The Principles of the Past

In celebrating Independence Day, E.J. Dionne questions the desire of many to base their policy choices on some notion of the "'original' intentions of the Founders." Writing in the Washington Post, he argues that too many people (presumably conservatives) rely upon their modern understanding of history, as a snapshot, to argue for certain policies, rather than acting as "we the people" best see fit today. He criticizes American historicism by writing:

[I]t is dangerous to turn the Founders into quasi-religious prophets who produced a text more like the Bible or the Talmud. It’s neither. It is a governing document that was the product of compromises and arguments....

We do a disservice to ourselves and the Founders alike if we take them out of history and demand that they settle arguments that we ought to settle on our own.

The Founders, after all, were not timid men bound by the past. They did something bold and adventurous. In creating a novel form of government, they were thinking and acting anew.

While Dionne eventually goes too far by essentially stripping the Constitution of any real meaning and advocating for an expansive government than can do anything the people (one can only assume he means a crude mass of majoritarian democracy) want, he does raise a valid point about the Right's overemphasis of a historical moment and the great men that shaped the country at that time. Indeed, while it is necessary to learn from history, it is not the past but the principles of the proper role of government that we must rely upon to shape policy.

The problems with an overly heavy reliance on the Founders' "vision" are manifold. First, it is unthinking. On a basic level, it ignores the nuances of policy debates and circumstances during the founding of our country. As any basic reading of the founding of the United States will reveal, many of the Founders had different beliefs. However, on a deeper level, such backward-looking reliance creates a situation where blanket ideas are deified without any understanding of why they are appropriate or how they properly function. This leaves proponents of constitutionalism stultified, unable to defend their perspectives with anything but the simplistic, "This is what the Founders established for us."

A related problem, is that this perspective handicaps the propagation of a constitutionalist ideology. There is minimal debate in public circles about the proper role of government. The Left has defined, as Dionne unquestionably advocates, a activist model of government as the solution-finder extraordinaire. Many on the Right have an enfeebled response of "small government because the Founders said so"—an argument that, as popular discourse shows, carries little sway.

Furthermore, the reliance on the historical argument for limited government has crowded-out the intellectual and philosophical one. Not only does a historical justification fly against the impetus behind the founding of this country, which was forward looking, but it severely encumbers the more proper, strong, and justifiable arguments. This often prevents the Right from meaningfully presenting solutions to very modern problems (whether in the government or within other, often waning, institutions), a situation that diminishes the force of the Right's arguments.

This can lead to a number of dead ends for proponents of limited government. In one regard it can devolve into a fight, relegated to the historians and irrelevant to most Americans, over history. Worse it can create a perception of a divide between the "thinking intellectuals" who are forward-looking and the reactionaries who do not want to address modern problems. Whether this classification is fair or not is irrelevant—it is unfortunately a powerful mainstream belief. (Why are the halls of higher learning, media, and many youth so pulled by the progressive ideology?) By de-intellectualizing the founding principles of the United States, the Right has allowed the progressive ideology, with its concomitant view of an expansive role of government, to dominate the realm of solutions.

Such an argument does mean dismissing the past. There are many lessons to be learned from history. The Founders clearly designed a great system and helped elucidate a number of profound principles that form the basis of our government. But they, knowingly, were unable to foresee everything that the future could hold. Instead, as the Founders themselves did, the Right must guide its policies on principles. It must reinvigorate the intellectual arguments that underpin classical liberalism (eg. the political philosophy of modern conservatives). While these principles may have historical roots, they are not themselves history but are timeless. The forward-looking application of the principles of limited constitutional government can serve as a worthy challenge to the progressive ideology that has become dominant, thus not only helping to shape the form and nature of our government but winning support from swathes of society that have been deemed lost.

@ FutureChallenges: The American Way and Healthcare

My newest article at Future Challenges, "The American Way and Healthcare," explores political economy in light of the health insurance debate in the United States. Arguing that an improper understanding of the proper role of government is at the root of the health insurance debate, the article briefly outlines the current, generally false, understanding of a government's role and what it should be instead. It then explores a number of pernicious effects that such misapplication of government has. While not offering a third solution (which I have done elsewhere), the article argues that by failing to explore the proper role of government, American society has been left with two poor choices: the status quo or a "big government" solution. A reevaluation of the true purpose of government will go a long way toward not only allowing government to flourish in its proper place but also freeing-up creative impulses to solve many real problems (such as the dismal American health system) in more appropriate forums.

The article states:

Healthcare, or more aptly the provision of health insurance, has been an increasingly contentious issue in American politics, particularly over the past three years. Since the passage of Obamacare in 2010 to its potential repudiation by the Supreme Court following the forthcoming judgment this summer, American politics have become infused with this intractable problem.

There is little doubt that the current American system—a bastardized semi-competitive private monstrosity that is enfeebled by regulations, restrictions, and complications—is a disaster. It is expensive, inefficient, and unable to provide reasonable access to many Americans.[1] This has lead many on the American left, and observers from across the Atlantic, to advocate for a government solution.

However, while some champion Obamacare—the current administration’s healthcare reform bill—as a step in the right direction, many across the political spectrum find it has failed to provide an ideal solution, albeit for different reasons. Many on the left feel it does not go far enough, pining for the type of public system that exists in numerous European countries. In contrast, the right has castigated it as a tremendous overreach of government authority and responsibility, but has, as a whole, offered few alternate solutions.

That a revamping of the system is needed seems to be beyond question; however, very little thought has been given to what is the proper forum for such change. The knee-jerk reaction, as is unfortunately all too common in American society, is to turn to the biggest and most powerful institution—the federal government—to solve such intricate problems. This has left Americans, at least in the popular media, with two choices: massive government involvement or the status quo.

The remainder of the article can be accessed at Future Challenges.

Representing All Americans

A unfortunate tenet on the left and on some segments of the right, is to accept that the government can justly represent just a small slice of the electorate; one's supporters, or base, interest groups, and political allies. But the reality is that for there to be any true level of justice in our political system, our leaders must truly represent all Americans. They must design policies and laws with this fundamental principle at the forefront of their minds; because, while as a political system we believe in majority rule, we also have a strong commitment to minority rights. No in-group or out-group should be offered special privileges or unfair treatment. Every American should be treated equally under the law.

It seems like a relatively simple principle when stated in a succinct manner, yet unfortunately it is frequently and readily ignored by America's politicians. It is a staple of the Obama administration's political ideology. For those on the left it is more than simply appealing to their base or providing pork to associated special interests, but a deeply enmeshed belief that the government has a responsibility to treat individuals differently in certain circumstances. Government, from this perspective, serves to ensure specific outcomes, or at least push the outcome in the desired direction. Explicitly, it accepts the notion that a just government should focus on the end result, aiming to create some arbitrary notion of equality—an impossible and unjust task.

When Obama lauds his success, as he recently did at a United Auto Workers' conference, of "saving" the auto industry, this ideology is displayed in its most unflattering light. If one was the chairman (or czar) of the auto industry, he would surely applaud the preservation of his interests. An individual, in the role of autoworker or auto company owner, may be ecstatic at receiving special dispensation, tacitly ignoring both those that paid for their rescue and those who were not rescued. But receiving such perks of money, influence, or connection, however historically common it may be, does not make it the proper way our system should be run.

However the argument here is not about the economic efficacy of such policies—there are plenty of economic rejoinders that would challenge those that tout such bailouts as fiscally sane, which can be addressed elsewhere.^[1] What is at question is the ideology that the government has the right to treat one group differently than another. These type of policies support the incorrect belief that the government can (justly) protect or injure certain segments of society using arbitrary criteria (and yes, regardless of how logical such criteria may be to one or another, they are arbitrary when they discriminate between different individuals). 

The problem, to be fair, is not singularly one of the left, but also unfortunately present on the right. When Rick Santorum stands on the podium arguing for special treatment for manufacturers through tax incentives, he concedes reliance on the same backward philosophy. When congressmen from agricultural red states fight for special subsidies to farmers, they too erode the just role of government. When oilmen or bankers (or union-members) are given carve-outs, the same philosophy is at work.

This is an issue that goes beyond the charges, often correctly made, of "picking winners and losers," which is certainly problematic. The problem is the vision of government that does not consider all Americans as equal before the law. That is an ideology that, for whatever electoral or political reasons, believes that a politician can treat different Americans in different ways. 

While the political roots of this problem are understandable, the long-term consequences are potentially disastrous. Our system has moved a long way from its foundations, where the government was supposed to serve as an impartial arbitrator, as an entity that facilitated the common space but did not try to fill that space, to a near feudal model of patronage and special privileges. The system, historically speaking, may never have worked as philosophically as it strove to—there are certainly too many examples of its failure—but historically (or maybe its simply an effect of rose-tinted lenses) the philosophy seems to have greater popular currency. Today, it appears to be rarely thought of or discussed. 

American politicians need to strive to represent all Americans and the electorate should hold them to that standard. If the people eschew demands for special treatment, the politicians will have to change their electoral strategy. If privilege to the few at the expense of the many becomes anathema in the American political system (right now it is only anathema if the "few" are not you), it will help rebirth the idea that the government needs to represent all Americans, providing a system that is nimble, light, and does not impede the individual. The alternative is a bloated, heavy, and cumbersome system (daresay European) that struggles under the weight of entitlements and carve-outs. The latter is a system that not only veers away from the correct formulation of a just government but will crush the unique spirit that has made America great.

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[1]Did an investment in the auto industry reap the best return for the government's investment when compared to other options? Could that money have been used to create or save even more jobs in other sectors or been better used by the taxpayers? Is having a large auto industry really in the best long-term interest of our economy? Would it have been smarter to facilitate structural changes in the economy rather than prop up a failing industry? Certainly, demonstrating that the auto industry is alive today and that jobs have been "saved" in isolation, as proponents are wont to do, does little to answer if the bailout was a smart financial decision.

Rush Limbaugh Proves Why the Government Should Leave Us Alone

Rush Limbaugh has provided us with yet another reason why government should stay out of making decisions for individuals. In a recent flap over contraception, Limbaugh referred to Georgetown Law student Sandra Fluke as a "slut" because of her desire to speak to a congressional committee on the merits of contraception (she was not allowed to). Limbaugh crossed a line—thankfully, after demurring, he apologized.

But the problem is not so much what he said—although shameful is the only way to describe it—but the firestorm and divisiveness that resulted. Limbaugh gave Fluke a national platform. Obama, in his usual arrogant way, thought that somehow his presence in the fiasco was warranted and jumped into the middle of a public fight between two private citizens. (The story of the "beer summit" between Henry Louis Gates and the Boston police officer, James Crowley, comes to mind, but Obama's swagger is another topic.) GOP presidential candidates had to distance themselves from his remarks. Organizations and legislatures changed their policies. The right marshaled or had to play defense. Suddenly, society is divided, screaming at each other over personal decisions.

And what is the cause of all this? Well the government of course. Its desire to meddle in the private decisions of individuals creates huge incentives for individuals to battle each other over how these top-down regulations are determined. It is divisive. While there are many problems with government meddling in the private sector, the one most evident in this fiasco is that government control prompts individuals and interest groups to struggle over the content of government decisions. By creating and controlling a monopoly power over a decision that will affect everyone—in this case, every American will have to pay or not pay for contraception—the government establishes an immediate battleground for unlike-minded individuals to struggle in favor of their perspective.

Suddenly, private decisions become very public ones, where advocates are either talking about their propensity to need birth control or how heinous and cruel contraception is. But the truth is, that in the public sector, this debate should not matter. One need not care or be bothered by his neighbor's decision to use or abstain from contraception.

One need not agree with the Catholic Church's stance on birth control to be in accord with the argument that the government should not interfere in individual's decisions on whether to pay for it or not. Americans should be as opposed to the government forcing individuals or private institutions into paying for contraception, as they should be opposed to the government prohibiting the sale of such devices. The point is: individuals should  have the right to make these decisions on their own, without having to justify their reasons, logic, or beliefs.

By interfering in these private decisions, the government only creates new sources of tension in society. It tries to force a disparate and diverse nation to hold one set of values or one set of beliefs. That is not only not achievable but pulls at the very fabric of social cohesion. We need not agree with our neighbors, but we also need not try to force them to conform to our beliefs. The less the government tries to push Americans into a one-size-fits-all mold, the fewer issues we will have to fight each other for control over. Congressmen should not be hearing testimony about a law student's beliefs on contraception. Pundits should not be calling people uncouth names. Presidents should not be meddling in private scuffles. And the government should not be deciding what is "right" or "wrong" for the individual.

Was It Wall Street or the Government?

A recent Securities Exchange Commission (SEC) investigation into Fannie Mae and Freddie Mac, the two government sponsored enterprises (GSEs) that were integral to the housing boom and bust, now formally argues that these two organizations committed massive fraud, which underrepresented their exposure to subprime mortgages and contributed to the economic meltdown.

The Wall Street Journal expounds how this investigation blows holes in the argument, often proffered by anti-capitalist Democrats, that Wall Street is solely to blame:

Democrats have spent years arguing that private lenders created the housing boom and bust, and that Fannie Mae and Freddie Mac merely came along for the ride. This was always a politically convenient fiction, and now thanks to the unlikely source of the Securities and Exchange Commission we have a trail of evidence showing how the failed mortgage giants turbocharged the crisis. 

That's the story revealed Friday by the SEC's civil lawsuits against six former Fannie and Freddie executives, including a pair of CEOs. The SEC says the companies defrauded investors because they "knew and approved of misleading statements" about Fan and Fred's exposure to subprime loans, and it chronicles their push to expand the business.

And while the GSEs were somewhat independent from the legislature and the bureaucracy, the paper trail seems to go further back. At least some of the incentive for the alleged fraud was directly caused by government's social policy of getting every American his or her own house - regardless of the ability to afford it.

The Beltway story of the crisis claims that Congress's affordable housing mandates had nothing to do with it. But the SEC's lawsuit shows that Fannie degraded its underwriting standards to increase its market share in subprime loans. According to the SEC suit, for instance, in 2006 Fannie Mae adjusted its widely used automated underwriting system, "Desktop Underwriter." Fannie did so as part of its "Say Yes" strategy to "provide more 'approve' messages . . . for larger volumes of loans with lower FICO [credit] scores and higher LTVs [loan-to-value] than previously permitted."

Unfortunately, this is what happens when the government meddles in private-markets for social engineering purposes - prices (and risk) get mispriced, bubbles are grown, and then busts bring the economy down. And while this does not fully absolve Wall Street (fraud did occur and non-criminal stupid decisions were made) or the consumer (the role that greedy homeowners played in buying too much house or refinancing to buy flat-screen TVs and BMWs is unfortunately overlooked), it does shed light on the harm government can do. Sometimes trying to help people ends up with a worse outcome than doing nothing, especially if all potential consequences are not considered from the outset.

Stop Trying to Control Everything

For a long time, Americans have turned to the government to solve their woes. When things "go wrong" the government has been the readily accessible and presumably best organization to make things right. Social problems, economic recessions, health concerns, cultural discords, and the like have all been placed under  government oversight.

Government officials have often done a poor job at solving these problems, partially because the solutions are outside the scope of what a government can successfully do, partially because legislators and bureaucrats often fail to appreciate unintended consequences, and partially because rigid bureaucracy is generally ill-formed to adapt to changing circumstances in the real world. Yet, unfortunately many Americans still turn to the government as the problem-solver. This impulsive desire to turn to the almighty government comes from a general malaise in the American psyche that wants others to carry the tough burdens (or at least a lack of confidence in the ability to achieve), a human desire to control his environment, and an undue confidence that the government is the only institution that can solve big problems. The latter, of course, is rooted in a fundamental lack of imagination on how other forces can have tremendous impacts. The government can be seen, it is tangible, and thus to the naive it is the only means to implement solutions. The less tangible - social, cultural, and economic forces - are summarily dismissed.

But while there has long been criticism of expansive government, there appears to be growing popular antagonism to these outmoded ways of thought. Former Florida governor, Jeb Bush, writes a powerful critique of the need for the "right to rise." He argues that government causes more harm than benefit by its incessant interloping in the marketplace and its attempts to solve the 'problem' of risk.

But when it comes to economic freedom, we are less forgiving of the cycles of growth and loss, of trial and error, and of failure and success that are part of the realities of the marketplace and life itself. 

Increasingly, we have let our elected officials abridge our own economic freedoms through the annual passage of thousands of laws and their associated regulations. We see human tragedy and we demand a regulation to prevent it. We see a criminal fraud and we demand more laws. We see an industry dying and we demand it be saved. Each time, we demand "Do something... anything."

He goes on to discuss the pressures he faced, as a governor, to always find a solution, to always be the one to "do something," even though there was not always something to be done. The pattern is emblematic of the corrosion of the American way, where Americans now look for the easy way out, for someone else to solve their problems, and for a cushy, utopian lifestyle free from any possible harm.

In a similar vein, Robert J. Samuelson argues that Keynesian economics, the economic theory that has justified government management of and intervention in Western economies since the interwar period, is on its deathbed. Government management of the economy may have been appropriate when governments were small, nimble, and able to tweak the economy at the margin; however, now these policies are increasingly a disaster.

Deficit spending and pump priming were plausible responses to economic slumps. Now, huge governments are often saddled with massive debts. Standard Keynesian remedies for downturns — spend more and tax less — presume the willingness of bond markets to finance the resulting deficits at reasonable interest rates. If markets refuse, Keynesian policies won’t work.

However, governments have long since abandoned prudent use of such policies, distorting the original intent of Keynesianism to justify massive government control and intervention in the private sector. This has not only rendered Keynesianism ineffective but created ripples of problems across the American landscape. The death knells of this philosophy, are deeply rooted in a growing lack of confidence that some enlightened, technocratic government is truly able to solve the country's woes.

Unfortunately, some still tenaciously cling to the outmoded confidence in government. They cannot envision an alternative. They cannot accept that not only can we as humans, with our minimal capacity, not fix every problem, but that it is often not desirable to try and do so. Failure can be a good thing, self-reliance can be empowering, problem solving can build character, and being independent can yield a better world than  stifling, top-down control. Mankind cannot control every aspect of its environment, not through individual or government action. The sooner we let go of this pernicious desire to shape our surroundings into some ideal and the sooner we let go of the false hope that only through government's magical hands will we better our world, then the sooner this country will be able to progress.

Some Sense Regarding the Housing Market

It is about time someone talks honestly about the economy. According to The Wall Street Journal, Mitt Romney commented about the housing market and foreclosure:

One is, don't try and stop the foreclosure process. Let it run its course and hit the bottom. Allow investors to buy homes, put renters in them, fix the homes up. Let it turn around and come back up. The Obama Administration has slow-walked the foreclosure processes that have long existed, and as a result we still have a foreclosure overhang.

Number two, the credit [that] was given to first time homebuyers was insufficient and inadequate to turn around the housing market. I think it was an ineffective idea. It was a little bit like the cash-for-clunkers program, throwing government money at something which was not market-oriented, did not staunch the decline in home values anymore than it encouraged the auto industry to take off.

The Journal went on to say:

How's that for refreshing? After five years of politicians trying without success to postpone disclosures and levitate the housing market, Mr. Romney dared to tell the truth. Parts of the U.S., including Nevada, still have too many homes, and that supply needs to be sold off and fixed up so the market can find a bottom before home prices can start to rise again. The faster that process proceeds, the faster the recovery will take hold.

While the personal plight of many individual Americans is heart-wrenching on the personal level, meddling in the housing markets is the sort of disastrous policy that helped push the economy to its current state. Why can so many correctly criticize the bailout of big banks, insurance companies, and auto manufacturers, but not realize a bailout of Main Street is just as dangerous? The government's expressed desire to "prop-up" or "boost" the ailing housing markets are simply other terms for "create a new bubble."

By distorting incentives the government encourages individuals and institutions to incorrectly calculate risk. Inevitably, this will lead to sub-optimal outcomes. As difficult as it may be to watch the nefarious outcome of poor risk management, it is sometimes better for all to simply do nothing. The government not only does not have the ability or resources to "help" everyone, but it creates awful drags on the economy, as current policies have demonstrated, and breed future problems when it foolishly tries to become a superhero.

Why Warren Buffett is Wrong on Taxes

Former chairman and CEO of American Express, Harvey Golub, writes on why Warren Buffett and Obama are wrong when arguing for higher taxes on the rich.

What gets me most upset is two other things about this argument: the unfair way taxes are collected, and the violation of the implicit social contract between me and my government that my taxes will be spent—effectively and efficiently—on purposes that support the general needs of the country. Before you call me greedy, make sure you operate fairly on both fronts.

Golub highlights statistics that the top 3% of taxpayers pay nearly 50% of taxes.  He also cites the inefficient collection of taxes - namely due to tax breaks and loopholes given to all sorts of special interests - and inefficient expenditure of taxes - on wasteful and unnecessary programs - to drive his message home.  Golub concludes "Here's my message: Before you 'ask' for more tax money from me and others, raise the $2.2 trillion you already collect each year more fairly and spend it more wisely. Then you'll need less of my money."


But while Golub's argument is fair, there is a more fundamental issue in his essay.  In refuting calls by some of America's wealthiest, including Buffett, for higher tax rates on the rich, he writes:

Others could pay higher taxes if they choose. They could voluntarily write a check or they could advocate that their gifts to foundations should be made with after-tax dollars and not be deductible. They could also pay higher taxes if they were not allowed to set up foundations to avoid capital gains and estate taxes.

The issue here is one of coercion and choice.  Buffett might be right when he calls for the closing of loopholes that give special treatment to certain forms of income or certain individuals, but that does not translate into justification for increased tax rates.  If Buffett feels he owes something to the community, he is more than free to write a check to any institution he feels deserving - including the US Treasury.  However, to argue that tax increases on certain individuals are necessary, because one feels like he is paying too little, distorts the relationship between government and the individual in a dangerous manner.

Income is naturally the property of the individual who earned it.  The government only has the right to take from an individual in order to provide the appropriate services of the state.  In other words, government should minimize its burdens on individuals and should tax only to meet its essential and proper functions (what these functions are is a separate discussion but would include many tasks that cannot be provided by the private market, for instance, defense, security, certain infrastructure, establishing rules and laws, and other pure social goods).  Taxes are thus a pooling of individual property to provide for certain aspects of the common good.  In this manner, taxes could be perceived as establishing or investing in an institution (the government) that provides needed services that would otherwise be unavailable.  Accordingly, all should benefit from this system.

Buffett's and Obama's argument turn this conceptualization on its head, arguing that the appropriate level of taxes is rooted not in the need to pay for essential functions but in an arbitrary determination of what an individual should possess.  Under this understanding, income (or wealth) is not the natural property of the individual, but is awarded to them based on their need.  Any amount that surpasses this arbitrary definition of need does not rightly belong to the individual and must, to be fair, taken away.  Taxes are thus used to 'level the playing field'.  The individual, whether rich or poor, now lives at the goodwill of the state, allowed to possess only due to the graces of leviathan.  In fact, taken to the extreme this argument does not even require the government to provide anything.  If taxes are justified by taking 'excess' from those who have it, the government has achieved its goal of taxation (this is not to say the government does not have other goals) simply by taking the money.

Taxation is a tool needed for the government to achieve its proper functions.  It is not a goal unto itself.  To assume otherwise is to break down the very fabric of a capitalist, free-market, liberal society and sets dangerous precedents.  It is certainly appropriate to debate how tax burdens should be carried by different segments of society, but it is far too dangerous to allow such discussions to distort the purpose of taxation.  Taxes are a government's paycheck or its alms - not a tool for social engineering.

The Entitlement State

The Wall Street Journal provides what they call "a short history of the entitlement state."  Unsurprisingly, the essay concludes, "The looming debt downgrade only confirms what everyone knows: Congress has made so many promises to so many Americans that there is no conceivable way those promises can be kept."


The Journal is right to peg so much of our dire fiscal straights on the over-inflated welfare state.  Beginning under FDR in the 1940s, the WSJ tracks the growth of entitlements through LBJ's Great Society and the Social Security problems of the 1970s and then onto Obama's profligate spending today.  While correctly arguing that the left's counter-argument of military spending is a red herring ("But national defense spending was 7.4% of GDP and 42.8% of outlays in 1965, and only 4.8% of GDP and 20.1% of federal outlays in 2010. Defense has not caused the debt crisis."), the editorial is fair to pin some of the blame on the GOP.

Mr. Bush and Republicans did prove after 9/11 that the Washington urge to spend and borrow is bipartisan. Republicans launched a Medicare drug benefit, record outlays on education, the most expensive transportation bill in history, and home ownership aid that contributed to the housing bubble. The GOP's blunder was refusing to cut domestic spending to finance the war on terrorism. Guns and butter blowouts never last.

Whatever nuanced disagreements one has with this argument, the fact is clear that the federal government is spending far beyond its means.  Much of this is arguably the by-product of a process that encourages a lack of forward-thinking.  The American system - and to some degree human nature - encourages politicians to dole out perks today while placing the costs on future citizens.  As time progresses, entitlements are increasingly piled on and rarely are forward-looking politicians able to remove these newly constructed "rights".  Political and moral arguments are marched out to defend these handouts and so the fiscal burden grows.

To be fair, the blame cannot solely lie with politicians, but must also lie with the electorate who votes for politicians who swing perks their way.  Individuals and groups across the political spectrum lobby politicians for special treatment, not realizing or simply not caring that someone else will have to pay for it.  Even the most stalwart small-government folk are resistant to relinquishing the handouts that they receive (Medicare?).

This is a losing mentality - a short-sighted and fatal way-of-life.  Americans have, for far too long, thought about the benefits they receive from the government separately from the costs that are required to pay for these perks.  It has always been someone else or some other generation that will pay.  But this model of government has proven it cannot endure for any prolonged period of time.

The fiscal sanity of our government and the future of the state demands that we, as a nation, rework our way of thinking.  We have become far too comfortable, as individuals and a society, living beyond our means, but it cannot continue.  Citizens need to reevaluate what they expect to have and what they want others to provide for them.  Remember the government does not produce anything.  Whatever is provided by the government comes in one end and, with some loss along the way, goes out the other.

Government should be restructured to perform the essential duties for which a government is needed; namely providing certain common goods (roads, defense, rule of law) that all citizens benefit from and are unsuccessfully provided by the private market.  It should largely cease its role as a wealth re-distributor, both across time and class.  Whatever the argument one has about this program or that program, the fact is they are unsustainable in our society.  The welfare state has only been maintained over the past seven decades because of the wool over America's eyes - it has been stomached because nobody has been paying for the full extent of the entitlement state.  This ultimate grand bargain has allowed politicians to appease both those who want more and those who do not want to pay more (oftentimes the same people).  But the free lunch has ended and Americans must reconcile themselves to reality - we can never over the long-run get more than we produce.  Americans must realize that government is not a magical tool to solve society's woes or to enact some vision of morality, but a limited means of coordinating essential services that a society needs.

A Taxing Mentality

Tensions have been mounting as the White House and congressional leaders have failed to agree on a package to resolve the impending debt-limit crisis.  Republican leaders, including House Speaker John Boehner, House Majority Leader Eric Cantor, Senate Minority Leader Mitch McConnell and Senate Minority Whip Jon Kyl, have all resolutely stood firm in opposing any tax increases as part of a deal to raise the debt-limit.

The GOP leadership is absolutely correct in their obstinacy.  While ultimately some short-run tax increases may be necessary to pay-off the monumental heap of debt this country has imprudently managed to accumulate, the Democrats seemingly do not understand the need to spend less than the federal government takes in.  Until the Democrats show an understanding of what taxes are for - namely to pay for the essential services required by this country - no tax increases should be considered.

Mona Charen highlights the backwards thinking of the left in an editorial at NRO.

It is becoming a verbal tic — the tendency on the part of the president to tell wealthy Americans (“people like me,” he’s always careful to add) that they have made more than enough money and will have to cough up more of it for the government. Speaking for himself on July 11, the president offered that he had “hundreds of thousands of dollars that I don’t need.” 

The president is of course welcome to donate as much of his extra money as he likes to the federal treasury. He knows Timothy Geithner personally and can probably get a guarantee that his check will be cashed without delay. And since the president is so ready to impute unpleasant motives (like greed) to those who oppose tax increases, perhaps we should impute some sort of moral failing to him for not having thus far contributed his spare change to the government.

The government should never be in a position to determine who has "enough" and thus claim a moral right to take "excess" from an individual.  The government's place is to provide a set of essential services - military, police force, infrastructure, and arguably some minimal safety net (to minimize social disruption).  The need for taxes should be based not on some arbitrary definition of "enough" but on the predetermined needs of the state to properly function.

The Democrats' reliance on the notions that the government can take because people have to much and that the government should provide because people want, shows a flagrant disregard for the purpose of government and taxes.  Tax reform may be necessary (loopholes should be closed), but it cannot succeed (and shouldn't be part of a "grand bargain") until this country's approach to spending and taxes is reevaluated.

Class Warfare and the Social Yard-Stick

Class warfare is becoming a full-blown storm on Capitol Hill. It is not really anything new – a time-tested strategy frequently relied upon by the left, but also used by the right. President Obama’s latest deployment was during his announcement of the bipartisan tax deal with Republicans.

Presumably, such a cross-aisle deal is a time to rejoice at actually finding middle ground in the exceedingly divisive Congress. Instead, the “class card” was thrown about. Obama likened the deal to one made with hostage-takers [Can a deal really be enforceable if made under duress?!]. He stated, “I’ve said before that I felt that the middle-class tax cuts were being held hostage to the high-end tax cuts. I think it’s tempting not to negotiate with hostage-takers, unless the hostage gets harmed.”

Now, the merits of Republican tactics aside, the interesting issue is the continued desire of American politicians, particularly on the left, to sow the seeds of class warfare. The storyline is familiar – greedy fat cat CEOs, those over $250k not “paying their fair share,” and “tax-cuts for the rich.” Republicans feed right into this game, defending the economics of high salaries and bonuses (needed to incentivize performance), arguing for low tax rates (high rates stifle economic growth), claiming that some “rich” just really are not all that rich, and pointing to all the good that some wealthy do for the community.

All of this is probably true and these arguments need to be made. However, they miss the fundamental point and allow the political game to be dictated on far-left terms. The left loves class warfare. It plays into a multitude of arguments defending wealth redistribution and increased government involvement in the lives of private citizens. But it rests on a fundamental misunderstanding of what income’s purpose is.

The left looks at income as a sort of social yard-stick, a tool to measure one’s value to society. By this logic the more one makes, the more good they should bring. However the argument goes, there is quite a bit of injustice in the system! Greedy CEOs do not help the country and yet they get rich, while struggling laborers barely make ends meet! The natural solution? Take from those who undeservingly make a lot of money and give to those who deserve it, but do not get it.

Implicit in this argument are at least two assumptions. The first is the particular standard regarding who deserves what. The left has come up with some arbitrary criteria of what is “deserving” and thus how wealth needs to be redistributed. Enter the Republicans – who try to challenge the left’s definition of “deserving.” This is where the class warfare is generally fought. Republicans, for instance, argue that CEOs, for better or worse, do deserve at least some of their recompense.

However, by playing the game of “what social value do [insert: CEOs, top 5% of income earners, those who make over $250k, etc] have,” Republicans are tacitly acknowledging the deeper assumption in this leftist [daresay socialist] argument – that there is even a relationship between social value and income.

The fact of the matter is that income is a measure of one’s services in a given line of work. It is the market’s determination of what value an individual provides for a certain occupation. Income, like the price of nearly every other good, is motivated by a host of factors, including, of course, supply and demand.

However, it is not – and should never be – a measure of one’s value to society. This is too arbitrary of a claim. Society – government in particular – has no right to pass judgment on an individual’s value or their associated income. [Beyond the issue of right – government simply has no, non-arbitrary means to determine value outside of the market-mechanism.] The rich are no more or less deserving of their wealth, than the poor are of their dearth. “Deserving” just simply is not a concept that the government is fit to act upon.

It is time to cut the class warfare. It is far too divisive and harmful for our country. Not only does it lead to strife between individuals and groups, but it creates an environment where the government feels even more compelled to meddle in the private affairs of citizens. One may not like that someone else makes more than him, but that never justifies arbitrarily taking it from him. Why should it be any different for the government?

The Budget, Entitlements, and Government

In today's Washington Post, Robert Samuelson wrote a poignant editorial on the much needed buget cuts.  He argues that government benefits, once lavished upon the electorate, are largely (politically) unremovable, becoming in the eyes of the people "property rights."  Coupled with the desire to minimize taxes this creates an untenable budgetary mess.  Samuelson correctly argues that partisan interests - whether farm lobbies, the elderly, or others receiving undue government support - should recognize a moral need for change and put aside their self-interest for the national interest.  In other words, he calls for a rewriting of the social contract.

The thrust of the argument is on the areas of the welfare state (or benefit state to construct it more widely in order to include agricultural subsidies and the like) that need to be slashed; however, he does tepidly venture into the more philosophical realm of the role of the state when he discusses the defense budget.  Samuelson argues that cuts to defense should not be treated the same as cuts in other areas of the national budget because "[n]ational security is government's first job."  He, unfortunately, does not take this to the next level, namely by opening a discussion on what the proper role of government is.  Government's role within society has expanded enormously and if America is to not only solve its budgetary issues but also resolve the government's wayward drift, the people need to pin down what, philosophically speaking, the purpose of government is.