The chink in the Democrats’ armor
[NOTE: This essay first appeared in May of this year. I’ve posted it again here with a few small additions.]
I’ve reported here repeatedly that the Democratic Party is riding a long-term wave of demographic and cultural trends that bode well for its future.
A more urban, multi-ethnic, women-empowered society — and those are all measurable, real-world changes our nation is experiencing right now — will almost certainly benefit the party of Obama and Pelosi.
But as we head into the crucible of the 2012 election, there is still a massive, gaping omission in the story that the Democrats are telling to voters, one they will need to remedy if they are to become the party of the future.
Put simply, Democrats need to explain how they will pay for the government which they believe America wants and needs.
Before I explain what I mean, let me detour for a moment to point out that Democrats don’t need to spend much time or energy arguing in favor of their vision of “big” government.
By overwhelming margins, Americans support all the big-ticket items that make up about 90% of the US budget, from Social Security to Medicare and Medicaid, to education, the military and homeland security.
Yes, we all grumble about pork and waste. But that’s just the normal bird-dogging of citizens who, quite reasonably, want to get good value for our tax dollars.
There is no evidence that voters have bought into the broader, conservative, Ron-Paul-esque notion that the fabric of government itself needs to be unraveled or dismantled.
When pressed, Americans are even pretty comfortable with the idea that there should be an appropriate safety net, to help citizens who stumble, or fall into poverty, especially if they are children or senior citizens.
And we also want — indeed, we demand — a robust network of police and first responders.
The big question, then, isn’t what government should look like in the future. The real question — and, yes, I lay this predominately at the feet of Democrats — is how to pay for it. How to sustain it over the long term.
[Why do Democrats’ carry this burden? Because they are, for the moment, the political movement that supports maintaining something that looks more or less like the status quo. The modern Republican Party does not — which is one reason they lost big last week.]
Currently, roughly half of all US spending is borrowed. Which means that any vision for a long-term, stable government on the scale that Democrats (and their constituents) want will have to include some enormous changes.
Some cherished services will almost certainly have to be cut, not because leaders oppose them ideologically but because they are just too expensive.
I’m guessing that in the future people probably won’t be able to retire at age 65 and draw government checks for the next quarter century of their lives.
[I’m also guessing that a moment is coming when Americans will no longer feel comfortable spending more on our military than the next five most powerful nations combined.]
Other services will have to be provided more cheaply, either by allowing the private sector to deliver them (not always the solution, but in some cases it might help) or by demanding concessions from public employees.
(The era of lifetime health insurance and pensions ended long ago for private sector workers, and I’m betting the time has come for public sector workers to see a big change as well.)
We will also have to generate a lot more revenue. Some of that will come from growth, as the economy bounces back, but it’s also time to level with the American people: all of us will have to pay more if this is really the government we want.
Taxing rich people won’t get us there.
The short-term reality, of course, is that Republicans will block enactment of any vision that achieves a sustainable balance. They’ll argue that even when balanced with spending cuts, any new tax revenues are a socialist scourge.
But that doesn’t mean Democrats can’t or shouldn’t lay out what their plan looks like.
Some on the left will point out that Republicans have also quietly embraced big government, and done little to bring down our national debt. This is true.
Most economists believe the various budgets put forward by GOP leaders over the last year would grow rather than shrink the long-term deficit, because of massive tax cuts that aren’t off-set by spending cuts, and because of plans to grow the military.
But fair or not, the identity and core values of the Republican Party aren’t linked to the health, quality, and sustainability of the Federal government.
On the contrary. Many conservatives would be quite cheerful seeing even good programs cut or eliminated, even if it requires insolvency to get us there.
So for better or worse, Democrats carry the torch of the government model created during the New Deal. They will be the ones to figure out how to pay for it, and put it on an even keel, or no one will.
Until President Obama, Senate Majority Leader Harry Reid, and Minority Leader Nancy Pelosi put forward that vision, they will remain vulnerable to the suggestion that their vision, no matter how laudable or popular, is simply a pipe dream.
And right now, that pipe dream is adding about $1 trillion a year to the national debt.
Tags: analysis, election12, politics
Obviously, the major cuts should be in defense and in the criminal justice system (which isn’t all that just).
A ton of the cuts in the criminal justice system could result from getting rid of the stupid pot laws – period!
Eliminate the war on drugs outside of our borders.
Raise taxes on everyone but raise them more on those making (not always earning) more than $500,000).
Wait a minute, we are where we are because of the 2001 tax cuts, two unpaid for wars, and a drug benefit enacted without being paid for. The recession and decreased economic growth has not helped either. The average person is not going to take kindly to seeing program cuts due to bad policy. When it comes to safety net issues I suspect many people would accept higher taxes to keep programs. Eliminating the Bush era tax cuts would be a start. Military spending needs to be reviewed. We have troops garrisoned around the world in a few hundred locations. Do we really need all of them? Keeping troops in S. Korea may be necessary, but do we really need a base in Okinawa, etc.?
This isn’t about the “the health, quality, and sustainability of the Federal government”, but the safety net for the American people.
“The chink in the Democrats’ armor” has a lot of similarity to the “magic thinking” Romney was so recently ridiculed for. I especially liked reading that “Taxing rich people won’t get us there”. No kidding? I am so sorry I missed this essay when it first appeared.
Spending on wars, including the incredibly wasteful drug war, needs to end as does our overseas garrisoning of most of the known world (Can we really afford to defend Europe any longer, or Okinawa, or Japan, or the Middle East?). We could save billions a year if we could just loosen the noose of the military/industrial/congressional complex. And Homeland Security is yet another cash cow the has ballooned since 911. We need to disassemble this complex that has grown unchecked and is also extremely inefficient and wasteful.
We absolutely need to reform social security and medicare/caid. A good start would be eliminating the cap on income of just over $97,000 per year and increasing slightly the amount withheld from employer/employee. Put forth an even greater effort at cutting the fraud (which the Obama administration has made a significant effort at in their first term) in all these benefit programs.
I would also say we need massive reform of our tax code. Simplify it and remove the deductions and credits that special interests have managed to insert. Part of this reform could include huge cuts to corporate tax rates or even their complete elimination in order to encourage investment right here in America rather than overseas. A growing economy, as we’d all agree, is the best mechanism for increasing revenue.
Emboldened by their 2% “landslide” the Democrats are now going to solve all problems by raising taxes across the board (despite Obama saying he would not), dismantling Homeland Security and generally eviscerating the military (al Qaeda & Iran have to be wetting their pants over that idea) and ending the war on drugs (meth lab operators and drug smugglers across the North Country will love it). Did someone mention magic thinking?
DBW, we are here because of the six or ten or fifteen trillion spent on the recent wars. No other reason can compare.
Larry, If we require this large an investment in the military…so large that it puts all progress in jeopardy…then al Qaeda has already won. A vast majority of our military is currently doing something else however, or should we say “doing nothing else” at the moment, and could be cut back or set to tasks that might actually accomplish something (and by that I mean “produce something”).
As far as Iran goes, they are only the third most belligerent state in the Mid-east, following Syria and Israel. Our efforts there have been almost as useless as our fifty year endeavour in Korea.
…And meth labs might disappear if pot was free.
Brian – Ive got news for you. Social security retirement age is already 66.
The biggest single thing we could do to get things (future costs) under control is to get health care costs down to the level that the other developed nations have managed to get to.
Hey Larry, you keep mocking the Democrats 2% “landslide,” but let’s not forget that He Who Must Not Be Named had a second term margin very much in the same ballpark (not to mention the negative territory in which his first term “victory” lay).
And let’s also remember, even with “He who must not be named” negative mandate, He who must not be named ruled as if he had a mandate.
Allow Bush tax cuts to expire for everyone.
Take cap off social security wage limit. It’s only at $110,100 this year.
For anyone currently under the age of 55, the social security retirement age should be increased to 70.
“The social security retirement age should be increased to 70.”
That’s fine, for many office workers, but if you’ve been working at hard manual labor for forty-five years or more, that extra five years you want to tack on could be pretty hard to live through.
Hey, it’s all about Obama now. He used the “Blame Bush” tactic to help beat McCain, to alibi for all failures during his first term and then used it a third time to help beat Romney. He’s on his own now and there’s nobody else to blame (or credit, if he’s successful).
By the way, I’m not mocking the 2% margin of victory. I’m mocking the people who speak and act as if it was 20%.
Why not shut down FEMA too and spend sme of the the money on candles for the 1M people still without electricity? Add the savings from that to what we realize from shutting down Homeland Security and the miltary and we might have enough to give everyone free health insurance.
The bottom line is there are relatively simple solutions to Social Security mathematically, they are much more difficult politically. Look how hard it is for anyone to have the guts to simply raise the social security tax back to its normal level now, let alone make actual structural changes. Right now we are moving in the wrong direction with what was a very ill advised reduction in the social security payroll tax.
The deficit certainly has gone up in the past 20 years, however the debt has been growing much longer than that, the amount of money in real terms that the federal government uses has always increased. Republicans of course have painted themselves into this corner about opposing federal government spending, when in reality they have NEVER cut spending in the aggregate.
I don’t see us willing to sacrifice in the ways necessary to actually cut the national debt on our own. Thus the promises of the left and the right will be funded by borrowing up until the point the lenders say no.
Re-runs!? Really? This early in the new season?
I’m going back to the original post and copying what I said before.
It’s Still All B***’s Fault didn’t get the memo. Also, think about a name change.
By the way, they are now the Obama tax cuts.
Brian, Let’s have a point-by-point of the ramifications of the “fiscal cliff”. I’m already tired of that name and the all-bad connotation it lends.
Actually now that the election is over it will be somewhat of a parlor game to see how long people still call them the “Bush” tax cuts? For one at some point they are no longer cuts they are the tax rates and secondly how long can they use that name, at what point are they indeed the Obama tax rates? Ever, I mean in some ways it is either disrespectful of Obama to say he is so weak that he can’t change ANYTHING or it is giving WAY to much credit to the power of Bush to tower over generations of future politicians with tax cuts that are simply impossible to change! How long can a person or a party play the card of perpetual victim to a past President and Party?
Obama has changed nothing from the Bush economic plan with the exception of the health care act, which is not really in effect yet. So now we will see if he really wants to change the Bush plan? He has the power to do it, he is in the drivers seat at this point when it comes to these tax rates.
I sound cynical but I am not, I honestly believe he will change the tax rates, it is going to be hard but I think he might really do it.
I see that suddenly people are waking up. The “Fiscal Cliff” is very real. In a way, it wouldn’t bother me at all if it went as I understand it. Taxes would go up, but funding for a whole big bunch of programs would cease. It won’t happen though, it’s just leverage for both sides.
I’ve seen a lot of good ideas for cutting spending here and elsewhere. Yes, we can draw in our military. Leave Europe and let the EU defend itself for a change. We can leave the Pacific too, but be prepared for China and North Korea, perhaps India too, to move into the space left. Taiwan would likely become history and South Korea, perhaps even Japan, would be attacked almost certainly by NK. The middle east, yes we can leave entirely. That would be just about like being George Soros and turning in your Jewish neighbors to the Nazis. I suppose some could live with that.
On the home front we can certainly go to means testing on Social Security and Medicare. We can drop a huge number of redundant social programs. We can drop entire cabinet level agencies like HHS, Education, Agriculture, Energy, Interior, VA and Labor and consolidate them under other agencies. You could reduce the bureaucracy in all those areas greatly, by that I mean fire a lot of people. We could institute a mandatory 10-20% spending cut across the board- no exceptions. We can do away with all gov’t grants, subsidies, etc. that aren’t shown to have a clearly positive impact on the economy within 2 years of the money being awarded. We can up the tax rates across the board. Or better yet, we can close all loopholes except for kids and primary home mortgage and up the tax rate too. We could turn Medicare and Medicaid over entirely to the States. We can cut Unemployment benefits back to the standard period of time. I forget now what that was, 20 weeks?
Do you notice the problem with all this? People aren’t going to like any of it. Not here, not in Europe or the far east or the middle east. Do any of you really think this administration has the backbone to make any meaningful cut? Military maybe but nothing else. Tax increases across the board are about all they can stomach.
I like a few of the proposals you make and could negotiate on some of the other ideas.
Some of the ideas won’t save any money in the short term and maybe none in the long term, but we could talk about them.
So what proposals do you have for generating additional revenue?
Four years of an Obama presidency and NOW we’re at the edge of the cliff? What’s he been doing? What’s different now?
Crabby – most agree that if we go over the fiscal cliff our economy will tank, at least in the short run. Have you noticed the stock market? There are lots of ways to deal with it. The problem is coming up with something that gets through congress and signed by the president. Republicans were hoping that the election would put them in control of all branches of government and could dictate terms. It didnt work out that way.
Krugman:
Larry, don’t tell me you’re not familiar with the “Fiscal Cliff.” It’s been all over the news. The NYT link above covers it, if you’re really unaware.
I’d like to share this email a friend sent me regarding the actual measure of victory for Obama. I think it puts into perspective very well the actual significance of the numbers:
“This continued effort to emphasize how NARROW Obama’s victory was is a bit much. It was not close in the electoral college. That is the game and that is where Obama’s team placed their emphasis. They won Michigan, Virginia, PA, Ohio, Iowa, Nevada, Colorado, Wisconsin, Florida and Minnesota. If they had the same ground operation going in the south, they’d likely have improved the popular vote totals as well. And as far as this popular vote % goes, let’s stop saying “half.” elections are almost always nearly half, loosely speaking. He earned 50.5% of the popular vote. There have only been 4 out of the last 14 elections (post Eisenhower) that had a candidate hit 51% or more. And one of those was President Obama in 2008. And the big whooping Reagan put on Carter, by the way, was at 50.75% of the popular vote. Mandate talks are silly, but a win is a win. And this wasn’t as close as you guys want to make it sound.”
Clapton: good points. The fact is Obama is only the second president since Eisenhower to be elected and re-elected with a majority of the popular vote on both occasions.
If he ends up with a little more after absentees etc., he’ll be the first since Ike to win at least 51% twice.
If you’re not willing to reduce the military to a rational size, then you’re not serious about fiscal discipline. It’s that simple.
The military’s purpose is to be a self-defense force, to preserve the physical safety of Americans in America and our territorial integrity. Its purpose is not intervening all around the world in defense of the interest of America’s corporations or being a corporate welfare pipeline or substitute for a rural economic development policy.
Boys the economy is going to tank one way or the other sooner or later. It will be this fiscal cliff or it will be when hyper inflation comes along due to the endless printing of money with nothing to back it. Check Argentina, Spain, Greece today or Germany in the 30’s. This is what the Tea Party is all about people. Democrats and Republicans alike have spent and spent and spent to buy votes and satisfy debts to supporters. So here we are. How anyone can logically look at the situation and see a easy way out is beyond my ken. Obama has n o t h i n g on the burner that will fix any of this. I don’t think anyone in Washington in either party has any real plan. Well maybe Ron Paul but that brings the same result through a different set of circumstances. So we could have held on a little longer with the R guy but people preferred the D guy. The R guy might have maybe gotten us past it I don’t know. The D guy isn’t going to deal with it at all.
Revenue? From where? The only way out of this is by cutting spending drastically no matter what we bring in. Unless we suddenly find $16 trillion in gold on some chunk of Federal land we have few choices. We can not keep borrowing! That means we have to cut spending. But we also need to increase revenue if only to pay down the debt and return value to the dollar which makes things like gas and food so much more affordable for us. We aren’t in an improving economy no matter what the WH would like you think. We can no longer look at the Dow and S+P and NASDAQ and make assumptions about the state of our economy. Yes, the Dow was at 13K but the U6 is at almost 15%. That warm and fuzzy feeling you got hearing about the 7.8% UE index was a farce. Jack Welch was right, you can’t add 873K jobs with only 114K jobs created. So instead of looking at the U3 with it’s first time claims for UE benefits look at the U6 and get a real idea of where we’re at. 15%. Back when we we at so called full employment in 2000-2001 and the U3 hovered in the 4% area the U6 was just a little over 6% to give you a reference point. So we basically need to come up with 12-15 million full time, good paying jobs. Actually, 20-30 million would be more like it. Where do you people think we’re going to find those jobs that will produce the revenue we need? We’re closing anything that even remotely resembles heavy industry at breakneck speed. We’re working on shutting down 43% of our electrical generating capacity which will drive power prices up. We’re not working cheap reliable energy for industry at all in fact. We aren’t at all competitive on the world market in most areas. Agriculture is becoming more and more a place where one person does the work that 50 used to do. Textiles, clothing, plastics, minerals, wood products, chemicals, metals- we don’t do much of any of that anymore. True, we still have our high tech sector but the assembly isn’t done here by high school grads looking to feed Susie and their 2.1 kids. Those shovel ready jobs promised to us back during the stimulus aren’t really their either. There’s defense, but we’re going to cut that. So the way I see it it’s all pretty much based on the service sector. The problem is the service sector depends on someone else having some money to spend on the service.
Why don’t you people give me some ideas because I don’t see any chance for a recovery under present circumstances.
“Boys the economy is going to tank one way or the other sooner or later.”
I would say sooner, as in 2007-2008. Right now we are in a slow recovery.
If you can’t see whats coming, that there is no recovery, then you are essentially fooling yourself.
I don’t agree with Krugman on a bunch of things, but he is very insightful (and certainly has a billion times more brain power than I have), however on this point I agree. The President does have the power to really use this so called cliff to his advantage. The impacts are not like a cliff and can be changed at any time. What can’t be changed however are the expiration of the tax cuts. So he could simply let those go and expire then go back and re-instate the spending next year, if he really wants to if he really believes in his own rhetoric?
We have a cyclical economy that is the nature of the economy. We have never ever had a period without expansions and recessions. So yes the economy will have another recession that is a 100% sure thing I agree.
What you want to avoid is the long term structural unemployment that places like Europe have endured for going on 40 years. That to me is the danger, not another recession. The European model is nice has some advantages, but not for the US we simply need to work, we can’t handle living with consistent 9-12 % unemployment over many decades like the many european countries ended up with we will never allow the social safety net needed for that much unemployment and our young people need to work, we don’t have as strong of family structures as they do in Europe that can support whole extended families for a long time.
KHL, so did you have any ideas for additional revenue or are you coming to the realization it’s not going to happen?