“ … Soilent Green is People!”

Like the miracle food in Soilent Green, the utopic welfare-state envisioned by Democrats is composed of ground-up people, but in this case, those living in future generations. Without even considering ObamaCare: Medicare, Medicaid and Social Security will, with the influx of Baby Boomers coming into these three entitlements, leap from 8.4% of GDP to 18.6% of GDP. Without reform, this increased cost would require raising taxes by the current equivalent of $12,072 per household[1] or eliminating every other government program [and still raising taxes after no-government-but-entitlements is no longer self-financing]. Funding all of the promised benefits with income taxes would require rais­ing the 35% income tax bracket [the “rich”] to at least 77% and raising the 25% tax bracket [middle class] to at least 55%.

But, the trust funds for Social Security and Medicare Part A are supposed to save us from insolvency, aren’t they? They would have delayed the inevitable if they in fact existed, but they are empty, containing only IOUs in the form of special issue Treasury bonds. Congress has already spent the actual money. So, to redeem the bonds, Congress will have to either raise taxes to cover the bonds, add the redemptions to the debt, or have the Federal Reserve just print the money. Taxes, debt or inflation. The responsible thing for Congress to do, of course, would be for Congress to pay back the trust fund money they stole earlier by cutting spending on a dollar-for-dollar basis as the bonds are redeemed, this would transfer money already allocated in the current budget from programs to payout the bonds – that would require neither taxes, new debt nor fiat currency, but Congress would never do such a thing. According to calculations by Brian Riedl[2] and others, offsetting this spending hike would require eliminating every other federal program by 2049 except interest pay­ments on the federal debt. All non-defense programs would be eliminated by 2030, and defense spend­ing would be eliminated by 2049[3]. That’s just to cover Medicare, Medicaid and Social Security. Toss in ObamaCare, and the road to perdition becomes steeper and gets there quicker.

Aside from Congress’s theft of the trust funds, demographics play a great part in this problem, which, of course, makes the situation entirely predictable and therefore entirely preventable. In 1960, 5 workers supported each retiree. This ratio has now fallen to 3:1 and will drop to 2:1 by 2030. A 2:1 ratio means that each married couple in 2030 will be paying the Social Security and Medicare bene­fits of a retiree. This has been foreseeable since the recognition of a Baby Boom generation in the late-1950s and early-60s.

Only Democrats seem unprepared to face the reality of vacant trust funds coupled with a shrinking support-base and growing recipient-pool. They’re still in denial, so we can’t expect any genuine help from them with solutions, and in fact, all we see is whining about those who breach the subject. President Obama’s “eight grannies out in the snow for every rich guy’s tax break” is a perfect example. If he were advocating raising taxes by enough to cover the shortfall, that would be one thing, but he’s not. As we’ve seen, even the middle class would have to have its taxes more than doubled to cover this theft. Or, shut down all departments but HHS and Treasury, and he’s certainly not proposing that!

I’m not dismissing Republican Congress’s from blame here – they’ve taken monies out the trust funds with as much ease as Democratic Congress’s have. But at least they’re now articulating the problem and trying to find a way out. At least they’re out of denial. This is yet another aspect of governance that Democrats are going to cede leadership to Republicans if they don’t join in honestly trying to repair the damage, and the only way I see is structural, not trimming around the edges. Medicare, Medicaid and Social Security, as we know them, no longer work. We need to change how they are structured, and we need to do that now. The remedies will only get more drastic and more painful the longer we wait.

Unlike blind promises, which is politics, paying for “entitlements”, like soilent green, is people.

[1] That’s not what your taxes would be, that’s how much more your taxes would be than they are now.

[2] Grover M Hermann Fellow in Federal Budgetary Affairs, Thomas A Roe Institute for Economic Policy Studies, The Heritage Foundation.

[3] Brian Riedl, A Guide to Fixing Social Security, Medicare and Medicaid, Heritage Foundation, Backgrounder 2114, March 11 2008, p. 2.

Why We Don’t Take the President Seriously

The President, and Democrats who support his position, can’t be taken seriously on budgetary matters. After suffering the November “shellacking” Democrats took, in what can only be described as a national referendum on the Obama presidency, he has suddenly become evangelical on the need to cut deficits and the debt. And like an evangelist caught sneaking into a motel with a paid companion, the 2012 budget he wants increases spending to $3.73 trillion, a third of which is deficit to be shoveled onto the debt-pile. He says he’s serious about cutting debt, and then issues a budget that adds over a thousand billions to it. That budget is still the only official White House budget on the table. House and Senate Democrats have no budget on the table yet. Haven’t since 2009.

Yeah, these people are serious about reversing their direction.

The President formed a blue-ribbon commission to tackle the problem, headed by Democrat Erskine Bolwes and Republican Alan Simpson. The report was highly praised and criticized by both sides of the aisle (normally a sign of a real proposal, as opposed to a political one). The President ignored it, including not one single commission idea in his budget. Frustrated, the Senate formed a “Gang of Six”, three Democrats and three Republicans to tackle the same question. Apparently nervous about what he hears from the three Democrats in the Gang, the President has formed a new “Gang of Six,” stacking the deck with four Democrats and two Republicans.

Yeah, these people are serious about reversing their direction.

Democrats are breathlessly opposed to – shocked by – Representative Ryan’s proposal to introduce premium supports in place of across-the-board direct payments to doctors and hospitals (a proposal they wildly endorsed when suggested by HillaryCare). Their idea? Status quo. Democrats declare Medicaid block grants to the states as practically demonic, apparently thinking state bureaucrats are evil, while federal bureaucrats are sincere. Their idea? Status quo.

Yeah, these people are serious about reversing their direction.

All hope of the President seriously engaging Republicans about spending discipline evaporated when his promised “plan” to be revealed in his speech at George Washington University turned out to be a stump speech, devoid of even a single specific program.

Yeah, these people …

Arithmetic not Party

The problems we face, in the real world, are arithmetic, not partisan. They are being politicized because both parties dogmatically cling to the “truth” of their catechism. Given most any situation involving diametrically opposed views of events, wisdom generally resides somewhere between them.

If one were to look at the genesis of the unease, one would see that they are reducible to the calculus of simple, axiomatic arithmetic. We are spending more money than we take in. The discussion now becomes one of priorities – would voters rather pay more or spend less, knowing that some of their freebies might be on the chopping block. Politically aligned voters will, of course, worship at the altar of their party, but fortunately, national elections tend to be in the hands of politically independent voters, who deserve an objective assessment of the problems we face and the realistic options at our disposal. This used to be the role of the press. It is now an intellectual vacuum.

First, it must be recognized that politicians will always give political answers to problems, regardless of discipline of the problem, be it spending, revenues, job creation, trade balance, geostrategic, race relations, religious freedom … whatever. Their primary concern is with re-election, not solving problems. Corollary to this is the recognition that politics, in practice, is the exercise of power – the primary example of which is to take money from those who have earned it and give it those who have not. Nothing succeeds like bribery. It is direct, it is personal, and it is generally reciprocated.

Bureaucracies – committees, agencies, departments and the like – do not solve problems, they manage them. No bureaucracy will ever knowingly work itself out of a job; should a problem appear near to solution, the responsible bureaucracy will simply redefine the problem and ask for increased budget authority to “attack” it. Prime example of this is the governmental help-the-poor industry, which is ~30 percent efficient. Seventy cents out of every dollar earmarked to some poverty assistance program is absorbed by the bureaucracy intended to assist the poor – 30 cents actually reaching the poor. The biggest beneficiaries of governmental poverty assistance are the middle class bureaucrats so employed.

These are the natural tendencies of the players in any debate about policy. The merits of the arguments are poor substitutes for turf-protection, bottom-feeding for votes and ideological purity. The natural tendency of government is to grow and usurp power. That’s why a constitutionally limited federal government is so vitally important to those who value individual liberty. It is up to each voter to either parrot their favorite politician, or to find out for themselves what the issues are, and what the wisest course of national action should look like – regardless of the impact on their favorite politician.

This brings us back to the current imbalance in fiscal policy. We are, as currently practicing, generating trillion-dollar deficits annually. That is unsustainable. Forget the excuses of how we got here – they don’t matter now. The problem is that we are here, and fiscal policy must be tuned to a more responsible balance between spending and revenues. The current wisdom is that those things most likely to exacerbate debt-generation from this point on – entitlements – are “off the table”. Sacrosanct. Not to be touched. That’s politicians talking. If the cancer is in the right arm, but the patient prohibits treatment because he’s right-handed, the patient will die. You can’t solve an entitlement problem by cutting defense (or earmarks, or infrastructure, or whatever). The patient will die. We are living the axiom that democracy will last as long as people don’t realize they can vote themselves somebody else’s money – at which point, it is doomed.

This is an important crossroad in our future. We have delayed and scammed [used bandages on] the problem of government’s fiduciary responsibility to its people to a point that systemic remedies [major surgeries] are now required.

It’s up to us, individually. If we depend on the self-interested politicians that got us here, the patient will die.

the Once and Future Brouhaha

There now begins public debate on two related but separate issues – raising the debt ceiling, and the FY2012 budget.

The important lesson the Republicans should take from last week’s continuing resolution agreement is that they won on issues directly related to spending cuts – not social issues – on which they hold an overwhelming advantage. Yes, $39 billion in spending cuts is less than the $61 billion passed by the House and shrinks the overall federal budget by only a little more than 1%. It also doesn’t repeal ObamaCare, remove Planned Parenthood’s (in their word “insignificant”) funding, kill EPA’s draconian carbon rules, or reform the entitlement-state. Those are all important issues, and they all must be addressed in order to bring federal spending back into reality, but they should be addressed on their own merits, not as riders on other bills.

Discretionary domestic spending grew by 6% in 2008, 11% on top of that in 2009, and 14% on top of that in 2010; in the last six months of this year it will fall by 4%. The hard pert – reversing the suicide-by-gluttony direction of government – has been accomplished.

Former Senator Phil Graham (R-TX), offers sound advice for a starting attitude: “Republicans,” he says “should agree that families and nations should always honor their debts. But in doing so they should also make sure they won’t pile up new debt. For a family, that means cutting up the credit cards. For Congress, it means passing budget reforms that impose hard and enforceable limits on new spending and debt.” The first point to be clarified to the American people is that we don’t have a revenue problem, we’ve got a spending problem. Once spending is reined-in – government has run well through thick and thin on 19% of GDP since World War II – to reasonable levels, if additional revenue is required, it can be addressed at that time, but right now, the “rich” could be taxed at 100% of income and only defray a month or two’s worth of federal spending. Revenue isn’t the problem.

Republicans need to keep the discussion on the necessity of reversing our casualness about endlessly accumulating debt, and in terms that ordinary people can understand. This will keep Democrats defending indefensible programs and spending levels. To that end, Republicans should keep the “price” the administration must pay for raising the debt ceiling to statutory limits on spending and debt-accumulation, leaving social issues outside the realm of this discussion. The administration can’t defend current spending levels (even under last Friday’s cuts), and that’s where the debt ceiling debate should be focused. A cut in the proposed rate of increase (as with discretionary domestic spending) isn’t a cut (as Democrats always claim) – it’s only a slowing of the increase. Republicans must remind the American people of that.

The FY2012 budget debate is different – that’s where the social agenda happens. ObamaCare is working its way through the courts, so it can be largely left alone this year. Republicans should be formulating contingency plans in case SCOTUS finds against them, but making it a major issue in this debate would be a distraction. Other entitlements – Medicare, Medicaid and Social Security – should be the main target of both public and legislative discussions. None of them is viable (all are technically insolvent Ponzi schemes right now), and without fundamental restructuring, cannot but bankrupt the economy on shorter and shorter time-horizons the longer we delay doing anything substantive about them. As they are the long-term obstacles to reversing ever-greater debt, the budget hearings is the time to finally deal with them. More on this in a later missive.

The debt ceiling argument is perfectly poised for Republicans. The Democrats starting position is that the ceiling must be lifted, and any discussions about other issues are not germane; the Republican starting position is that the ceiling must be raised, but with the understanding that doing so in no way legitimizes the administration’s irresponsible handling of the economic impact of its agenda. That is very much a part of the discussion. On this, most Americans (and more importantly, most independent likely voters) are on board. The argument is the Republicans’ to loose.

Can Open, Worms Everywhere

The Republicans are poised to snatch defeat from the jaws of victory. Boehner’s insistence on keeping the policy riders – defunding liberal programs – is costing us a return to sanity and muddying the waters highlighting the Democrats’ longing for a government shutdown they can blame on Republicans.

The issue confronting Congress is producing a budget for a fiscal year six-months-old. A job the oh-so-concerned Democrats failed to do when they had legislative majorities in both Houses because they didn’t want their members to have to defend an indefensible budget in the upcoming elections, after having crammed ObamaCare down the throats of the American people. Not producing a federal budget was purely a political decision. Now the Republicans are insisting on things they know the Democrats can’t accept in order to keep government open. A purely political decision. It’s a mistake.

Speaker Boehner must rein-in Tea Partiers and present a clean Continuing Resolution that contains the exact same budget numbers as now, just stripped of the riders that attack issues that will have to be addressed again during the 2012 budget process in any event.

Democrats don’t want the deep cuts contained in the House-passed CR, but they are using the policy riders to resist voting for it. Take those out, and Democrats are stuck with voting in those cuts or expose themselves as the ones who shut down government.

Everything that happens in Washington from here on out is about the 2012 elections. Paul Ryan has given the Republicans a leg-up with his FY2012 budget proposal, the first out of the House in two years, and a specific starting point for meaningful debate over the direction of the country. John Boehner is fouling the greater debate by introducing an unnecessary out for Democrats caught on the wrong side of economic common sense.


Dealing with Klingons

The Bush Doctrine, taken as it was meant, is naïve and culturally anthropomorphic. The Bush Doctrine, taken at its language, is far-sighted and profoundly important.

The right of preemption, the statement of unilateralism (if necessary) and the concept of remaining the world’s preeminent military power – all governments hold preemption as a right, will act in the nation’s interest unilaterally if necessary, and desire to hold or improve their relative strength – got all the attention by the news readers. “Shocked! … shocked!” was the typical treatment, “how could this cowboy hold such blunt views of American Imperialism?” The real news was President Bush’s claim that all the world’s people want what we want: “safety from violence, the rewards of liberty, and the hope for a better life.” He dedicated American policy to “actively promoting democracy and freedom in all regions of the world.” A step beyond the Jeffersonian “shining city on the hill” promotion of democracy by example.

Taken in its Platonic meaning of self-determination, “democracy” is indeed a universal desire; taken as a rigid definition of Western institutions and elections, it is not. In dealing with Muslim Arabs, we are dealing with a tradition superimposed on a culture, both of which are alien to our experience – or at least deep enough in our lizard-brains to be overwhelmed by Judeo-Christian Greco-Romanism. The Arab culture is familial, tribal –based upon pockets of autonomy, led by what amounts to warlords. Everything is about consultation, within and between tribes. A rough consensus is reached on matters of internal and external policy. This is reflected in the bazaars that famously dotted the landscape from the Maghreb to the Levant – Arabs don’t set prices on their goods, they bargain with you for them. This tendency is endemic.

Superimposed atop this culture is Islam, a belief system that addresses virtually every aspect of life. “Whatever the question,” al Qaeda’s Egyptian-born second in command Ayman al Zawahiri has famously stated, “Islam is the answer.” The revelations of the Prophet Mohammad, taken as a whole, comprise the Qur’an, the quotes and anecdotes of the Prophet make up the Hadith, and the legal implications therein define the Shari’ah. Between these, every aspect of life for the faithful Muslim is described.

The “Arab Spring” that is sweeping the Greater Middle East is rife with risk and opportunity, for both the people of the region and interested onlookers. But to shape the situation toward stability, we need to be subtle and match our aspirations to their culture and traditions. “Western-style elections,” Barnard Lewis argues, “should be the culmination – not the beginning – of a gradual political process. To lay the stress all the time on elections, parliamentary Western-style elections, is a dangerous delusion.” Witness the “election” of Hamas to power in Gaza in 2006.

The demands of both superpowers on their client-states during the Cold War catapulted these societies into modernity, and in the Middle East the traditional consultation process was a main casualty, which helps explain modernization’s dubious reputation in parts of the Arab and Muslim world. Modernization enormously increased the power of the state, and it tended to undermine, or even destroy, those various intermediate powers which had previously limited the power of the state. This was enabled by the cunning of the Mubaraks and Assads of the region, paired with modern communication, modern weapons and the modern apparatus of surveillance and repression. As a result, these autocrats amassed greater power than even the mightiest of the sultans ever had. The Arab Spring isn’t a yearning for Madisonian democracy, it’s a revulsion against the loss of their traditional way of doing things.

We should be encouraging Muslims not to look across the ocean, but back into their own history.

There exists a letter written by France’s Ambassador in Istanbul shortly before the French revolution. The French government was frustrated by how long the ambassador was taking to move ahead with some negotiations. The ambassador retorted, “Here, it is not like it is in France, where the king is sole master and does as he pleases. Here, the sultan has to consult.” In Middle Eastern history consultation is the magic word. It occurs again and again in classical Islamic texts. What this means, practically, is that political leaders had to cut deals with various others – the leaders of the merchant guild, the craft guild, the scribes, the land owners and the like. Each guild chose its own leaders from within. The rulers, even the great Ottoman sultans, had to consult with these different groups in order to get things done. This was the limiting factor on government inherent in Arab culture. They don’t have to be taught to do this, only allowed to resume doing it.

This is where our information and intelligence operations should be focused – not on producing Arabic-speaking Westerners, but on freeing the Arab people to be Arabs. This is going to take a sophisticated foreign policy – sadly, not a hallmark of our current pin-the-tail-on-the-donkey approach to the rest of the world.

A Princeton professor, Mr Lewis is widely considered the West’s foremost expert on the Muslim Middle East.