I begin with a familiar pie chart. It is well named. It is a chart of the political pie.
Now look at the bottom of the chart: Non-defense Discretionary. It was 16% in 2015, but you can be sure that it is closer to 14% today. This is the political battlefield in Washington: available loot. The rest of the loot is spoken for already. Politics cannot change the rest of the budget. Politics today, in terms of federal spending, is now down to under 14% of the budget, and it is probably heading toward 10% by 2022, when a new President will be in power.
Sometime before the 20’s are over, there will be no more discretionary slice of the budgetary pie. At that point, there is going to be a guerilla war in Washington. It will be a battle over the size of the slices of pie. Political voting blocs that thought the size of their slice was guaranteed will find that it isn’t.
This outcome of battle is going to change the nature of civil government in the United States. A series of battles that parallel ours will take place in Western Europe, where it all began in the 1880’s: Bismarck’s welfare state.
THE BUREAUCRATIZATION OF AMERICA
The greatest single threat to liberty in the West is what it has been for at least a century: the expansion of administrative law. This system is extending the power of central governments into every nook and cranny of the West. Bureaucracies have created administrative law courts that have been substituted for civil courts all over the West. Bureaucratic agencies provide their own judges. They serve as their own juries. Then they execute the laws that they have interpreted autonomously. This process is well developed, and it appears to be irresistible. It is the overturning of the Western legal tradition, as described by Harold Berman in his Introduction to Law and Revolution (1983).
This process is relentless. It is not affected by politics. It is protected in the United States by Civil Service rules. All over the West, comparable protections exist. These people are tenured. They cannot be fired. Their word is the law. This system is manifested in the United States by the Federal Register, which publishes over 80,000 pages of fine-print regulations every year.
There is only one way to stop the growth of administrative law: budget cuts. Nothing else offers any hope whatsoever.
I do not think there is any possibility over the next two decades to de-fund the federal government. Yet I do think there is hope. There is going to be a Great Default. Washington at some point is not going to be able to pay its bills. The unfunded liabilities of Medicare and, to a lesser extent, Social Security will eventually force the bankruptcy of the federal government. The magnitude of these liabilities has been discussed by Prof. Laurence Kotlikoff in his testimony to the Senate Budget Committee in 2015. The only way to stop it will be to cut off granny. But granny is part of the best organized voting bloc in the United States: oldsters.
From a political point of view, the oldsters are unstoppable. From a governmental point of view, administrative law is unstoppable. Sometime no later than 2030, there is going to be a collision between these two unstoppable forces. One of them is going to prove to be unstoppable. The other one is not only going to be stopped, it is going to be reversed.
I think the oldsters are unstoppable.
Eventually, there will be a Great Default that will make it impossible for Washington to control state and local governments. This is a positive development. It will lead to political decentralization. It is going to lead to a new birth of liberty. But between now and then, there is going to be guerilla war inside the federal government.
Here, I am focused on the transition period in between the arrival of the Great Default and the permanent de-funding of Washington.
THE CENTRAL POLITICAL QUESTION
The central political question that will begin sometime around 2025 will be this one: “Who gets the loot when 100% of the federal budget is nondiscretionary?”
Social Security, Medicare, and Medicaid will continue to absorb the lion’s share of the federal budget. This is statistically inevitable. The Great Default will not begin with a cutback of checks going to old people. It will begin with cutbacks of checks going to the Pentagon and the administrative state. That is because the Pentagon and the administrative state do not have organized voting blocs comparable to AARP and the Gray Panthers. Granny is going to get an increasing share of the federal pie.
The Great Default is going to begin inside the federal budget. As the administrative state is cut back, regulatory power over state and local governments is going to shrink. That is going to be the beginning of the restoration of American liberty. But along with the reduction in regulation will come a reduction of transfer payments to local governments. That also is crucial for the restoration of American liberty.
My timetable may be off. It may not take until 2030 for the entire budget to become nondiscretionary. Whenever it does, the political battles over who gets the loot will escalate into a bureaucratic war over funding. The gloves will come off the iron fists.
It’s going to be a question of guns or granny.
Here is the number-one fact of this confrontation. Granny is going to get her money. The politicians will respond to the electorate. They are going to have to cut the funding to the regulatory agencies if they are going to expand the funding of Medicare and Medicaid. Politically, they will have to expand the funding of Medicare and Medicaid.
Money talks. When money gets re-directed to Medicare, Medicaid, and Social Security, it will have to be redirected from something. It is going to have to be redirected from the existing executive bureaucracies. In other words, it will come at the expense of administrative law and the administrative state.
A NEW VIEW OF THE WELFARE STATE
Here is my position. The expansion of the federal welfare state offers the greatest mid-term hope for American liberty today. The expansion of Medicare, Medicaid, and Social Security is politically unstoppable. It is actuarially unstoppable. This means that the politicians are going to have to put everything else in the budget on the chopping block. This will include the Pentagon. This will also include the administrative state.
The federal welfare state is limited by the ability of the federal government to collect revenues. As I have said repeatedly, this limit is about 20% of GDP.
Politics in the next two decades will be about divvying up the loot. It always is about that, but when all of the federal government’s nondiscretionary budgets can no longer be funded, some of them are going to be cut. The question is this: “Which budgets will be cut?” I am confident that these will not be the budgets of Social Security, Medicaid, and Medicare. Yet these are the fiscal monsters.
Here is what I have never put in print before, but I’m finally ready to do it: The federal welfare state is our mid-term friend.
Where would I rather see the money go? Do I want see it to go to the Pentagon? No. Do I want to see it go to the administrative state? No. Do I believe that there is any politically conceivable way to shut down the federal government? No. Would I like to see the federal government default on the debt? Yes, but I don’t think it’s politically conceivable over the next two decades.
Then where is the money going to come from? Nobody is willing to ask this question in public, least of all national politicians.
A lot of sacred cows are going to get slaughtered before 2030 arrives. They will continue to get slaughtered all through the 30’s.
The administrative state is the great enemy of Western civilization. All over the West, it is going to be cut back as a result of the unstoppable expansion of welfare spending on the old age voting bloc.
I am self-interested. Most people are. I would rather see my generation suck the money out of 95% of the federal government rather than let the rest of the government continue to grow. I say this: hooray for the baby boomers. They are going to get their grasping hands on a growing percentage of the federal budget. Yes, this is looting. But somebody is going to loot the Treasury. It is a lot better to let old people loot it rather than let the administrative state and the Pentagon loot it.
Nondiscretionary spending will be the political battlefield by 2025. I am not sure how the forces on the battlefield will line up. I know this much: it will be a three-way battle. The Pentagon, the administrative state, and the oldsters are going to appeal to the public for a greater share of the pie.
The general public does not understand the administrative state. It will be difficult for the various bureaucracies to make an effective appeal to voting blocs. Their voting blocs are too small. There is no voting bloc for administrative law as such. There are only supporters of particular kinds of regulations. It is easy to make fun of bureaucrats in general.
The voters are generally gung-ho for the Pentagon. Certainly, the conservative movement is.
My guess is that the cuts are going to begin in these cabinet-level departments: Interior, Agriculture, Commerce, Labor, Health and Human Services, Housing and Urban Development, Justice, Transportation, Energy, Education, Environmental Protection, Small Business, and the United Nations.
I am sure of this: the oldsters are going to get a growing percentage of the pie. The battle between the Pentagon and the administrative state can go either way. The conservatives will back the Pentagon. The Democrats will probably back the administrative state. One or the other is going to surrender a portion of its budget to the other. But both of them will surrender to the oldsters.
When push comes to shove, the voters would rather see the money go to their parents than to the Pentagon. If it does, there is at least an outside possibility that their parents will not move in with them.
I will escalate this statement. In a crisis, the voters would rather see their parents move in with them while still receiving federal checks rather than not receiving them.
For 40 years, I have argued that there will be a political clash between the generations: retirees vs. workers. That day will come. But before it does, there will be a grand political alliance: working-age adults who don’t want their parents to move in, plus retirees who don’t want to move in. This will be an unstoppable alliance.
The voters are going to be willing to cut back the money that goes to the American Empire by way of the Pentagon if that is what it takes to keep the money flowing to oldsters. There will be political agreement among the generations on this issue. The generals are going to have their budgets cut. So are the admirals. So are the bureaucrats who regulate the American economy.
Lyndon Johnson tried to fund guns and butter. Whoever is President in 2021 is going to have a decision to make: guns or granny?
I believe that ideas have consequences. I also believe that money talks. I think ideas have consequences after it is clear who has the money. At that point, somebody had better do the persuasive talking.
I think the fundamental political questions that lie ahead of us are fiscal. In other words, I think they really do have to do with money. They will lead to political battles.
At some point, the federal government will not be able to support granny. It will already have decimated the Pentagon and the administrative state. At this point, ideas really will begin to have consequences. The administrative state will be a shadow of what it is today. The federal welfare state will also have imploded. But this will happen in stages. The oldsters’ budget will be the last large slice of the pie.
I am hoping that in the transition period, which could last well over a decade, the conservative movement and the Christian activist movement will begin to sort out the issues of centralism versus decentralization. In other words, I hope that the conservatives and Christians will go back to an outlook that prevailed before 1787. We can never go back entirely. History moves forward. But there are principles that do survive over time. The anti-Federalists had it right in 1787. The battle over dividing up the loot in Washington is going to expose the Constitutional settlement as a deeply flawed experiment. Americans are going to have to re-think the relationship between Washington and local governments. It has been a one-way train to centralization ever since 1788. This is exactly what the anti-Federalists predicted.
That train is going to derail no later than 2050. I won’t be around to see it. I hope you will.
Will the conservatives and the Christians have some kind of philosophically grounded, morally grounded worldview to justify the re-establishment of decentralized political power in 2050? Jeffersonianism did not prove successful in resisting Hamiltonianism. Madisonianism could not balance the scales. No one is writing a rap musical titled Henry.
Ideas have consequences, but it is not clear who will have the ideas. I think we are going to have at least a decade in which the issue of decentralization will be one of the crucial political issues in America. When Washington’s checks bounce, because the money is going to granny, America’s academics, intellectuals, social theorists, website editors, and even a handful of pastors will have to deal with the fiscal and political reality that nobody is talking about today.
Money talks. People listen. People think. They come up with new ideas. Then ideas have consequences.
Today’s dominant ideas will not shape what happens over the next 35 years. Money will shape it. More to the point, the absence of money will shape it. The battle over the nondiscretionary budgets will shape it.
This is the grand opportunity today. It is time for serious thinkers to begin thinking seriously about a world in which the nondiscretionary budgets of all national governments in the West must be re-allocated to meet the growing demands of the retired oldsters.
The outcome of this budgeting process and the re-thinking of this process will re-shape society around the world between 2050 and 2100.