Freedom or Statism

Tony Blankley of the Washington Times explains why the current debate in Washington over how best to handle the debt ceiling is really an exercise in niggling around the margins. Spending needs to be cut and needs to be cut much more drastically than either party is proposing. What's at stake is nothing less than our liberty. Here's the crux of his essay:

Until a couple of years ago, I never actually expected to see a constitutional restoration. I assumed that America was on a slow, irreversible trek to the statist side. But the sheer incompetence and, in some cases, mendacity, of the current crop of statist politicians in both the legislative and executive branches seem likely to bring on an economic crisis that will actually force Americans to decide between a constitutional restoration and a full embrace of statism.

When the current, failing effort to fund our medical and retirement benefits programs creates an American bond crisis (Greece today, Spain, Portugal, Ireland tomorrow, America probably soon) that will lead to actually running out of money to pay the promised benefits. When that avoidable crisis hits, I'm pretty sure the American people will overthrow statism for restored constitutionally limited government. If we flop on the statist side, then the great American freedom experiment will be over.

The Washington power holders could and should avoid that stark choice if they would actually try to get our fiscal condition under control. But they have drifted into fantasyland. It is hard not to suspect that even the recent "big solution," a $4 trillion alleged reduction-in-deficit plan (rumored to be $1.3 trillion in taxes and $2.7 trillion in spending cuts) is inadequate to the challenge.

First, it is too small a reduction — we need to reduce deficits by at least $10 trillion over 10 years. Second, President Obama talks about attaining that $4 trillion in the 12th out-year. That is another way of saying that such proposed spending cuts will mostly be backloaded to the years 2023 and 2024 — three presidential administrations and six Congresses from now. That would constitute the world's longest can-kick.

Meanwhile, the proposed tax increases that are described beguilingly by their advocates as responsible, sensible and necessary are both excessive and inadequate - and misrepresented. Not only is raising tax revenues during an economic slowdown a violation of even Keynesian principles, which recommend both deficit spending and tax cuts during economic contractions, but if the George W. Bush tax cuts were repealed for all couples with incomes of more than $250,000, it would yield just $700 billion over 10 years, while the entitlement shortfalls will be about $10 trillion. That would include severely limiting mortgage interest deductions and charitable deductions.

It is representative of the dysfunctions that arise when symbolism replaces policy calculation that the president has recently taken to calling for raising the taxes on corporate jets — a provision of the tax code that the Democratic Congress passed in 2009 and the president signed into law — reasonably justified at the time as an effort to protect more than 11,000 workers on corporate-jet construction who were losing their jobs. Now, with unemployment again going up, that same policy, which once symbolized helping workers, is characterized as needed punishment for the plutocrats.

If the federal government really went after all those billionaires the Democrats snarl about and confiscated all the property of the country's 400 billionaires (down to their last set of cuff links and children's baseball mitts) it would yield only $1.3 trillion — about five months of federal spending.

We're headed for a cliff and the only party in Washington that seems to be serious about averting catastrophe are the Republicans. They keep putting forward proposals to at least limit the rate of increase in spending, but the Democrats keep shooting them down. The problem is that we spend far more than we have. Conservatives want to roll back projected spending increases, liberals want to raise taxes, but as Blankley and others have pointed out, even if the government confiscated everything that the "millionaires and billionaires" owned it would only solve the problem for a few months.

Any long term solution to the problem, any restoration of fiscal stability, is going to require that we severely curtail how much we spend and borrow. It'll be painful, to be sure, but if we don't do it our children and grandchildren will find themselves living in a third world country.