'An Unhappy Birthday'

My favorite economics writer, Robert Samuelson, has written a terrific but depressing column on the occasion of this nation's 235th birthday. And it feeds right into the prevailing narrative of this blog.

Republicans and Democrats are not getting the job done. As Samuelson sees it, Democrats are "reactionaries" in refusing to face up to the limitations of what government can accomplish with the funds available. "Tax the rich," say the Dems. In other words, raise taxes on anyone who makes more than the typical Democratic voter.

Republicans, on the other hand, are "radicals." GOP "promises of more tax cuts either border on dishonesty or imply huge unspecified spending cuts that would devastate national defense, states and localities, and the poor," Samuelson said.

To that I would add a few thoughts of my own:

Neither party has really embraced the non-partisan Simpson-Bowles or Rivlin-Domenici plans for restoring fiscal discipline. Why? Both plans call for a combination of painful spending cuts and tax increases. Look at the composition of those commissions. Notice how the title of each chair is preceded by the word "former?" Former senator Alan Simpson, former budget chief Alice Rivlin.

Why? No sitting public official of either party can come out with the kinds of recommendations made by those two groups. Why? Because they belong to political parties that would, on some level, find those conclusions to be heretical. A Republican who calls for a tax increase or a Democrat who advocates for significant cuts in social programs would either lose a re-election bid or face an ugly primary challenge. Even unelected White House officials such as Rivlin and Erskine Bowles would probably have found themselves out of a job if they had promulgated such apostasies.

So what we have is a dreadful situation in which legislative gridlock has become the order of the day. Why? Because the politicians who run our government are more concerned about their careers than they are about saving the country. This brings to mind what George Washington said in his farewell address about party power struggles, which he called a "frightful despotism:"

But this leads at length to a more formal and permanent despotism. The disorders and miseries, which result, gradually incline the minds of men to seek security and repose in the absolute power of an individual; and sooner or later the chief of some prevailing faction, more able or more fortunate than his competitors, turns this disposition to the purposes of his own elevation, on the ruins of Public Liberty.

A Mob of a Different Color

How bizarre is it when news accounts of rioting in Europe describe the frenzied protesters as an "anti-government mob?" Is that an accurate description? The criminals setting fire to banks and murdering their fellow citizens are public-sector workers. In other words, they're a "government mob" -- plain and simple.

I was reminded of that image when I noticed this morning  that officials in several European nations are bracing for mayhem in anticipation of widespread strikes by public-sector workers. A number of  labor leaders as well as the head of the European Socialists party howled in outrage at the proposed cuts in public-sector spending. And the only solution they seemed to be offering for the crisis was to tax the banks.

That, combined with today's Thomas Friedman column in the NYT, got me to thinking about people who complain loudly about perceived problems but offer no viable solution. Friedman, who usually irritates me to no end, nonetheless did a commendable job of boiling the noisiest and most incoherent faction of the Tea Party down to its essence. He calls them the Tea Kettle Party -- just a bunch of alienated folks loudly blowing off steam to little effect (other than generating lots of cable news coverage!).

I'd say the government mobs in Europe display much of the same tendencies, although to be fair, the Tea Partiers appear to be far less violent. Still, both sides are in high dudgeon but are at a loss to offer any long-term solutions to systemic governmental and economic problems. Actually, I'd say they're in denial.

The Tea Partiers think we can cut taxes yet again, take a meat axe to the federal budget and everything will be fine. The government mobs think Europeans can simply tax and spend their way to prosperity -- the mob's prosperity, I guess.

And then there's would-be U.S. Sen. Dick Blumenthal. He thinks we can sue our way to prosperity, but ah, that's another matter entirely ...

Ignoramus Or Cranky Old Man?

Should former Sen. Alan Simpson be fired from the Deficit Commission for using the T-word? Here's an excerpt of his recent email to feminist activist Ashley Carson, who basically says Simpson doesn't know what he's talking about and that Social Security is healthy and doesn't contribute to the deficit:

And yes, I've made some plenty smart cracks about people on Social Security who milk it to the last degree. You know 'em too. It's the same with any system in America. We’ve reached a point now where it's like a milk cow with 310 million t*ts! Call when you get honest work!

Carson is correct that currently Social Security runs a surplus and is not responsible for the red ink in our operating budget. But Baby Boomers haven't started to retire yet in great numbers. After 2037, for example, only 76% of benefits will be available (PDF). Medicare is in even worse shape with a $36 trillion unfunded liability. Social Security's is $8 trillion.

What happens when those bills come due? Where do you think the money will come from to pay out promised benefits? Raise the payroll tax? How can we do that if we also have to raise income taxes to get ourselves out of debt? The tax burden would be too great. We will never address our long-term deficit problems unless we get a handle on the unfunded liabilities of those two massive programs.

People who accuse Simpson of demagoging this issue miss the point. Simpson is about to turn 79 years old. What is he doing? Stirring up the masses in preparation for a run for the zoning board in Laramie, Wyoming?

Simpson is guilty of nothing more than being a cranky old man. And he happens to be saying things of substance that the geezer lobby doesn't want to hear – and certainly that they don't want recommended to Congress.

Long live old Alan. We need his grumpy voice.