrats are not the minority.” But beyond the semantics, I am increasingly unclear what center-right means. The government spends the bulk of its money on four things:
- Interest on the national debt;
- Social Security;
It is the Republicans – principally Ronald Reagan and George Bush – who were so unwilling to live within our means that we have the national debt that must now be serviced with interest payments.
It is the Republicans – ever since Joe McCarthy rose to prominence by accusing the team that successfully prosecuted World War II of treason – who have been adamant that we can never spend too much on defense procurement.
It is the Republicans – and shudder to think what would have happened had this been approved – who proposed to privatize Social Security while simultaneously guaranteeing payouts to existing beneficiaries, essentially doubling the payout.
It is the Republicans who put forth Medicare Part D to provide prescription drug coverage and then barred the government from actually negotiating the price of those drugs.
Given this performance, it’s a bit hard to understand what is so center-right about our right wing? The fact that it wants everyone armed, hating gays, and polluting?
I am not even convinced of the lodestar of conservatism – low American taxes. An American in a high tax bracket likely lives near water, which in our Federal system means he pays 45-50% of his income in combined federal, state, and local taxes. That higher than, say, Switzerland, and we don’t have anything like their social services. Now, our sales taxes are roughly 5%, versus 17%…but you don’t pay sales taxes on money you save, and if you are a Swiss citizen (or indeed the citizen of any other nation on earth except Brazil and Cuba) you don’t pay any tax at all on income generated by assets outside the country.
On the Democratic side, there is no problem that does not deserve a program to fix it. It’s a bit like trying to stabilize a leaning house with additional guy wires instead of building a foundation. When Wall Street had problems, the solution was throwing money at it, instead of assuming that bankruptcy would solve problems on its own. When GM and Chrysler had problems, the solution was throwing money at them, instead of letting a true bankruptcy solve the issues. My barometer of true liberalism, Daily Kos, has this post on green jobs, lamenting the fact that Muskegon, MI was outbid for a turbine plant by Windsor, Ontario.
Let’s think of what it means to offer a company a subsidy to locate somewhere. It means that the company will pay a lower effective tax rate than other businesses (potentially negative, if the benefit is large enough). Alternatively, businesses that have a difficult time moving – small service businesses such as restaurants and laundries – are supposed to pay a higher rate.
Take this far enough and we will end up in a European structure, where one of the main reasons for the high VAT is that governments historically were unable to collect income taxes and needed to rely on more regressive but more transparently calculated point of sale charges.
We will not fix our economy until the government finds the ability to say no. Falling house prices are not a natural disaster calling for government billions; they are simply a transfer of wealth from one group of Americans to another, and there is no reason to assume one is more moral than the other. Pouring money into the FHA, or offering a tax credit to house buyers (really just a credit to house sellers), is a poor use of taxpayer money.
Indeed, at this point, the main argument in favor of intervention is simply “you did it for someone else.” The auto makers complained that the banks got money with no questions asked, and instead of suggesting that the government stop throwing money at Wall Street, they got the government to throw some at Detroit as well. Clunkers, housing – even the general tax cuts in the stimulus plan, a completely inefficient plan if ever there were one, were defended as a way of giving Republicans something.
How do we get a politician with more sanity than Ron Paul to argue both that the government should spend less and that the government should spend its money more wisely?
From Gregg Easterbrook’s Tuesday Morning Quarterback:
Second Consecutive “One Time Only” Giveaway: Two months ago, TMQ supposed that if Barack Obama supports a bonus giveaway to senior citizens whenever it is announced that there will be no Social Security cost of living adjustment increase in 2010, this would be a bad sign for his presidency. Last week, it was announced there would be no COLA increase, and Obama immediately proposed a “one time only” $250 gift to senior citizens. Set aside that this same group also received a $250 bonus last winter, also characterized as “one time only.” Set aside that when the very same COLA formula that now says no increase for 2010 said a 5.8 percent increase in Social Security benefits a year ago, seniors sure didn’t complain then! Set aside that the 5.8 percent increase in 2009 was itself a bonus, since inflation was less than 2 percent at the time. The key point is that in 2009, consumer prices have been negative — prices are down 1.3 percent in the past 12 months. That means senior citizen buying power has gone up: Falling prices are the same thing as rising income. Yet seniors will still receive a bonus. Of course there are needy seniors — but everybody on Social Security will get a check, including the wealthy.
Seniors as a group are the best-off segment of American society. Multimillion-dollar bonuses to bungling bankers are more outrageous than a $250 check, but the total expense of the latter is greater, while in both cases, government is taxing the less-well-off, or borrowing from the young, to hand a giveaway to a politically connected lobbying block. Our new president must learn to pronounce the word “no,” or liberalism will be discredited for a generation.