“We’re going to take things away from you on behalf of the common good.” So said Hillary Clinton at a fundraiser back in 2004. Conservatives, in a rush to tag Clinton as a Marxist, sometimes strip out the context; she was talking about repealing President Bush’s tax cuts. But her remark is a nice motto for modern progressivism, which constantly demands that the rich finance a bulging public sector that acts for the common good.
This has been the theoretical foundation of the Obama presidency. The stimulus would borrow from a wealthier future generation to energize the economy. Obamacare would take resources from the health insurance companies and give them to the uninsured. Repealing part of the Bush tax cuts would force the rich to “pay their fair share” for programs to help the poor. The government, having defined the common good, then gets to enforce it on its own terms. It’s a nice gig, if you can get it.
The problem is, it’s spectacularly backfiring. Take yesterday’s report from the Congressional Budget Office. The above-the-fold headline was that the CBO is predicting a lower deficit for 2014 than it had last year. But the real news is that the accounting agency is increasing its projection of how many full-time employees Obamacare will eliminate from the workforce—by a long shot. The CBO had previously calculated the health law would kill about 800,000 jobs by 2024; now they’re estimating 2.5 million.
Only a few days earlier, the Brookings Institution released a study that examined the effects of Obamacare on each income decile (the poorest one tenth through the wealthiest one tenth). While the researchers found that the lowest two tenths of income distribution will be better off, the remaining deciles will see their incomes shrink thanks to the health law. For the fourth decile—close to the median; certainly among the middle class—the result would be a net 1.1 percent loss of income.
Let’s not assume too much from these results. Economic projections are frequently wrong, and some of the worst punditry on earth consists of wonks slinging educated guesses at each other. But the overall trends shown by both studies are clear and born out by anecdotal evidence: Obamacare, which was supposed to serve the economically vulnerable, is instead shrinking the workforce and socking the middle class in the solar plexus. The top one tenth might get smacked too, but they can easily absorb the damage. And it’s not CEOs who are seeing their jobs shredded by new Obamacare regulations; it’s Applebee’s waitresses and Papa John’s delivery guys.
Obamacare is destroying wealth, and Congress is doing what it can to help. Democrats and moderate Republicans are once again giving the coughing, spluttering immigration reform engine another crank. The left wants to help destitute illegal immigrants; Republican businessmen want cheaper labor; everyone is supposed to win. Except, of course, for American workers. If last year’s immigration bill had been passed, wages would be depressed through 2023, according to the CBO. Again, the wealthy benefit and the middle class gets hammered, all for the supposed common good.
Then there’s the deficit. Admittedly, the latest CBO report projects the deficit will shrink in 2014 and 2015, though it will increase steadily after that. But the long-term budget picture is far more unsettling. By 2024, Social Security outlays alone will reach $1.5 trillion. Health care spending, including Medicare and Medicaid, will hit $1.8 trillion. Other handouts will cost an additional $351 billion. Combined, that’s enough to consume the federal budget, and then some.
All of that will result in $7.3 trillion in deficits over the next 10 years and an astonishing $27 trillion in national debt, according to the CBO. And again, don’t take those numbers as gospel. The CBO already increased the projected deficit by almost $1 trillion over last year’s prediction because of weaker economic growth. If the economy continues to lag—a very real possibility—the hole in the budget could gape even wider.
This maniacal spending—in conjunction with trillions more from the Federal Reserve’s quantitative easing program—is supposed to be stimulating the economy. Instead the swamp bubbles while the government frantically borrows money from perhaps the poorest class of people in America: the young. Millennials, 44 percent of whom are underemployed weighed down by an average of $29,400 in student debt, are footing the bill for everything.
I was once on a political talk show and a progressive guest started making noises about “Medicare for all.” I asked how we were supposed to pay for that. “Increase taxes on the wealthiest two percent,” he said. Easy-peasy! Except in real life, liberal governance achieves the exact opposite. It buttresses corporate profits and stock portfolios while hurting those who can least afford it: the middle class, the American worker, and the chronically indebted twenty-something.
This happens because the government isn’t an effective agent of the common good. Its legislators and bureaucrats might strive for this ideal in theory, but in practice they're far better at lining their own pockets and bending to powerful interests. (Obama might be comparable to James Buchanan the president, but he should try reading James Buchanan the economist.) Public intellectuals, wrote Christopher Hitchens, love to dwell on complexity, but need to remember to “Never, ever ignore the obvious either.” In the case of a sprawling government, massive debts, and a stagnant economy, Ockham’s Razor should point us away from too-cute theories of neo-Keynesianism and towards: less government, less debt, and more opportunity. Sometimes it’s really that easy.