Great Bumper Sticker

Just saw this bumper sticker:

"When everything is free, will I still have to work?"

The World Turned Upside Down

The World Turned Upside Down was a popular Revolutionary War song. Reportedly, it was played as General Cornwallis surrendered some of the finest troops in the world to a rag-tag army of colonials at Yorktown, Virginia, in 1781.

A ghostly whisper of that song could be heard in the background of last week’s minuet over minor reductions in current year federal spending.

The nature of American politics has changed dramatically, and the politicians are the last to see it.

Until WWI, service in the federal government was part time. It was routine for members of Congress and the senior officials of the Executive Branch (to include the President) to take at least six months of vacation each year. Shortly after that, during the Great Depression, politicians learned that they could win popularity by spending other people’s money. For some reason, the electorate never made the connection that the goodies they were receiving from the government were being paid for by money the government had taken away from them.

No political sacrifice is too great to win popularity and stay in office, so the full time Congress was born. After all, if a little bit of spending is good, a lot of spending must be better.

In the decades since, the politicians have made popularity from the spending machine even more productive. They discovered borrowing. Previously, Washington had approached debt as you and I do; a way of meeting a pressing need and something to be repaid. Indeed, the historical view of debt was expressed most clearly by President Thomas Jefferson, when he said:

“I ... place economy among the first and most important of republican virtues and public debt as the greatest of dangers to be feared... And to preserve independence, we must not let our rulers load us with perpetual debt. We must make our election between economy and liberty, or profusion and servitude.”

How old fashioned. Spending more each year than the government receives in revenue allows the politicians to maximize their popularity and let others in the future worry about paying for it. As President Herbert Hoover said, only partially tongue-in-cheek, “Blessed are the young, for they will inherit the national debt.”

The other tactic to hide the cost of government largess from the voters was the semantically brilliant concept of progressive taxation. Just as the Paris mob would shout “death to the aristos” during The Terror, their modern counterparts shout “tax the rich”. And, just as the doomed aristocrats dared not protest for fear of further political prosecution, today’s successful people are equally cowed into silence.

As a result, 40 percent of all federal income taxes are now paid by those in the top one percent of income. Some 98 percent of income taxes are paid by the top 50 percent of wage earners. Half of all Americans pay no income tax at all. Indeed, many receive “rebates” on taxes they never paid. They have no idea of how much government costs and do not participate in paying for it. To them, it is just a huge cookie jar full of never ending free goodies. But, they vote. And, that is just the way the politicians want it.

Unfortunately, that well has run dry. Taking 100 percent of wealthy people’s income won’t make a dent in the financial problems we face. But, expect to hear cries to “tax the rich”. Bad habits are the last to die.

For decades, a style of politics has emerged which is based upon unlimited spending to buy popularity. That spending has created interest groups whose existence depends upon federal spending. Alliances between the politicians and the interest groups have generated campaign contributions that help the politicians stay in office, so they can keep the spending coming. A closed loop of mutual reinforcement has been created that continually pushes spending upward.

This has become so pervasive that politicians of both parties have had to play the game, and build a “bridge to nowhere”, or be defeated.

The cost of spending now and paying later has finally caught up to our nation. In 2006, when Senator Barak Obama declared that raising the debt ceiling was a failure of presidential leadership, and voted against it, the total national debt was $3.5 trillion. Today, with President Obama, the debt is $14.2 trillion, growing at almost $5 billion per day, and scheduled—under President Obama’s budget—to grow to more than $22 billion in less than ten years.

With only a slight increase in interest rates, the interest on that debt could very well crowd out virtually all government spending in the future. We will all pay taxes, but all of it will go to pay the debts that have been incurred to buy votes in the past. The cookie jar will be broken.

Some of the new Republicans understand this. The only way to save the country is to end deficit spending; now, not tomorrow, and begin to pay off the debt while we still can. The rest of the Republicans, and virtually all the Democrats, see no need to change the basis of politics that has worked so well for the last six decades. Spend today and ignore the future has always worked, why won’t it work forever?

Government does not create wealth. The teenage girl who babysits, the boy who mows a lawn, and every other facet of the private sector create wealth. Government consumes what they create.

Members of corporate boards of directors have a legal an ethical standard to exercise their power wisely in the use of their company’s assets. Failure to do so could land them in jail. Members of Congress have no such legal or ethical standard requiring them to be wise stewards of our national resources. They have used their power to further their own careers, not protect the nation.

The debt crisis has turned their world upside down. From now on, the successful politician will be one who is seen as a wise steward not a spendthrift; one who places the needs of his constituents before his own need for power. I doubt that many now in office will be able to make that transition. And, if we lose those who can’t, the nation will be better for it.