THE DECLINING USA-63

This essay will be hard-hitting and pull no punches (it is not always wrong to use clichés, it is just that one should not overuse them and never include mixed metaphors) and it is not intended to please far left or far right partisans. While I have seldom, if ever, been labeled a Pollyanna, I certainly have not been accused of being, as the Germans say, “Weltschmerz” either (inherently pessimistic). Where then does that leave me? I would like to believe it is realism that drives me, leads me, and forms the basis for my belief system. And so I shall continue to adhere to this philosophy unless and until I am definitively proven wrong. My thesis is that the United States, as many people I know believe, is in decline and has been for several decades. For evidence of this I will cite historical precedent and current data, both absolute and comparative. I do not mean to imply that the situation of the USA is unique; hardly. The European countries are finally now beginning to pay for their massive decades long “welfare state” policies and “entitlement mentalities.” We, the United States, are following the same downward path to an inexorably declining economic and social fate. It is just that the Europeans have a head start on us; pas de proble’me, never fret, we are gaining on them (there is always room for a bit of ironic humor). What about Asia? There are arcane and supposedly sage commentators who posit that Asia, and in particular, China and India, will be the dominant economic and social entities in the future and not in that distant a future either. I would challenge them to read the book, “The Empire of Lies” by French economic journalist Guy Sorman which makes the case that China has more serious problems than we in the West can comprehend, which I would characterize as, to quote the Bard of Avon, “There are more things in heaven and earth, Horatio, than are dreamt of in your philosophy.” As far as India is concerned even though it has made tremendous economic gains in the last couple of decades, emblematic of it problems is that it is still a country that is welded together, such as it is, with an English language which was imposed on the Indians by the hated English during their colonial period. Down through the centuries there have been oracles, or those who fancied themselves such, who have predicted or chronicled the downfall of various empires or civilizations and have done so with regularity. There is a famous quote discovered years ago which lamented the degenerated state of people and particularly the youth, stating, in effect, that they were going to hell in a hand-basket at that time compared to the caliber of people who came before. This was in the 3rd century BC following the “Golden Age of Greece” which claimed such notables as Socrates, Pericles, Plato, Thucydides, and Sophocles. If the Greeks in the century following their Golden Age failed to measure up to previous standards what about contemporary Greeks? Is there a more entitlement driven, to the point of inciting violent street protests and demonstrations, and a more whining group of ingrates anywhere on earth now or in the past than this current crop of Greeks? The Greeks gave the world democracy and look at that sorry lot now. The 18th century English historian, Edward Gibbon, chronicled “The Decline and Fall of the Roman Empire” in his book and British author Bernard Lewis has written sympathetically and eloquently about the literary and scientific achievements of the Ottoman Empire as well as its decline, especially in his 2002 book “What Went Wrong.” Lewis shows how the Ottomans failed to modernize, thereby falling behind the West in all aspects of military, economic and social categories. At one time it was said, quite accurately, “The sun never sets upon the British Empire.” Those days have long since past. The British did not seem to ever recovery from the enervating effort of winning World War II while the much younger United States seemingly went from strength to strength in the post war period even given the pitfalls or pratfalls, depending upon how one wants to define them, of the Korean and Vietnam Wars. It is since then that the USA has begun to slip appreciably. One who appeared to disagree with that timetable was Philip Wylie who wrote a 1942 book titled “Generation of Vipers” which was a jeremiad against politicians, businessmen, and the public in general at that time. Fortunately for him he died in 1971. One could speculate that he would be absolutely apoplectic given the much worse state of American society today. Two primary, but not exclusive, sources of more current data for detailing the decline of the United States are the books “The BATTLE: How the Fight Between Free Enterprise and Big Government Will Shape America’s Future” by Arthur C. Brooks and “FDR Goes to War” by Burton W. Folsom & Anita Folsom. I would, that these and other data were less compelling in supporting my thesis, yet how can I arrive at any other conclusion than where the facts unmistakably lead? N’est-ce pas? The federal government is “growing like Topsy” relative to the private sector. According to Brooks in 2009 the federal government added 13,000, mostly high paying, jobs. In 2012 the average federal worker earns 73% more than the average private sector worker (Does any observant person really believe that, on average, a public sector worker is more productive and efficient than a private sector worker?). From 2001 - 2008 (if I am not mistaken Bush The Younger was president) the Dept. of Energy grew by 54%. Medicare Part D (prescription drugs for seniors) became the largest medical entitlement program in history. The Congressional Budget Office (CBO) estimated that its cost to taxpayers between 2004 -2013 would be $593 billion. As president of these United States the gallant Bush signed spending bills that contained more than 55,000 earmarks without a single veto. It was the aforementioned Bush who offered up the notorious Troubled Asset Relief Program (TARP) with a price tag of $700 billion and bailed out General Motors and Chrysler with $17.4 billion. The bailouts of the auto companies may or may not have been sound moves, but that hardly squares with the idea that Republicans are always frugal while Democrats are profligate. By 1997 (the Clinton administration) Fannie Mae was buying sub-prime home loans secured with nothing more than a 3% down payment. Four years later (Bush admin.) it was buying mortgages with no down payment; yet congress pushed for making even more risky loans. New government mandates required Fannie Mae and Freddie Mac to increase their low and moderate loans to at least 55% of their mortgage purchases. From 2001 – 2006 subprime loans rose from 7% to nearly 19% of all mortgages. Two of the leading lights in congress who led this travesty of Freddie and Fannie taking on these risky mortgages which turned unto a worldwide financial disaster were the egregious Sen. Chris Dodd of Connecticut and the termagant and labile Rep. Barney Frank of Massachusetts. Both were too mendacious and dishonorable to accept any blame whatsoever for the debacle. Those two jokers were not known for their comity or comedy for that matter, especially the cranky Frank. True, the Wall Street greed-heads took advantage of the situation to profit mightily from that whole sorry business, yet it was the offal-smelling politicians who caused it. The increase in the national debt was $4.9 trillion (call it $5 trillion) during the 8 years of the George W. Bush administration, going from approx. $5 ½ trillion to $10 ½ trillion. During the 3 ¼ years of the Obama administration the national debt increased by another $4.9 trilllion, culminating in a total national debt of more than $15 ½ trillion to date. To be fair, the economic conditions of the country were much more dire when Obama became president than when Bush did. However, also to be accurate, the Obama administration, except for the American Recovery & Reinvestment Act of $787 billion (stimulus package) signed into law by President Obama on Feb. 9, 2009, which is widely thought to have been largely wasteful and ineffective in ameliorating the financial woes of the nation, did not put the economic recovery of the country as its first priority. Everyone remembers that Obama’s Chief-of-Staff, Rahm Emanuel, said, “You never want a serious crisis to go to waste.” So President Obama and the Democrats in congress imposed what has turned out to be an unpopular healthcare reform, comprising 1/6 of the USA economy, on the American public as the signature legislation in the first two years of the Obama administration. No sensible person denies that a major change is needed in our healthcare system to keep it from imploding financially, yet to turn complete control of the healthcare system in this country over to the federal government is a proven recipe for inefficiency, medical rationing, and financial disaster. Respected economist Abba P. Lerner wrote a primer on economics titled “Everybody’s Business “ in 1961. In it he stated the national debt was not a problem in that “we owe it to ourselves.” He was correct in that the national debt was a fraction of what it is now, some $290 billion, and by 1970 just 5% of our debt was foreign held. By 1990 19% of our debt was foreign held and by 2011 this had ballooned to 46%. These last statistics came from Rep. Paul Ryan (R-WI) who is chairman of the important House Committee on the Budget. Ryan, 42 years old, is one of only a few people in congress who are truly looking out for the good of the whole country in trying to achieve fiscal reforms that will keep us from imploding. Most of the congress people, both Democrat and Republican, are not worth a rat’s posterior. Ryan also came up with the statistics that in the last 40 years the federal budget was approximately 20% of the economy. Given the growth of the government it is project that by mid-century this figure will be about 40% and by the end of the century close to 80%. Currently $0.40 of each dollar of the federal budget is borrowed. It certainly is not irrational to forecast that, unless drastic changes are made, on its current trend this country will become a collapsed financial and social society. There have been 47 defined depressions or recessions in the United States since 1790 and the average length of these economic downturns since the mid 1850’s is about 17 months. Why then is the current recession lasting so long? I would postulate it is the same reason that the Great Depression of the 1930’s lasted so long. What do they have in common? Both were punctuated by massive federal government intervention. First President Hoover then President Roosevelt, with the best of intentions (remember the old saw about what the Road to Hell is paved with), used the federal government to attempt to stimulate and control the economy. It is an eerily apropos example of first a Republican President then a Democrat President employing the federal government to “fix” the current economy as was done in the 1930’s. What comes to my mind are the words of philosopher George Santayana who said, “Those who can not remember the past are condemned to repeat it.” Of course these leaders have tremendous egos (or they would not have been driven to achieve the positions they held), which force then to believe they will succeed where other have failed. In addition to these four presidents there is a prime example of former Soviet Union leader Mikhail Sergeyevich Gorbachev who was convinced he could reform Soviet communism and make it into a viable and dynamic economic and social system. Communism had never worked anywhere at anytime in history and it eventually failed spectacularly in the case of the Soviet Union. What a surprise. President Obama has made clear that he favors a “redistributive fairness” mode of income, that is to say, leveling the amount of money Americans can keep simply because that would be “fair” rather, as Arthur Brooks calls it, a “meritocracy fairness” form of income – allowing people to keep most of what they earn based upon the merit of their efforts. What is “fair” as to the amount of income taxes that people pay is, as the saying goes, in the eye of the beholder. President Obama repeatedly stated that higher income people should pay even more in income taxes than they do now. But what is the breakdown of what people pay as a function of their income? Here it is: The top 1% of earners (1.4 million people) bring in 17% of the income, but pay 35% of federal income taxes; the top 5% of earners bring in 37% of the income, but pay 60% of federal income taxes; the bottom 50% earn 12% of the income, but pay 3% of federal income taxes. Further, this disparity is becoming more pronounced with time. From 1986 to 2006 the proportion of taxes that the top 1% of earners paid grew from circa 26% to 35%. In 2008 presidential candidate Barack Obama promised to raise taxes on individuals earning more than $200,000 per year and on couples earning more than $250,000. His rational was that we needed “a sense of balance and fairness in our tax code.” He has repeated this consistently every since. As of 2012 the bottom 50% of earners will soon, if not already, not only not pay federal income tax, but will be net takers from the government in the form of the Income Tax Credit, food stamps, Medicaid, and the school lunch program among other government largesse. That President Obama wants to fundamentally change this country into a more European type quasi-socialistic society cannot be gainsaid. However, conservatives who believe that all will be well if Obama is defeated in his re-election bid this fall and Republicans keep control of the House and regain control of the Senate are themselves a bit deluded. History is not on their side – such an outcome would doubtlessly slow, but not stop our inexorable descent into a financial and social abyss. This attitude by conservatives would be risible were it not so specious. As far as incontrovertible historical data to bolster my thesis that it is politicians in general, not just Democrats, who have created a too big, too intrusive, too powerful, too expensive, and an overweening government are concerned, the following study from Arthur Brooks is compelling: In 1913 the ratio of total taxes - local, state, and national, to the federal Gross Domestic Product (GDP) was 8%; in 1940 after the New Deal policies of FDR it was 15%; in 1980 it had reached 30%; in 2000 it was 33%; in 2009 it was 43%; and is projected to be 50% by 2038. During this period as taxes increased as a percentage of GDP there were local governments, state legislatures, and congresses which were alternately dominated by Democrats, by Republicans, and sometimes basically evenly split and there were 9 Republican presidents along with 8 Democrat presidents between 1913 and now. How else can one rationally interpret these data other than the way I have? I would welcome hearing dissenting opinions, just remember, to use an American Civil War expression, an opinion unsupported by facts is not worth “a pinch of owl’s dung.”