Politics & Policy

Rosamond’s Country

Illustration from a 1910 edition of Middlemarch, Rosamund at left.
Middlemarch prefigures America’s debt dilemma.

I’ve just come across a rather intriguing scene in George Eliot’s Middlemarch, in which the idealistic doctor, Tertius Lydgate, tries to reason with his wife, Rosamond.

Rosamond, we learn quickly, is a big spender, and soon after she and Tertius have married she starts to rack up debts in his name, justifying the profligacy on the grounds that physicians enjoy an elevated position in society and should thus have indulgent lifestyles to match it. Think of it as an investment, she repeatedly suggests. We’re better than this! When, fearing bankruptcy, her husband finally gets around to objecting, Rosamond explodes, shouting, “I never could have believed that you would like to act in that way.”

“Like it?” burst out Lydgate, rising from his chair, thrusting his hands in his pockets and stalking away from the hearth; “it’s not a question of liking. Of course, I don’t like it; it’s the only thing I can do.”

#ad#“My dear Rosamond,” he adds, “it is not a question of choice. We have begun too expensively.”

Rosamond’s argument isn’t a terrible one in and of itself. Sometimes people really do need to “invest” in themselves, and sometimes borrowing really is an acceptable price to pay to improve one’s prospects. The same goes for countries. Roads need fixing, wars need fighting, and, on occasion, years of “bad trade” have to be patched up. There are strong arguments, too, to suggest that keeping some government debt is a good thing.

The problem in Middlemarch, however, is that Rosamond spends not on anything that would help her husband’s surgery to flourish, but on luxuries that bring little in return. That is, she spends on a lifestyle that she cannot afford — and she has no plans to alter the balance sheet. Eventually, her defeated husband has to borrow money from a crook, and his reputation suffers. It strikes me that America may be gearing itself up for a similar fall.

When confronting Rosamond, Eliot writes,

Lydgate had begun to reason, with a more distinct vision, about the expenses of living, and any share of pride he had given to appearances of that sort was meagre compared with the pride which made him revolt from exposure as a debtor, or from asking men to help him with their money.

Would that Americans were so brave as to take such a stand. Instead, it seems that incessantly borrowing to pay for our choices is now the established plan. By 2015, the federal government’s recession-inflated deficits will dip to a relatively reasonable 2.1 percent of GDP, after which they will start to skyrocket, far outstripping both economic growth and projected revenues. Absent a dramatic change, this will continue — forever.

These are not unforeseen circumstances, as were, say, the Japanese attack on Pearl Harbor and the financial crash of 2008. Instead, they are political decisions, based upon the well-intentioned but foolhardy instincts of a culture that often considers economic reality to be optional, and the preferences of an electorate that evidently believes that it is virtuous to take short-term gains at the expense of long-term solvency. The trend does not look good. In just a few decades, the American people have moved from believing that it is acceptable to go into debt only in order to wage war or to deal with crises to believing that it is acceptable to borrow vast sums of money to pay for political choices. What, one wonders, will be next?

Lest you be convinced by the progressive claim that Social Security and Medicare are not “entitlements” because their beneficiaries have paid in, it is worth bearing in mind that almost everybody gets more out than they contribute, and also that payments are tied to the beneficiaries’ wages and not to their contributions. Unlike the pension obligations that are currently bankrupting state and local governments, Medicaid, Medicare, and Social Security are not legally binding contracts, but benefits that can easily be repealed and modified through the normal legislative process.

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Sadly, the lie that Social Security is an insurance program — and not normal spending — has still not died. Ronald Reagan was warning about this as early as 1964:

They have called it insurance to us in a hundred million pieces of literature. But then they appeared before the Supreme Court and they testified that it was a welfare program. They only use the term “insurance” to sell it to the people. And they said Social Security dues are a tax for the general use of the government, and the government has used that tax. There is no fund, because Robert Byers, the actuarial head, appeared before a congressional committee and admitted that Social Security as of this moment is $298 billion in the hole. But he said there should be no cause for worry because as long as they have the power to tax, they could always take away from the people whatever they needed to bail them out of trouble! And they are doing just that.

They still are.

#ad#At the root of our trouble is that we have established as normal a perverted understanding of what is moral, with too many people convincing themselves that it is acceptable routinely to spend money we don’t have if only we like the outcome enough. We have allowed ourselves to believe, too, that mathematics will — nay, must — bend to meet our indulgences, and that tomorrow will never come. What one wants is more important than what one can have, and those who object to the deception are “mean” — or, worse, “evil.”

Once upon a time, Americans broadly agreed that entitlement reform was necessary, and that without it disaster would strike. Now? Not so much. There is no more amusing illustration of the transition than the one provided by Paul Krugman, who in 2004 was struck by sheer terror at the “future liabilities of Social Security and Medicare” and by the coming “fiscal train wreck” that “the leaders of the United States,” “acting like the rulers of a banana republic,” were ushering in, but who this week wrote: “The next time you see some serious-looking man in a suit declaring that we’re teetering on the precipice of fiscal doom, don’t be afraid.”

Krugman’s change of heart is almost certainly explained by his partisanship. But not everybody’s is. Indeed, rather than making it even more obvious that Americans are living beyond their means, the vast sums spent on the Wall Street bailout seem to have harmed the old reform consensus, pushing some citizens to feel that if the banks can be saved at great expense, then so should the elderly and the poor.

This understandable sentiment is best summed up in the suggestion that so-called “deficit hawks” intend to “balance the budget on the backs of the poor and the elderly” as a way to avoid “taxing the rich.” Nevertheless, while such a line makes good political hay, it is deeply misleading. The truth is that “the poor and the elderly” are the people on whom the majority of federal money is being spent, and “the rich” are the people who pay the vast majority of the taxes. Deep down, everybody knows that the tax rates that would be necessary to balance the books are politically and economically impossible within the American system. But they can’t quite bring themselves to say it, much less do anything concrete about it. So they pretend that disaster is a choice.

As I reread Rosamond’s inflated whining this week, my main instinct was that Tertius really should have forgone his Hippocratic oath early on and thrown his turbulent wife screaming from a second-floor window. Alas, America’s politicians almost certainly do not have this option at their disposal — nor would indulging it be good for their electoral chances — but they do have the power to stand and tell the people the truth. “It’s not a question of liking it,” they might say. “Of course, I don’t like it. But facing up to the future is the only thing I can do.”

— Charles C. W. Cooke is a staff writer at National Review.

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