Jonathan Kay on U.S. downgrade:
To understand why S&P lowered Washington’s credit rating on Friday, one need only compare two numbers: U.S. federal tax revenue and U.S. federal expenses as a percentage of GDP.
Under Ronald Reagan, the gap was, on average, about 4% (22% expenditure versus 18% revenue). It was the same 4% under George H. W. Bush. Bill Clinton cut the budget deficit in the early 1990s, and even ran a few surpluses — netting out at a shortfall of less than 1% for his eight years in the White House. But then George W. Bush came into office, pushed through deficit-driven tax cuts, and the red ink began to build again. Bush 43’s last year in office produced a 3% shortfall.
This, plus a financial crisis and major recession, is the situation Barack Obama inherited from Bush in 2009. His stimulus-driven spending binge, in conjunction with tax revenues that plummeted to 14% of GDP, produced an average spending-revenue gulf of 9% of GDP (24% versus 15%) over his tenure thus far — more than double what it was during the Reagan-Bush Sr. period. Yet even in the face of this crisis, Congressional leaders refuse either to raise taxes (even on the rich) or to cut short-term spending. Why has the most dynamic nation on earth succumbed to what can only be described as self-destructive paralysis?
Many blame the Tea Party movement. But the Tea Party didn’t materialize out of thin air. It is the product of an America that never really got over the fear and anxiety produced by 9/11, the Afghanistan and Iraq wars, and the real estate crash. The rise of China is another factor that figures large: Many Tea Partiers I’ve interviewed believe that America is destined to be the guiding force in world affairs in perpetuity, and they see Asia’s increasing pre-eminence as a sign that something is fundamentally wrong with the cosmos.
In times of crisis, all societies instinctively revert to romantic, backward-looking notions. There is a religious strain in this instinct: It is imagined that current trials result from the population deviating from some ancient revealed text, be it the Bible, the Koran, or the U.S. constitution. This is why at Tea Party events, there is such a strong correlation between religious Christianity and fiscal conservatism: The small-government pastoral frontier society of America’s formative years is idealized as a sort of Eden. (Some conservative Christian activists even blur the line between the Constitution and the Bible by claiming that the latter inspired the former — this being the thesis of a 1981 book, The 5,000 Year Leap, which Glenn Beck, among others, have credited with forming their political philosophy.)
In this telling, the Founding Fathers are transformed into something resembling religious saints, and policy questions are settled by speculating about what view those men would have taken. Following her interviews with Tea Party supporters, Harvard historian Jill Lepore channeled their outlook this way: “That the Constitution speaks to us the way Jesus speaks to us in the Gospels. That it comes alive when we read it today. That it is our form of scripture. And that all the intervening years between the drafting of the U.S. Constitution in 1787 and the present don’t matter. That those years represent a corruption from a state of purity … It’s a particular form of Protestantism and a kind of understanding of the Bible as literal truth that has a really strong hold on America and in American religious culture.”
According to this way of thinking, keeping taxes low isn’t just smart policy: It’s become the central dogma in one can only be described as a quasi-spiritual policy cult.
The problem, of course, is that this libertarian social contract is a complete anachronism in today’s industrialized, high-density consumer society, in which government is expected to regulate trillions of dollars’ worth of trade between strangers, protect more than three hundred million people from crime, ensure universal literacy, prevent epidemics, save endangered species, police the airwaves, prop up failing banks, take care of the poor and old, and maintain a continental network of public roads and airports.
The idea that an 18th-century-style social contract can cure America of its 20th-century ills is attractive in the way that all romantic political ideologies seem attractive in turbulent times. But as several generations of conservative populists can attest, the romance always ends in heartbreak: Once elected, every modern politician, no matter how ostensibly conservative, eventually will have to hang up his tricorner hat, sit down at his desk, and confront the same modern-world realities that greeted his predecessor. Ronald Reagan is the greatest hero in the history of American conservatism. But even he couldn’t find a way to eliminate a single major spending program during his presidency. George W. Bush, denounced by liberals as a heartless “neocon” during his two terms in office, actually added a major spending program — the Medicare drug benefit.
Such hypocrisy is old news among American political pollsters. As far back as 1964, two scholars — Lloyd Free and Hadley Cantril — used Gallup Poll data to cross-index American attitudes toward government programs and respondents’ professed ideological beliefs. What they found was that overlapping majorities of Americans expressed support both for small government in principle, and big-government programs in practice — a paradox Cantril identified in an influential book, Political Beliefs of Americans, as nothing less than “mildly schizoid.”
The same phenomenon manifests itself today among conservatives who make radical claims about the need to scale back the size of government, but also express satisfaction with classic welfare-state programs such as Medicare and Social Security. In late 2010, a poll conducted by the Washington Post, the Henry J. Kaiser Family Foundation, and Harvard University revealed that a majority of Americans who say they want more-limited government also believe that Medicare and Social Security are “very important.” Likewise, more than half of self-declared Tea Party supporters said the government should maintain or increase its involvement in poverty eradication.
Since the New Deal era, America has been ravaged by a noisy on-and-off culture war, waged, in part, between those who are at peace with the need for bigger government, and those who are not. The “mildly schizoid” quality of American political life means that this culture war is fought not only between two camps of political partisans, but often within Americans’ own dissonance-wracked minds. Which explains why the war is not only shrill, but endless: Since most American conservatives would never actually accept the much smaller government they claim as their goal, their war demands will never be met — even when their legislative armies conquer Washington.
This is the reason we are at the current, surreal moment — in which the most successful economy in the history of human civilization is now more precarious, and less credit-worthy, than those of many nations once deemed “Third World.” What’s worse: There seems to be no clear end to the crisis, aside from outright bankruptcy, because there is no policy solution that can simultaneously satisfy the dictates of both 21st-century economic reality and 18th-century libertarian dreamscape.
National Post
jkay@nationalpost.com.
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