The United States seems to be enduring a prolonged Groundhog Day. No matter what happens, responses from the governing liberal establishment remain the same. At the prospect of freer elections in Egypt, the New York Times produces pages of anesthetizing treacle on the benignity of the Muslim Brotherhood. The same people who told us the Viet Cong were agrarian reformers in a civil war who made their own weapons, and that Ayatollah Ruhollah Khomeini was an idealist who would end the Shah’s police excesses and govern with the godly severity but honest scruple of Pius IX in the Papal States, tell us now that the assassins of Anwar Sadat are moderate reformers driven to occasional attacks of extremism by the oppressive provocations of our departed Egyptian ally.
Columnist Tom Friedman, in the same pages, briefly set aside his passionate concerns about global warming in the midst of this frigid winter, and the need to put a hand-held communication device in the fingers of everyone in the world above the age of three weeks, to complain about Israeli settlements. The ability of Mr. Friedman to continue to believe that Israeli settlements have anything to do with the attainment of a durable peace in the region is a triumph of superstitious self-brainwashing over mind, spirit, and flesh. If the Israelis designated everything built in the Jerusalem area since 1948 as a settlement and abandoned it to be turned into homes for retired unsuccessful suicide bombers, the Palestinians would fasten on some new complaint. There will be no peace until the Palestinian leadership believes that it has no chance, and will have none, to get any more territory than they can negotiate for now, and that their long-term best interests and those of the Arab powers who sponsor and promote their acts of terrorism and infiltration will be best served by composing differences with Israel and accepting the permanence of a Jewish state.
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And in Washington, after a long drum roll, and intimations of pending mountain-moving in deficit reduction, the Obama administration gave birth to a deformed mouse of a budget. On the basis of wildly optimistic forecasts of revenues from new taxes and economic-growth rates, the deficit is supposed to shrink to $1.1 trillion, more than the entire (M1) money supply (currency plus short-term or easily liquefiable deposits) in the first year of the Obama administration. There is a good deal of pie-in-the-sky over $2 trillion in deficit reductions over the next ten years, again based on 4 percent annual economic-growth rates, euphoric revenue and spending assumptions, and 95 percent of it after next year’s elections, after which Mr. Obama will be looking forward to skipping down the well-trodden path of the ex-president to immense wealth in an undreamed-of pay grade.
The administration ignored its own deficit commission, ignored the rather unambiguous message in the shellacking of 66 House members and six senators and the cadres of state and local government in almost every state just three months ago, and proposes to skip the opportunity to tackle the approaching train wrecks of Medicare, Medicaid, and Social Security before the great Baby Boomer population bubble leaves employment for the golden years of the beneficiaries. At this point there arises the Punxsutawney Phil — the supreme groundhog — of modern American politics, William Jefferson Clinton, nonstop tutor in political survival techniques to the president, and also a former standard-bearer of the new Democratic politics. Just as Mr. Clinton — shellacked himself in 1994 by Newt Gingrich, Bob Dole, and their Contract with America — lured Mr. Gingrich into shutting down the government to try to enforce spending reductions, Mr. Obama has left it to the Republicans to tackle entitlements, as everyone with the benefit of a Grade Three education in arithmetic who examines the budget, however cursorily, can see must happen.
For too long, we have been largely silent over wasteful government spending, based on unfulfilled promises. Since 1925, federal spending has increased from 4.4 percent of GDP to 26.5% of GDP.
In that time, the private sector electrified most of America, created affordable and bigger houses, made auto and air transport possible for everone, created wireless devices and infrastructure, invented wonderous medicines, and on and on. Where is there anything similar to point to by way of public good where the federal spending is concerned?
We need a constitutional amendment to limit taxation and spending to a much smaller percentage of GDP. To lay the groundwork for an amendment our state and federal constitutions, we need an intense public debate and expose journalism on the proper role and limits of federal, state and local government.
Clearly, we can't leave things any more to electic officials. They make promises they don't keep. They finagle to spend beyond even their outrageous budgets.
Do our conservative congressmen know what it takes to actually enact a budget cut (versus reduction in rate of increase) ? Do they have the stomach for eliminating a worthless program ?
How about let's see them first do some warm ups and get rid of the dozens of smaller spending opportunities that may not matter much to the overall deficit but demonstrate to voters they are prepared for bigger challenges later.
I understand the game of chicken on entitlements -- so in the meantime -- how about at least demonstrating their basic blocking and tackling expertise and show us those fighting muscles aren't atrophied beyond use.
The example I use is that if it were enforceably decreed that every adult in Paraguay were obliged to write a poem and sell it and buy another, ten times each day for a year, with every sale of the poem for $100, Paraguay would have the highest standard of living in the world (GDP divided by the population), but no one would be a cent wealthier. There is some of that in the U.S. now, with $4.5 trillion spent annually in legal, consulting, and financial-transaction fees (“God’s work,” as the chairman of Goldman Sachs disinterestedly calls it), and $2.4 trillion in medical costs. Very little of it is really value added as primary (extraction of resources) and secondary (manufacturing) industry revenues are. It is essentially a taxation of more productive activity.
The above is an excellent point that the great majority of people don't understand. I make a lot of money preparing tax returns, but I recognize it would be better for the economy if I switched to picking lettuce. I live in an agricultural area and I predict within five years there will be white faces out in the fields tilling the crops. I think this Obama budget is a guarantee of this result.
I've thought for some time now that a very effective solution to reducing domestic spending is to apply a bottom-up approach. Giving taxpayers a huge deduction, (along the lines of 80-90% of their tax liability), for donations to domestic charities will increase such donations. Taxpayers have the option of either giving their money to the government, which will apply it inefficienty as they see fit. Or the taxpayer can send the money wherever he wants to be spent more directly and efficiently.
Given this option on such a dramatic scale, people will solve societal problems as they see them in their local areas and inevitably moving toward greater geographic scope. This will alleviate the need for government programs and shrink the government. A smaller government needs less fuel, thus, less burdens on the private sector and more employees making more money making more donations to solve more problems more effectively and efficiently. More charities will also spring up, with purer intentions since they now have a more serious responsibility.
Contrast Obama with Christie's AEI speech and budget toughness.
It's not that Obama is dumb or evil. It's that he's a coward. He has no spine to deal with anything of consequence. Deep down I believe he knows he's not up to the job and is not qualified, which is why he so readily delegated all the policy-making to Pelosi and Reid from 2009 till now, why he cannot function without a teleprompter, and why he tries to take all sides in the current Mideast/North African revolutions. His acolytes in the media and academia mistake his fear for nuance.
This is not new; remember how many times he voted "present" even as an Illinois state senator. It's also why he wrote two autobiographies before having accomplished anything noteworthy, and why he refers to himself in the first person so frequently in his speeches. People who are truly self-confident do not feel compelled to do such things.
It's not that Obama doesn't see the oncoming debt crisis, it's that he's too afraid for his popularity to deal with it and cut spending and entitlements, preferring instead to coast along and make Republicans look like the bad guys or, if that fails, at least stick some future president with the disaster. His SOTU speech and budget proposal were, for all their huge financial numbers, very small in character and courage.
Watching Christie in words and actions, it's clear that he is the anti-Obama. Whether he runs for the presidency in 2012 or not, whoever ends up as the Republican nominee would be well-served to learn from Christie.
A good read with good points. The piece was very clear until the last sentance: . . ."and it just delays and makes steadily harder and more costly the task of getting to grips with the problems this president was elected to solve".
What problems was BHO elected to solve? The problems he's created or made worse I can name, but Mr. Black, make no inference that he was elected to solve anything. It is simply not reason why BHO is President.
There may be some truth to the idea that Obama wouldn't mind creating a third rate, decaying America, if that condition would help consolidate State power.
I'm going to take issue (a bit) with Conrad Black's last point about the service economy. It is a good point but taken too far.
The fact that I can hire house painters, auto mechanics, and tax preparers frees me to concentrate on my own work (which happens to be in product development). Much of what the service sector does enables the producers to work more efficiently.
Even lawyers (a much-maligned lot) help me protect the company's intellectual property and make sure we are in compliance with the enumerable federal requlations we face.
It's very easy to tame the deficit, on paper at least, using the New York Times Flash applet at External Link . Give it a try. It's illuminating, demonstrating the impact of various spending choices on short term and long term debt. The hard part is putting these choices into action. But it's not hard to identify the choices that would work.
@SC: For the most part yours is a valid point. However, simpilfication of the laws and taxes to the point that it was unneccesary to hire someone to deal with them would free up resources to be used more productively by our economy.
Japan has issues of its own, but I find it interesting that they have a 2:1 engineer:lawyer ratio while we have a 1:2.
Liked your piece over at National Affairs on Rupert, et al.
I know next to nothing about economic theory. The frugality of my parents, Mr. Black is legend material. But if they could do a few things over again, I'd bet they'd loosen up a little. When you're of the peasantry and you've seen unending misery, you want to be prepared for emergencies. I'm not fit to shine their shoes.
Anyway, here's a question: how can a Nation that doesn't really trade with each other stay healthy and whole?
Mr. Black makes good points, but still sees manufacturing as the be all and end all. Actually, manufacturing as a percentage of the world economic activity continues to drop. Productivity reduces the effort needed to manufacture. As a nation gets wealthier, they wish to buy other things, that Mr. Black would see as non-tangible. But they have value for those who buy the service.
I would never deny that our government skews the services we really would prefer to buy and that would makes us even wealthier. Never argue on that point - very true.
What's happening in Wisconsin, and particularly Obama's reaction to it, point to a deep danger. Obama's first response was to defend public sector unions, not even being able to tell them that in hard times everyone has to take some share of the sacrifice.
Why is this important? Obama does not want to cut government services. This may seem to be about the people who receive those services, but it is at least as much about the government employees involved with those services. We can never forget Obama's Alinsky-ite roots: public employees at all levels constitute a powerful voting and (to Obama and cronies far more importantly) mobilization bloc.
Obama consciously did not distance himself from the excesses of the protestors in Wisconsin, but stressed the importance of not being "anti-union". Let's watch for his response if any meaningful cuts are made in the budget and SEIU mobilizes in DC.
All of which is to say that I don't think his budget is merely the product of economic ignorance or lack of political will. I think it points to what he is willing to do and accept in the interests of maintaining and growing the federal bureaucracy.
