So the great speaker chase is over. Kevin McCarthy caught the prize, although the actual prize differed greatly from what he originally sought. Rarely have I seen such naked ambition overwhelm common sense and a sense of self-dignity, but then what do you expect in this, the age of the TikTok 5 second video receiving millions of views. The national attention span has gotten smaller and smaller as social media has gone through successive generations. Pretty soon we will be reduced to subliminal messaging serving as the primary exchange medium for philosophical insights.
There is no doubt but that this is a different world from the one I grew up in. I grew up knowing it was necessary to pay for my debts, not to foist them off on future generations. And so I ended up being a saver, and was fortunate enough to find a life partner with a similar sensibility. As a result, we will not have to worry about our retirement. Heck, it’s now been 8 years since I’ve worked for a salary, and our savings just this year declined for the first time, but that was due to general market conditions and not due to withdrawals. My former employer allowed me to retire and keep family medical coverage, paying a pension in addition. On top of that, we had a savings plan even before the advent of 401k’s which transitioned neatly into a tax-deferred plan later on. As such, I realize how lucky I’ve been when compared to the average person of my age.
Unfortunately, at a national level, we’ve found it extremely difficult to pay for our debts. One political party has insisted reducing taxes for the wealthy is the best way to ensure prosperity for all. Though experience has shown the futility of this practice, it is the original “big lie” we’ve lived with for over 40 years. Only once in my lifetime has the national tax / spend account been balanced. I can still remember the dismay as pundits feared a loss of government paper for all entities who needed a guaranteed income stream. They were certain that the temporary excesses of income over expenditure by the federal government would become a permanent condition. Thus the haste in ratcheting down tax rates as soon as the Republican administration took office in 2001. Then the war on terror happened, and the need to pay for the increased military expenditures never crossed the minds of the party in charge of this national budget.
So when a real economic emergency happened, in 2008, the only solution available was incremental borrowing and throwing money at financial institutions. Of course, we had to pretend we cared about the budget, so a series of machinations took place to keep discretionary spending level. Meaning that we had no money available to deal with the infrastructure needs that kept getting deferred. Then we had a new administration who represented the worst of all possible worlds. A faux-populist who was manipulated into pretending we had short-changed military spending, while insisting on adhering to the mantra of increasing prosperity through lowering tax rates for individuals and most of all, for corporations. Then, when COVID hit, the only weapons available were to: 1) Ignore the pandemic, hoping it was just a ploy that would soon be a minor irritant, and 2) Throw lots and lots of money at the economy in the hopes of keeping personal spending alive.
Now, three years later, we have no clue how to return to normality. Increasing tax rates is still off the table, though experience has shown increasing rates up marginally does not reduce economic activity. Indeed, government sometimes has had to be the first investor in an area in order to spur increased economic activity. Only the government is able to spend money which will not pay off fully for a generation or longer. The private sector cannot operate on that long of a payback period. No, activist investors will instigate a corporate takeover for any public corporation trying to improve the public good rather than maximizing short-term payback. But the insistence on quantifying the 10-year spending for any program lends itself towards propaganda, making it appear to mathematically-impaired citizens that all of the money is being spent right now, and of course, that is why we have inflation. It’s all Biden’s fault!
So how do we get out of the dilemma we find ourselves in? Early feedback from the House Speaker race is not hopeful. We will anticipate the upcoming federal government shutdown as these inept representatives strut and preen pretending to save the nation from overspending. Yet still none will consider any solutions involving an increase in taxation. Look, the ship on adhering to the letter of the constitution sailed long ago. In the name of the commerce clause, and in the name of addressing the general welfare of the nation, we’ve developed an entire series of programs which would be impossible to remove from the fabric of this economy. Imagine how this nation would function without social security? Yet you will not find a single phrase in the constitution authorizing a national pension program.
We will be entertained with a call for a new constitutional convention. Those loudest in this call are those who wish to return to the original intent of the founding fathers. Meanwhile, the world has long gone past the strictures of the 18th century. In order to compete in the marketplace of ideas and economies, we do need a new social contract developed. Can those who favor a more expansive view of allowable government activities ever reach an agreement with those who believe all government is bad? That seems to be the battle of our age.