December 28, 2012
President Barack Obama was “optimistic” Friday that he and Congress could reach a last-hour agreement to avoid the fiscal cliff of tax increases and spending cuts.
Short of a substantive deal, Obama hopes Congress will vote to preserve middle-class tax cuts and extend payments again for the long-term unemployed. We’re confident the cliff is quite a bit of hype. Oh, we may go over it. And, yes, the free fall will exact economic terror — especially in a place such as Colorado Springs, which trades in military contracts.
The potential of imminent pain may result in a rescue before anyone hits the ground. Our culture isn’t accustomed to economic suffering, and our politicians won’t allow it for long.
Therein lies the larger concern. Whatever Washington does to move the cliff down the road, or to soften our fall, will involve continued pretense that Americans can afford their standard of living. It will involve more spending far in excess of what our economy can afford. We are in trouble and the solution, alas, is not one budget deal away.
In The Weekly Standard, owned by Gazette parent company Clarity Media, Christopher DeMuth brilliantly explains the nature of our plight in an article titled “The Real Cliff — The staggering debt from decades of continuous government borrowing is about to come due.”
The Gazette occasionally warns that our government’s debt is nothing close to the $16.3 trillion we hear about. The most recent credible estimate we found put the debt at $51 trillion last January. That was the estimate of Bruce Bartlett, former senior economics adviser to presidents Ronald Reagan and George H.W. Bush, as reported in the New York Times. Bartlett’s figure includes the promises government has made to future retirees in the form of Social Security, Medicare, veterans’ benefits, etc. The largest generation alive, baby boomers, are beginning to retire in droves and are outliving past generations. This means payments on government obligations will come due at increasing rates.
Yet, we have a president who’s most pressing concern is getting Washington to continue wages for the long-term unemployed. When Obama isn’t pressing to pay for unemployment, he encourages Americans to use food stamps. Consume for nothing; Obama will pick up the tab.
The federal government’s Supplemental Nutrition Assistance Program (SNAP), aka “food stamp program,” was designed to provide subsistence for people in crisis. The government of a successful country should want less participation, not more.
Food stamps no longer indicate distress. A Nov. 5 Washington Post headline says: “Food stamps: Once associated with the poor, now commonly used among college students.”
President George W. Bush began recruiting food stamp recipients with paid radio ads in 2004. Food stamp use increased by 63 percent during his presidency. Obama’s stimulus eased qualifications for food stamps, and his administration began a new ad campaign last summer.
We don’t want a country in which the unemployed and poor cannot eat. We also don’t want slick ads to promote dependence.
In historical detail, DeMuth’s article describes a country that has confused the fundamentals of Keynesian theory to the point of self-destruction.
“Keynes introduced the idea that government could legitimately borrow not only for production but also for consumption,” DeMuth wrote, explaining that Keynesians advocated incurring debts during economic downturns that economic upturns would pay for.
“What was not foreseen was the effect of the Keynesian proposition in the context of practical politics. For it taught that government officials, in weighing current revenues and expenditures, should weigh the needs of the known present against the resources of an imagined future. But the present is always cluttered with problems and difficulties, while the future is an abstraction. The future is also, in the progressive American mind, a more prosperous and untroubled place — especially if we can just get ourselves through today’s pressing exigencies. This manner of thinking tended to dissolve the distinction between investing for the future and borrowing from the future.”
It’s hard to conjure a political device more appealing than a haute economic theory that empowers politicians to grant benefits worth considerably more than the costs demanded of taxpayers. It’s irresistible. Indulge today’s constituents; stick future generations with the bill. Politicians assume they will retire or die before future debtors can punish them for such gross irresponsibility. It’s equal parts crude, stupid, evil and expedient.
DeMuth explains how conservative supply siders hoped they could “starve the beast.” By holding the line on taxes, government would reach the public’s threshold for debt and politicians would curtail spending.
“The public’s tolerance for high debt and deficits was much larger than anyone had supposed,” DeMuth wrote. “Today, one would have to say that tolerance is unlimited so long as the public is faced with abstract numbers in newspaper headlines rather than tangible consequences.”
Most of our debts are genuine obligations owed to Americans who have been promised food, health care and retirements on the backs of younger Americans who are seeing the light. When the dollar goes bust, and foreigners won’t finance our lifestyles, Americans will know their debts have come due. We won’t promote food stamps if we’re competing for food.