Economics, Pethokoukis

The Democratic endgame is here

President Obama signing the Affordable Care Act into law

President Obama signs the Affordable Care Act into law. Image Credit: Pete Souza via Wikimedia Commons

Yuval Levin deftly describes Democratic and Republican policy goals. For the Ds, he says, it’s to preserve, protect, and defend the Obamacare-expanded welfare state — oh, and finance it, too:

With Obamacare enacted, they are basically done building. They might dream of expanding the reach of one program or another, expanding the tentacles a bit or consolidating some, but their social-democratic edifice has all its major parts. The trouble is that we can’t afford to keep them all, or at least in the form and structure that the left insists those parts must have. The foundation is falling out from beneath the building just as they have finished construction. That means that liberal political power must now be used to raise money to buy the liberal welfare state more time, and it must be used to hold off efforts to change the structure of the entitlement programs. … They must get as much as they possibly can in this round, and they must resist significant entitlement reforms, which would make the whole exercise largely pointless.

By contrast, Republicans want “to transform the welfare state into a series of (relatively) efficient and market friendly 21st-century safety-net institutions” while keeping taxes as low as possible.

So America needs to decide: Big Spend and Big Tax vs. Reform and Modernize. Muddling through means muddling from one cliff and crisis to the next. The 2012 election was hardly a referendum since the Obama campaign made no effort to outline the future tax burden their spending will require. Raising taxes on the top 2% isn’t going to cut it. Raising taxes more broadly will be easier if the Obamacrats are successful in turning these social welfare entitlements into something more akin to constitutional rights, putting them beyond mere politics. As Harvard’s Harvey Mansfield said in a WSJ interview last weekend:

But Democrats’ refusal to address the future in positive terms, he adds, also reveals the party’s intent to create “an entitlement or welfare state that takes issues off the bargaining table and renders them above politics.” The end goal, Mr. Mansfield worries, is to sideline the American constitutional tradition in favor of “a practical constitution consisting of progressive measures the left has passed that cannot be revoked. And that is what would be fixed in our political system—not the Constitution.”

 

13 thoughts on “The Democratic endgame is here

  1. there was a vote, you know….

    don’t blame the winners. Blame the folks who could not or would not articulate a better alternate vision that people would want.

    and no… don’t blame people either. the responsibility is squarely on those who seek to govern ….. or perhaps that’s the real problem.. the don’t believe in govt and their only motivation for “governing” is to ….dismantle government.

    how many would vote for that? Actually about 49%.

    • I blame both. But mostly the loser. Would be nice if you could make it through a post without a pathetic strawman (“the don’t believe in govt and their only motivation for “governing” is to ….dismantle government”).

      • @Greg – how many times have you heard – repeated over and over “Govt is the problem”?

        that’s not a strawman – it’s the truth.

        they say they want a small govt but they want a LARGE DOD and a LARGE govt social footprint.

        they are opposed to FDIC-like regulation for the unregulated banks that almost destroyed the economy.

        they say they would close down the EPA and DOE and Education….

        they talk about “takers” and “illegals” and self-deportation and the foreign-born Muslim in the WH.

        these are the messages that they themselves have put out there.

        If you want to win – you have to convince people that you would be better at governing.

        What they did instead was put serious questions in a lot of people’s minds about their fitness to govern.

        Frankly, I WANT to see strong fiscal conservatism in govt but what the GOP is peddling these days is not fiscal conservatism at all.

        • I don’t know what the Republican party wants anymore, but most conservatives are in favor of a strong, effective Department of Defense (not a LARGE one). Most conservatives don’t want a large federal government footprint on social issues.

          Yes, conservatives would love to shut down the Departments of Energy and Education, because there is zero constitutional basis for their existence. An argument can be made for a federal EPA, but the massive unchecked, unaccountable authoritarian powers they’ve accumulated over the years need to be stripped away.

          “Takers” are those who happily, gleefully, get ‘free stuff’ from the Government, as an alternative to self-sufficiency and hard work. Is it unfair for a productive person to be irritated at being forced to support a mooch?

          “Illegals” are, in fact, breaking the current immigration laws of the country. If you don’t like the current immigration laws of the country, then work to change them. If you believe there should be zero restrictions on who should come into this country, more power to you. Some people disagree with that philosophy.

          “Foreign-born Muslim in the WH” has become to the Right what “9-11 Truthers” are to the Left. An eye-rolling embarrassment, and best left ignored.

          As to your idea of ‘FDIC-like regulation of banks’… That’s a very complex and difficult situation, considering there hasn’t been an ‘unregulated bank’ in this country since 1791, and considering it’s all a bunch of political spin and shell-games regardless of who’s in power. If you want corporations and banks to stop influencing D.C., you take away their incentives to try to influence D.C. The more regulations you pass, the more big banks you’ll have cozying up to politicians, to carve out loopholes and exemptions. It’s not banking that’s the problem. It’s cronyism. And you will never… ever… solve cronyism with regulations.

          I will agree that the GOP had (at best) a muddled and half-hearted message this year. The conservative message should be a strong and persuasive one. Government is too big and too intrusive, and we want to scale it back, so you have the dignity of deciding your own future, and making choices for your own family. But that wasn’t what Romney was selling.

          Someday, perhaps, we may have another president like Washington or Coolidge.

          • “I don’t know what the Republican party wants anymore, but most conservatives are in favor of a strong, effective Department of Defense (not a LARGE one). Most conservatives don’t want a large federal government footprint on social issues.”

            when National Defense is spending every bit of the total tax revenues taken in – the “fiscal conservatives” are no longer fiscally conservative in my view.

            “Yes, conservatives would love to shut down the Departments of Energy and Education, because there is zero constitutional basis for their existence. An argument can be made for a federal EPA, but the massive unchecked, unaccountable authoritarian powers they’ve accumulated over the years need to be stripped away.”

            there are many things that don’t have a “Constitutional Basis” in the minds of Conservatives but not in the minds of SCOTUS – which does have a substantial Constitutional “basis”.

            ““Takers” are those who happily, gleefully, get ‘free stuff’ from the Government, as an alternative to self-sufficiency and hard work. Is it unfair for a productive person to be irritated at being forced to support a mooch?”

            nope but if you are running to be a leader who wants to govern – it’s a dumb message when, in fact, quite a few labeled as “takers” are not and take extreme umbrage.

            “Illegals” are, in fact, breaking the current immigration laws of the country. If you don’t like the current immigration laws of the country, then work to change them. If you believe there should be zero restrictions on who should come into this country, more power to you. Some people disagree with that philosophy.”

            but not all Hispanics are “illegals” and many, many have ties to those who are and the solution to this is more alone the lines of what Bush has advocated than the current crop of “conservatives”.

            You have GOT to want to REPRESENT the INTERESTS of those you seek votes.

            ““Foreign-born Muslim in the WH” has become to the Right what “9-11 Truthers” are to the Left. An eye-rolling embarrassment, and best left ignored.”

            again.. how does this affect voters?

            I lived in the South during the Civil Rights turmoil and I am very familiar with how racism expresses itself and I refuse to vote for anyone who does not strongly and definitively disavow it. I am not alone.

            “As to your idea of ‘FDIC-like regulation of banks’… That’s a very complex and difficult situation, considering there hasn’t been an ‘unregulated bank’ in this country since 1791, and considering it’s all a bunch of political spin and shell-games regardless of who’s in power. If you want corporations and banks to stop influencing D.C., you take away their incentives to try to influence D.C. The more regulations you pass, the more big banks you’ll have cozying up to politicians, to carve out loopholes and exemptions. It’s not banking that’s the problem. It’s cronyism. And you will never… ever… solve cronyism with regulations.”

            the “banks” who got into MBS and credit defaults were not regulated like FDIC banks were. Had they been, we would not have been so badly damaged.

            but the key here is who what to do what about it or not?

            A fiscal conservative realizes that banks will run amok if not regulated no matter what the “free market” folks say.

            I see no Conservatives railing against the “job-killing” FDIC regulation. Why?

  2. The debate isn’t simply about big government vs small government; it’s also about a rapidly growing national debt versus a more slowly growing debt.

    But of course, there’s no reason to worry. The rich will pay for everything.

    • actually – “individual mandate” does not mean “protect”, it means requiring people to pre-pay for their needs so we don’t have to have a welfare state.

      on the deficit/debt, if we’d stop being idiots about using GDP metrics to justify our spending… and instead use actual revenues – and AGREE on what percentages to devote to DOD, entitlements, etc… we’d do what most state budgets do as well as home budgets.

      No state or home budget is so stupid as to justify spending on their supposed “productivity”… yet no shortage of others who advocate that at the Fed level.

        • re: measuring by GDP while ignoring your actual revenues is a known recipe for disaster.

          we are living it.

          no productivity = no revenues = spend like it don’t matter = disaster

          more “growth” won’t fix a mindset that thinks your budget should be based on your GDP.

          try that with your own budget.

          the “proof” or not of your GDP is in your actual revenues.

    • Hey, don’t forget Big Business. If Medicare could negotiate directly with drug manufacturers, as Medicaid does, for example, the savings would start at $68 billion and rise to $175 billion in 2021. http://www.bloomberg.com/news/2011-09-07/for-medicare-savings-send-a-negotiator-to-the-pharmacy-view.html. Yes, Medicare Part D providers can negotiate, but they aren’t nearly as good at it as Medicaid. (Ibid) And the Part D authorizing law expressly prevents the government from negotiating directly,which, I believe, is Big Pharma, saying please Brer Wolf don’t throw me in the briar patch.

      And when congressional delegations go to work saving defense programs that the Pentagon doesn’t want, it’s the defense industry’s version of Please Brer Wolf…

      The best way to contain entitlements is to contain health care inflation. Ditto for defense. But of course there is no reason to worry. Big Business will get paid regardless.

  3. Big Spend and Big Tax can’t work. Let’s measure spending and revenues as a percentage of GDP as I posted earlier. Spending is still well above its post-War average (23% vs. 19.3%), whereas revenues are only slightly below their post-War average (16% vs. 17.3%). If you assume that post-War averages are the norm, then 72% of the current budget deficit of 7% of GDP is due to excess spending, and 28% is due to a revenue shortfall. And let’s not forget that federal revenues exceeded their post-War average from 2005 to 2008 despite the Bush tax cuts. Those same tax rates are delivering disappointing tax revenues today because of a shortfall of jobs and the fact that our economy is about 13% below its potential output. That growth gap is the problem that now holds us hostage. It’s the shrunken tax base, not lower tax rates, that is responsible for today’s revenue shortfall. A healthier economy and faster jobs growth would do much more to close the deficit than any amount of higher tax rates on the rich.

    As a percent of GDP, the most efficient balance-point historically has been around 18%. Certainly the best level is nowhere near the recent 25% spending rates that generated just 2% growth and few jobs. The resulting shrinking tax base produced huge deficits. Spending and taxing more (the inefficient Big Government solution) only crowds-out and shrinks the more efficient private sector, provides disincentives for efficient producers and misallocates resources into the hands of the inefficient Big Government sector. The result is slower economic growth that yields less tax receipts as well as reduced wealth and prosperity.

    In order to conclude the analysis–this is precisely why socialism has failed wherever it has been tried.

    • Do you suppose that the $7 trillion in household wealth vaporized by the housing bust makes 2008-12 an anomalous period in postwar history? If so, isn’t any comparison a waste of pixels? Just asking.

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