The budget drama that has filled headlines for weeks is an important story, yet its outcome is still uncertain. Much is at stake: Is the U.S. to be kept on a permanently higher government spending path, which is what President Obama, most of the news media, and all the Democrats want? Or can spending be restored to pre-2008 levels?
I have been writing budget articles for years and in that time I have learned a simple lesson, as the following two anecdotes may show. My first such article, for Harper's in 1979, included an interview with Chris Matthews. A longtime aide to Speaker Tip O'Neill, Matthews, now a TV star, was an officer with the U.S. Capitol Police when he came to Washington. When I saw him he was toiling away in a Washington bureaucracy downtown -- maybe the OMB.
Chris was full of jokes, but he gave me this heads-up. "Budget?" he said in mock alarm. "No one reads articles about the budget!" Government reorganization was the number-one turnoff for readers, he said, but "budget" came in a close second. After I had written a few more (unread) budget articles, I realized how right he was.
A second anecdote involves Newt Gingrich. When he was Speaker of the House, the U.S. government was briefly shut down. You probably don’t recall the details. In the fall of 1995 the Congress sent a budget to the White House without including the extra spending on Medicare, education, environment, and other goodies that President Clinton wanted. So he vetoed the bill and the government was shut down. Yet Gingrich was blamed.
It was even reported that only "essential government workers" would stay on the job after the shutdown. That should have told us that there are lots of inessential government workers out there, but as Matthews could have told us, no one was reading beneath the headlines. And in that visible spot, Gingrich was portrayed as the villain. It worked.
Months later I met Gingrich himself coming out of the American Enterprise Institute. He told me that what he hadn’t taken into account was that liberals control the news media. He should have known that, of course, but even so it seems reasonable to have assumed that the man who vetoed the budget should have taken the blame. But he didn’t. Gingrich did. A minor episode in which it seemed that Gingrich had been driven by personal pique was inflated into an act of retaliation against Clinton, and "polls showed" that a majority accepted that the shutdown was Gingrich's fault.
How does today's situation compare? We were told that the sky would fall if the debt ceiling was not raised by August 2. Obama, the Democrats and the New York Times axis tried mightily to use this deadline to push the GOP into raising taxes one more time. They apparently failed to achieve their "grand bargain." Spending cuts will probably turn out to be spending increases that are smaller than planned. But Republicans in the House deserve credit for holding firm against tax increases (gratitude to Grover Norquist).
There is still a danger as I write. The Tea Party–supported House is so confident that their constituents want no increase in the debt ceiling that they may be willing to bring down the fiscal house. If so, a full court media press would blame the GOP, and Obama’s "adult in the room" message might carry the day. In response, Sen. Mitch McConnell of Kentucky has proposed giving the president the power to raise the debt ceiling with no new taxes, but continuing to hold Obama's feet to the deficit fire.
I don't know how this will play out. But the 1990s should be a warning. Incomprehension is widespread, the Matthews dictum still reigns, and budget stories are unread. The phrase "deficit reduction" still deceives people into thinking that the budget is being reduced, when it is being increased. These days news-media influence on public policy is waning, but right now we are in a moment when they still carry weight. Headline writers can decide who deserves the blame.
Compare it to the coverage of abortion. It is a perilous issue for liberals because everyone understands what abortion involves. On the other hand a "grand bargain to avert a crisis by reducing the deficit on a bipartisan basis" is perilous for conservatives because only insiders understand it. Usually they are up to no good.
House Speaker Boehner is more deft than Gingrich; the unemployment rate is higher and the potential financial crisis is far greater (nonexistent in Clinton's day). So if Obama were to veto a raised debt ceiling today because it had no new revenues he surely would be the loser. Still, there is peril. Obama's problem (and ours) is that he is adamantly pursuing leftist policies that, over and over again, have been shown not to work. He is unlikely to change and if he gets past the 2012 election he certainly won't.
There is a related and even bigger international story. Starting with Greece, where sovereign default is already under way, a big fiscal crisis is brewing in parts of Europe. It is likely to boil down to this: how much longer will German taxpayers continue propping up other Eurozone countries, such as Portugal, Italy, and Spain?
MEANWHILE IT'S time for us to ask this question: How come we expect the State to take care of so many of our concerns? Educating our children. Guarding our health. Paying doctors' bills. Paying out pensions. Subsidizing housing. Funding scientific research. Handing out taxpayers’ money to those without jobs. Agitating about the environment and shutting down expensive, job--creating projects if so much as a minnow is endangered.
We even dole out taxpayers' money to foreign officials so that they can send some of it on to their own people (keeping some, maybe a lot, for themselves). These were not considered to be the responsibility of the state until quite recently. And all this is in addition to the roles traditionally considered appropriate: defense, police, and the maintenance of law and justice.
Televised democracy and a media still dominated by people who are hostile to any reduction of these burdens on taxpayers make change nearly impossible. A fiscal collapse may be the only way. Unproductive people, whether through their own fault or not, can receive tens of thousands of dollars from the state and cast one vote each. Working people compelled to hand over thousands of dollars to the state also have one vote each. This setup, in which democracy is designed to maximize income redistribution, has taken decades to play itself out. It now looks inherently unstable. Perhaps it deserves to collapse.
If the intelligentsia agreed the system was going to have to change, a way would be found. But they are protected too, many of them tenured and idle on a thousand university campuses across the land.
The often wealthy leaders of modern-day liberalism can live comfortably in their own cocooned world. They are sustained by the conviction of their own moral superiority because (unlike self-interested businessmen) they want to help other people. So by their lights they are public spirited. The catch is that they want to help others with other people’s money, not their own. Their moral ambition is really a disguised form of vanity. They also believe that if the unproductive are to be saved, the rich must be punished.
Most transfers are to older, less healthy, non-working people. And there are more of them every day. With births now well below replacement levels all over the Western world, and staying that way, the crisis will be unavoidable.
The huge expansion in the approved functions of the state was the overwhelming political development of the 20th century. In recent years the leaders of Western countries have been pretending to pay for their spending spree by running up an unpaid credit card at the national level. It cannot be sustained and will not be, even if our current debt-ceiling deadline passes without repercussions.