What the (Bleep) Just Happened? (12 page)

The cartoon from 1934 reveals something else. For years, leftists have spun the big lie that while they embrace big government, their approach is not that different from the Republicans’ approach. It’s just a question of scale, you see. All politicians spend. The Left just wants to spend a bit more to make sure that the most vulnerable people are cared for and the system “works for everybody.” The Left has effectively peddled this drivel for years, even as leftist administrations and Congresses chronically outspent Republican ones by staggering amounts. In fact, they’ve spent so much more money than Republicans that if you visit the U.S. Mint, there’s literally a Socialist Walk of Fame. But unlike in Hollywood, where you can see celebrity hands in cement, here, molded in cement, are the ass-prints of FDR, LBJ, and Obama, where they sat on their derrieres as president, laughing as trillions of dollars rolled off the printing presses.

This is why the 1934 cartoon is so profoundly terrifying: it reveals a much darker motivation on the part of the leftists than merely a desire to maintain a reasonable social safety net. It shows that the kooks are driven by a pathological desire to deliberately spend like mad as a means to seize ever-greater power and ultimately to undermine the constitutional form of government. That cartoon predicted Roosevelt’s big-government, big-spending orgy, and it was eerily predictive of a young twenty-first-century president and his wrecking crew taking it to a whole new level. The current “Young Pinkies from Columbia and Harvard,” drunk on their own “Power,” have taken us headlong into “Planned Destruction.”

The preamble to the Constitution refers to promoting the general welfare, a concept that the kooks have hijacked and morphed into promoting the welfare
state
. From the time that cartoon was published in 1934, the Left has sought to establish a massive voting bloc of dependents who would guarantee perpetual Democratic control, allow the constant empowering of the state, and reduce us to a nation of needy subjects. The welfare state they have built is entirely incompatible with the rest of the Constitution, particularly the phrase “and secure the blessings of liberty to ourselves and our posterity.” Dependents are not free.

To make their dark grand strategy work, however, the kooks needed the veneer of intellectual legitimacy. They found it in the macroeconomic work of John Maynard Keynes. Prior to the rise of Keynes in the 1930s, American economics had been guided by the “invisible hand” principle of the free market as first explained in 1776 by Adam Smith. Keynes’s work gave the kooks an alternative approach, which they have subsequently used—and abused—to an appalling extent.

Put simply, Keynes saw government spending as an indispensable but
temporary
tool to be used judiciously to correct certain perceived imbalances in the economy. Since there was no entity as large and flush as the central government and since government was the only entity that could print money, government was the biggest and best source of economic stimulus. The Keynesian assumption is that government spending has a big positive effect on growth, particularly when the economy is faltering. Keynes was also opposed to higher taxes in a recessionary or depressionary period.

A critical part of Keynesian theory is the “multiplier effect,” first introduced by British economist and Keynes protégé Richard Kahn in the 1930s. It essentially argued that when the government injected spending into the economy, it created cycles of spending that increased employment and prosperity regardless of the form of the spending. Here’s how the multiplier is supposed to work: a $100 million government infrastructure project might cost $50 million in labor. The workers then take that $50 million and, minus the average saving rate, spend it on various goods and services. Those businesses then use that money to hire more people to make more products, leading to another round of spending. This idea was central to the New Deal and the growth of the Left’s redistributionist state.

The great free market economist and Nobel Laureate in Economics Milton Friedman, among others, showed that the Keynesian multiplier was both incorrectly formulated and fundamentally flawed, in that it ignores how governments finance spending—through either taxation or debt. Raising taxes takes the same or more out of the economy than saving; raising money by bonds causes the government to go into debt. Growing debt then incentivizes the government to raise taxes or inflate the currency to pay it off, which in turn decreases the value of each dollar that the workers are earning. The Keynesians also ignore the fact that saving and investing have a multiplier effect at least equal to that of deficit spending, without the drag of debt.

Keynes turned the commonsense laws of economics upside down: that debts need to be repaid, that demand curves slope downward, that higher taxes mean less growth and less of whatever it is being taxed. The FDR Keynesians’ defiance of the basic rules of economics led to such absurdities as the New Deal decision to pay farmers to burn their crops and slaughter their livestock to maintain high food prices. It’s Mad Hatter economics, based on the leftist assumption that the government can spend your money better than you can. The reality is that in this Wonderland, Alice is no longer at the Hatter’s Tea Party. Instead, she’s in a soup line, waiting to get a hot bowl of gruel, the ingredients of which now include the March Hare and the Dormouse.

Today’s Keynesian cultists have so abused Keynesian theory that Keynes himself might not even recognize it. The kooks have taken the central aspect of his comprehensive economic thinking—massive infusions of government spending—and
institutionalized
it in order to make it
permanent
. Of course, eventually all of that spending must be paid for, through either higher taxes or perpetual borrowing, both of which have eventual net negative impacts on the overall economy. It’s a nasty economic death spiral, but today’s Keynesian cultists refuse to acknowledge this basic flaw in their logic. They also tend to disregard the free market and the individuals who make it up: the entrepreneur, the risk taker, the innovator. They are peripheral, if they exist at all in today’s Keynesian kookdom. The only entity that matters is the all-powerful state.

While Democratic presidents from Roosevelt to Johnson massively expanded the size of government and put us into a Keynesian slumber, Obama has spent us into a Keynesian coma.

Roosevelt kicked off the modern government spending spree with the New Deal programs and Social Security, and the activist government template he put in place—in terms of both discretionary spending and entitlement spending—began to grow and spread like a horror movie virus. Lyndon Johnson seized the Rooseveltian model and supersized it. He began huge welfare programs in public housing and food stamps that quickly took on lives of their own. And most significantly, he introduced health care as a government entitlement. In 1965, Johnson launched Medicare, the program for the elderly, and Medicaid, the program for the poor. In retrospect, early projections of their future costs are hilariously absurd. Medicare was projected to cost $12 billion by 1990 but instead rang in at $110 billion. Today, Medicare’s future unfunded obligations come in at a mind-blowing $40
trillion
. For its part, Medicaid cost $3 billion in inflation-adjusted dollars in 1966, $41 billion in 1986, and a whopping $243 billion in 2010.

Social Security had been manageable until 1972, when Democrats increased benefits by 20 percent, added an annual cost-of-living adjustment, and tacked on built-in additional benefits that would rise along with wages instead of inflation. Incredibly these entitlement enhancements were added to the 1972
debt-ceiling
bill.

FDR had originally designed Social Security to be a national retirement program for workers beginning at age sixty-five—at a time when life expectancy was less than that. Today life expectancy is eighty years old and climbing. In 1960, five workers supported a retiree. Today, a mere 1.75 workers do. The retirement age has not kept pace with the aging and growing population; the system is increasingly top-heavy and projections are that it will be completely drained by 2037, if not earlier.

Furthermore, none of the benefits that were added over time were required to undergo annual budget reviews, resulting in costs mounting faster than Lindsay Lohan’s jail sentences. And given the population growth and the expansion of coverage to increasing numbers of people, it’s no wonder that entitlement costs are astronomical: according to 2011 government information, today approximately 50.5 million Americans are on Medicaid, 46.5 million are on Medicare, 52 million receive Social Security, 5 million get Supplemental Security Income, 8 million are on unemployment insurance, 48 million receive food stamps, and 24 million benefit from the earned-income tax credit. You can also add in the 9 million people who get free Brazilian waxes, the 7 million people who get a lifetime supply of Mentos, and, finally, the 750 people who receive free rides on Ruth Bader Ginsburg’s Jet Ski, all covered by the American taxpayer. In 1965, when Johnson began the new wave of government expansion, these types of payments made up 28 percent of the federal budget. Today they are 66 percent of it. They are costing us over $2.1 trillion per year, and that’s
before
the widespread retirement of the baby boomers and the true fiscal onset of ObamaCare, both of which will set TNT under the budget and blow it up, Wile E. Coyote–style. Combined, these redistributionist programs have unfunded liabilities totaling an eye-popping $117 trillion. That total is more than all the registered wealth in the world.

Since the Democrats took control of Congress in 2007, more Americans are more dependent on government for their income than at any point since 1929.

Luxuriating in the dirty trough of big-government spending, however, was not restricted to the Democrats. Under President George W. Bush, for example, Republicans should have cut domestic discretionary and entitlement spending to bring the budget under control in wartime. Instead, they went on a spending binge, blowing hundreds of billions of dollars on a new Medicare prescription drug benefit, education including No Child Left Behind, expensive transportation legislation, and home ownership assistance that helped to lead to the housing bubble and ultimately the 2008 financial meltdown. This was the net result of “compassionate conservatism,” a concept even more sinister than outright leftism because of its deceptive characterization. It was neither “compassionate” nor “conservative.”

There is big government, however, and then there is
really
big government. What we have experienced from the Obama administration has been government on the scale of the alien mother ship in
Independence Day
. In a February 2009 cover piece that seemed to invoke that 1934 cartoon,
Newsweek
proclaimed, “We’re All Socialists Now.” The then editors Jon Meacham and Evan Thomas wrote, “Whether we want to admit it or not … the America of 2009 is moving toward a modern European state.” And: “As entitlement spending rises over the next decade, we will become even more French.” Would this be the same Europe that has suffered from weak economic growth, high unemployment, ever-higher taxes, growing uncompetitiveness, and crippling debt crises, thanks to decades of economic redistributionism? Would this be the same Europe that is experiencing economic chaos, riots, and strikes as a result of socialist economic policies? Oh yes, by all means, let’s become more European. Despite both the hard sell of Democrats over the decades and the soft sell of Obama in particular, the majority of Americans today reject this approach. In late 2010, Gallup released poll results showing that most Americans do not, in fact, believe that we are all socialists now. Every fall since 2001, Gallup has polled on a series of questions related to the size and activism of government. The 2010 results showed widespread and deep disapproval of large-scale government intervention in the private economy. Given the economic upheaval since 2008, it’s striking that Americans are more likely to say there is too much intervention, spending, and regulation, particularly when Obama and the Democrats have been selling those big-spending policies as critically necessary to prevent an economic death march. As Gallup put it, “The average American is
less
appreciative of increased government control over business during the past year, rather than more so.”

More important, Gallup found a sharp increase in the number of Americans critical of the overall size of government. They noted, “This sentiment stretches to 59 percent of Americans now believing the federal government has too much power, up eight percentage points from a year ago.”

Gallup concluded: “An expanded proportion of Americans in 2010 believe
the government has overstepped its bounds
—
growing too intrusive and too powerful
. Also,
nearly half now consider the government a threat to individual liberty
.” (Emphasis added.)

We’re all socialists now? Not so much.

The central question of our time—upon which the future of America hangs—is this: What is the proper size, scope, and role of government? How we resolve it will determine what kind of country we will be going forward. The debate fiercely rages in Washington, state capitals, and local communities. The debate refers to the size of everything: the size of government, the size of government spending, the size of the debt, the size of entitlements, the size of taxes, the size of the bills passed against the will of the people, the size of the political egos making the decisions. This fight will also determine the size of the Republican Party’s cojones, and whether it has the ability to stand up to a tenacious redistributionist with a God complex who has the media in his pocket.

Americans see that this is not just about merely big government. If the 2006 and 2008 elections were a repudiation of the Republicans’ brand of big government, then the 2010 election was a repudiation of Obama’s brand of
really
big government.