by
Michael S. Rozeff
The U.S. federal government is on a course of self-destruction. People of many political persuasions know this. People who are against coercive government know this. People who favor coercive government know this. People who do not mind if the federal government self-destructs know this, and people who want to save the federal government know this. From a scientific viewpoint, one of the interesting aspects of a government that is self-destructing is that the process cannot be stopped, even when people who want to stop it, try. Government based on coercion cannot be tamed. It keeps on running until the clock stops ticking and the bomb goes off. The Committee for a Responsible Budget, which is part of the New America Foundation, consists of Washington insiders. It chairman is William Frenzel. Leon Panetta was a co-chair up until joining the CIA. The Board of Directors is strictly Establishment. So are the Directors. Among them are Vic Fazio, Alice Rivlin, Robert Reischauer, Lawrence Summers, David Stockman, Paul Volcker, and David M. Walker. These people support the State, the federal government, the republic, democracy, and the Constitution. They would vigorously deny that they don’t. These people do not want the federal government to destroy itself, but they tell us in no uncertain terms that the federal government is on precisely that course. It is precisely because this committee is made up of numerous Washington establishment figures that their statements are useful in complementing and confirming the observations of LRC writers, who might otherwise be viewed as unduly radical, alarmist, or biased. Here is a sample of statements coming out of this committee. See here, here, here, here, here, and here. "The economy is in crisis, the deficit is out of control, all of the Bush tax cuts are about to expire, and the tax code is in many ways broken – this is no time to think small," remarked Maya MacGuineas, President of the Committee for a Responsible Federal Budget. "Borrowing has ballooned to unimaginable levels. A $1 trillion deficit – more than twice the previous record – now appears to be a conservative estimate for fiscal year 2009. The debt is already over $10 trillion. And to paraphrase President-elect Obama, economic conditions will probably get worse before they get better. Yet as bad as things seem today, the future looks bleaker. The projected rapid growth in spending – driven primarily by the aging of the population and health care cost growth – will put this country’s fiscal and economic health in permanent jeopardy. If not brought under control or paid for with new revenue, this growth will turn trillion dollar deficits from an exception to the norm. "In its recent Budget Outline, the Administration claims to reduce the deficit by paying for its new initiatives, winding down the war in Iraq, and raising taxes on higher earners. In their budget, the Administration displays policy changes relative to a current policy baseline... The budget relative to the standard current-law baseline, however, reduces taxes, increases mandatory spending, and increases the deficit." "Including the costs of his health care plan, spending would grow considerably under President Obama’s budget. Under the current law baseline, outlays would return to a fairly average level of GDP after the costs of the current economic and financial crisis have passed. Under the President’s budget, however, outlays as a share of the economy would reach a permanently higher level, and would only grow from there as population aging and rising health care costs take their toll on the budget. "Mandatory payments – the combination of mandatory programs and net interest spending – increase from 62 percent of total government spending in 2008 to 72 percent of total spending in 2019 under the President’s budget. "While it makes sense that the President would advocate for the policies on which he campaigned, we worry about the introduction of too much new permanent spending before addressing the unsustainable growth of existing programs. "The Committee for a Responsible Federal Budget has warned that the President’s budget is not aggressive enough in reducing the medium or long-term deficit, and CBO’s [Congressional Budget Office] analysis projects a significantly worse situation than the Administration does, with the President’s Budget plan resulting in larger and continuously rising budget deficits. "The budget proposal would increase the debt held by the public from $5.8 trillion, or 40.8 percent of GDP, in 2008 to $17.3 trillion, or 82.4 percent of GDP, by 2019. "CBO’s recent analysis of the President’s budget paints a dismal fiscal picture, with deficits not only continuing, but increasing, as far as the eye can see, and debt growing to levels not seen since World War II. Although large short-term deficits may be necessary to put the economy on a path to recovery, debt cannot sustainably continue to grow as a percent of GDP over the long-term. If deficits are not eventually reduced to manageable levels, they will threaten long-term economic growth and impair the normal functions and flexibility of government." Being supporters of the State, this Committee recommends the only remedy available to the government to prevent fiscal disaster: higher taxes. "The Task Force would be wise to focus on base broadening by making recommendations to reform tax expenditures, and it should explore alternative means of raising revenue. Additionally, the Committee recommends that the Administration remove the restriction that prohibits the consideration of tax increases for families making under $250,000 a year." No doubt, the projections of the alarmed Establishment are conservative! If any serious budget analyst were to go through the budget carefully and pinpoint all of its rosy assumptions that are unlikely ever to occur, the deficit projections would be even greater. Based on these optimistic deficit projections, the Obama budget shows debt doubling between 2008 and 2013. The rise is likely to be even greater. It then shows debt rising by less than 50 percent between 2013 and 2019, as in the best years of the nineties. Given the sour economy, falling tax revenues, and higher government spending, this is a pipe dream. And so, in the good old American way, the Washington insiders attempt to alter the course of the government while preserving it. Their goal is to tame the government. It’s not going to happen. It can’t be done. Why not? Why can government not be reformed? The government we have is coercive by construction. The law of the land is coercive by construction. They involve majority rule in which one group is able legally to impose its wishes on other groups by force. A non-coercive government can be reformed. People only need to stop using its services. It then either shapes up and responds to people’s needs or it loses out to alternative means of governance. A coercive government invariably imposes losses on some while providing gains to others. (The same person may gain from one vote and lose from another.) To survive, the state has to juggle these losses and gains so as to not to alienate too many people. Power has to ensconce itself. It cannot rely solely on the use and threat of force. That is too costly a means to maintain power. Instead, it seeks to make itself indispensable. It seeks to weave itself into the basic fabric of daily life. It inserts itself into basic needs that involve food, health, money, financing, education, and so on. Thus, the survival of the State goes hand-in-hand with growth in government because the growth allows the State to entangle many more people in many more ways so that undoing the resulting society becomes too costly and scary a possibility to the people caught in the web. Furthermore, the growth of government is assured by a second circumstance, which is that the use of power attracts people who want to use that power and who compete to use that power. Any attempt to cut back this growth or tame it poses a threat to the State’s survival and to the power-using inclinations of those in power. Such attempts at reform open up politics to new negotiations, new votes, new priorities, and new coalitions. They threaten to reduce the scope of power exercised by rulers. They alert the citizenry to entirely new possibilities. They unhinge old and established alliances and interests. In all reform movements lie great risks to the established system, interests, and people in power. If they cannot control these reforms, they will want to squelch them. If they control them, you can be sure that no real reforms will be forthcoming. The governing establishment, left and right, is highly conservative in one major respect, which is the maintenance and extension of the existing power structure and hold of coercive government over the private lives and liberties of Americans. Not wanting to take the risks of reforming government and having much to gain by extending government, the government grows.
There is no question but that the unmitigated profligacy of Bush II and now Obama is hastening the day when the federal government implodes and takes the country on a far from merry ride downhill. Labeling them (fascist and socialist) hardly even matters. Obama is now fully responsible for the slide. His across-the-board spending increases in all departments of government are not stimulus. The intent is to exercise power, especially by Democrats. The intent is to give us bigger government, as his anti-Reagan rhetoric makes clear. (Reagan gave us bigger government too.) Bush gave us Iraq and Afghanistan. Obama gives us Afghanistan and Iraq. Obama accuses Bush of irresponsibility. He then turns around and gives us a new era of irresponsibility. The conclusion, which I pose as a theorem of political dynamics, is that government based on coercion cannot be tamed. Coercive governments can and do commit suicide.
April 7, 2009 Michael S. Rozeff [send him mail] is a retired Professor of Finance living in East Amherst, New York. Copyright © 2009 by LewRockwell.com. Permission to reprint in whole or in part is gladly granted, provided full credit is given.
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The
interesting phenomenon emerges, which is that the government grows
too much and risks its own destruction, even while those who are
close to government, in and out, see that the government’s very
survival is threatened. This is because growing government is advantageous
to the rulers, both personally and in terms of managing to hold
power over society, and because cutting government back opens up
many political risks. It is far easier for those out of power, like
many on the Committee for a Responsible Federal Budget, to identify
the survival threat and warn against it, than it is for those in
power to do anything about it. Those in power want to retain power
and get re-elected. Their time horizons are rather short. It hardly
pays them to do something for the long-term good, even of the government,
especially when that something involves large political risks. To
upset one or two constituencies by cutting back their benefits may
mean losing office.