Connoisseurs of democratic decadence can savor a variety of contemporary dystopias. Because familiarity breeds banality, Greece has become a boring horror. Japan, however, in its second generation of stagnation is fascinating. Once, Japan bestrode the world, jauntily buying Rockefeller Center and Pebble Beach. Now Japanese buy more adult diapers than those for infants.
America has its lowest birth rate since at least 1920 — family formation and workforce participation have declined in tandem. But it has an energy surplus, the government-produced overhang of housing inventory is shrinking and the average age of Americans’ cars is an astonishing 10.8 years. Such promising economic indicators, however, mask America’s democratic decadence, as explained by the Hudson Institute’s Christopher DeMuth (The Weekly Standard, Dec. 24):
Deficit spending once was largely for investments — building infrastructure, winning wars — which benefited future generations. Now, however, continuous borrowing burdens future generations in order to finance current consumption. Today’s policy, says DeMuth, erases “the distinction between investing for the future and borrowing from the future.”
Most Americans will be spared the educational experience of fiscal cliff-related tax increases and spending cuts. Still, December’s maneuverings taught three lessons.
First, there will be no significant spending restraint. Democrats even rejected a more accurate measurement of the cost of living that would slightly slow increases in government benefits.
Second, Barack Obama has (as Winston Churchill said of an adversary) “the gift of compressing the largest amount of words into the smallest amount of thought.” His incessant talking swaddled one wee idea — raising taxes on “millionaires and billionaires.” He has nothing pertinent to say about the steadily worsening fiscal imbalance that will make sluggish growth — under 3 percent — normal.
Third, one December winner was George W. Bush because a large majority of Democrats favored making a majority of his tax cuts permanent. December’s rancor disguised bipartisan agreement: Both parties flinch from cliff-related tax increases and spending decreases. But neither the increases nor decreases would have tamed the current $1 trillion-plus budget deficit nor made a discernible impact in the unfunded liabilities of the entitlement state.
This state cannot be funded by taxing “the rich.” Or even by higher income taxes on the middle class. Income taxes cannot fund the government liberals want, and they dare not seek the consumption and energy taxes their entitlement architecture requires. Hence, although Republicans are complicit, Democrats are ardent in embracing decadent democracy.
As economists Glenn Hubbard and Tim Kane explain in National Affairs quarterly, America’s political system “cannot govern the entitlement state” that “exists largely to provide material benefits to individuals.” Piling up unsustainable entitlement promises has been improvident for the nation but rational for the political class. The promised expenditures, far in excess of revenues, would come due “beyond the horizon of political consequences.”
“Our politicians,” say Hubbard and Kane, “are acting rationally” but “politically rational behavior is now fiscally perverse.” Both parties are responding to electoral incentives to neither raise taxes nor cut spending. Hence, “the clash over raising the debt limit that gripped Washington during the summer of 2011 was the beginning, not the end, of our fiscal woes.”
But the perils of the entitlement state are no longer (in Hubbard’s and Kane’s words) “safely beyond the politicians’ career horizons.” Furthermore, a critical mass of Republicans reject the careerists’ understanding of “politically rational” behavior. The media, which often are the last to know things because their wishes father their thoughts, say the tea party impulse is exhausted. Scores of House Republicans and seven first-term Republican senators (Rand Paul, Mike Lee, Pat Toomey, Ted Cruz, Ron Johnson, Marco Rubio and Tim Scott) will soon — hello, debt ceiling — prove otherwise.