Economics

Dejection 2012

America ratifies an untenable status quo.

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Well into the third year of the weakest economic recovery since at least the mid-19th century, less than two months before the U.S. government was scheduled to plunge off a "fiscal cliff," an American public deeply and rightly dissatisfied with the economic and political status quo voted to lock it into place.

On November 6, voters who just two months earlier had given Congress its lowest Gallup approval rating in 38 years (a measly 10 percent) ratified Capitol Hill's existing balance of power. The Democratic majority's edge in the Senate grew from four votes to nine, and Republicans at press time held a 41-seat advantage in the House of Representatives, just slightly down from 49 prior to the elections. Presiding above this hopeless stasis was the man who four years earlier campaigned on precisely the opposite: Barack Obama.

If elections are up-or-down assessments of politicians' job performance, then this was a vote in favor of trillion-dollar annual deficits, bailout economics, and failing the minimum competence test of passing an annual budget. Federal policy for four years has produced lousy short-term results for the price of long-term insolvency, and now the characters responsible for this misgovernance have been given a pat on the head.

It was not only at the national level that the results looked bleak for those of us yearning to tackle the three-pronged crisis of runaway government spending, unfunded taxpayer obligations (particularly to public-sector workers), and the surge in entitlements due to retiring baby boomers. Puerto Rico Gov. Luis Fortuño, who faced down an impending debt crisis in 2009 by cutting government seriously and producing economic growth, lost his re-election bid by one percentage point. In pension-crippled San Diego's mayoral race, longtime pension-reform crusader Carl DeMaio (who has worked in the past for the Reason Foundation) lost to a Democrat by about 10,000 votes. And in Massachusetts, Elizabeth Warren, darling of the progressive left for her class-warrior rhetoric, beat out moderate Republican Scott Brown for Teddy Kennedy's old Senate seat.

Perhaps most depressing of all, California, which has been mired in double-digit unemployment since February 2009, elected to raise taxes on itself and send a supermajority of Democrats to Sacramento. No longer is there even the thin defense of an ineffectual state Republican Party or the veto power of Gov. Jerry Brown to protect taxpayers from the predations of California's buffoonish big-government political class. The Golden State is now officially a laboratory experiment to see how the worst of bad contemporary economic policy works in practice.

Remarkably, economic policy did not dominate the campaign season. Democrats, who did not go a day on the campaign trail in 2008 without criticizing George W. Bush's "reckless" debt accumulation, preferred this time around to talk about the GOP's hostility toward women, immigrants, gays, blacks, and anyone who doesn't pay federal income taxes. The Democratic National Convention was a three-day exercise in fiscal denial, where the only speaker to even engage the thorny "math" of entitlement reform was former President Bill Clinton, whose magic-realist speech attempted to bathe Obama's 1970s economics in the rosier glow of 1990s Clintonian restraint.

Republican candidate Mitt Romney tried to run the general election on economic issues, but only while assiduously avoiding policy specifics about what government programs he might reduce or eliminate. Before that, Romney survived the long primary season in part by promising to save Social Security while boosting military spending and protecting Medicare from President Obama's cuts. There is no way to restrain government with this formula. 

And after Romney appointed Rep. Paul Ryan (R-Wis.) as his running mate, he sent the young entitlement reformer out on the campaign trail to defend Romney's lukewarm reform and attack President Obama for policies and actions that Ryan himself backed in Congress. Lacking the courage to tackle big-ticket fiscal categories, let alone to provide concrete details of his economic plan, Romney was left with vague appeals to his managerial authority ("I know how to get America working again!") and faux-specific promises to create "12 million jobs."

What Romney's primary campaign lacked in economic-policy resolve it made up for in socially conservative bravado, especially his call on illegal immigrants to "self-deport." Although Obama deported people at record levels and unabashedly reneged on his promise to propose comprehensive immigration reform in his first year in office, his voting share among Latinos rose from 67 percent in 2008 to 71 percent in 2012. It is amazing that Republicans think the way to win general elections is by having each of their presidential nominees successively more hostile toward undocumented workers. 

This does not look like a country ready to grapple with its long-term fiscal viability. And yet the same gang that got us into this mess now has the urgent deadline of January 1 to either cobble together a long-term deficit reduction package or let us all plunge off a pre-negotiated fiscal cliff of widespread tax hikes and modest spending trims. Although this deadline of doom went all but unmentioned during the general election, it is the public policy issue going forward. Two days after the election, a banner headline on the front page of The New York Times proclaimed, "Back to Work: Obama Greeted by Looming Fiscal Crisis." It would have been nice if the candidates (or the press) had talked about this impending disaster during the previous two years.

reason has been examining these issues in depth ever since the financial crisis of 2008, and we continue that discussion in this special Apocalypse 2013 issue. On page 26, a group of economic thinkers discuss just how precipitous the fiscal cliff is likely to be while suggesting reforms to Washington's standard operating procedure. Contributing Editor Veronique de Rugy explains on page 21 why even cutting the rate of growth in military spending is so damnably difficult; on page 70, columnist Tim Cavanaugh looks at the slow-but-steady growth in municipal bankruptcies; on page 48, cartoonist extraordinaire Peter Bagge reports on the economic ruins of Detroit; and in case all this isn't depressing enough for you, Science Correspondent Ronald Bailey details on page 34 how the government is using your cellphone to spy on you without your knowledge.

That's a lot of pessimism for one issue (or one year), so let's end here on a much more optimistic note. The fact is that voters tended to respond positively on the rare occasions when they were given the opportunity to make explicitly libertarian choices. For the first time in history, a ballot initiative ending discrimination against same-sex couples who want to marry passed, not just in one state but in three. The vast majority of state and local tax hike initiatives failed. 

Most spectacularly of all, recreational marijuana was at long last legalized on the state level, in Colorado and Washington. This historic development could be the turning point in a drug war that has mangled tens of millions of lives and reduced the freedom of every living American. (For more about pot legalization, see Senior Editor Jacob Sullum's "The War Over Weed," page 60.) 

And how did such a potentially momentous change happen? Not by waiting on any politician or on the results of any major-party political competition, but rather routing around the people who hold power. Freedom is still ours for the taking, and the sooner we realize that it's up to us instead of our political representatives, the sooner we can start scaling back up this fiscal cliff.  

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  1. Unsustainable
    In every way,
    And forever more
    That’s how you’ll stay.

    For the commentariat, I say, “No, fuck you, cut spending.” For Matt and FCC-regulated airwaves, I say, “No, it’s the spending, stupid.”

  2. Editor in Chief Matt Welch considers what it means that America just ratified an untenable status quo.

    It means we need more teachurz, I guess.

    Because there are still some people out there who DON”T BELIEVE.

    1. It’s pretty obvious that it means the majority of voters are morons.

  3. Instead of E PLURIBUS UNUM, we get

    “I will gladly pay you Tuesday, for a hamburger today.”

    1. We need to get that translated into latin!

      1. EGO mos laetus persolvo vos Tuesday , parumper hamburger hodie

        1. Tuesday is dies Martis. No idea on “hamburger”, and kind of perplexed why Google Translate wouldn’t be able to translate Tuesday.

        2. Awesome.

          Although when I translate it back to English using google translate, I get “I will gladly pay you Tuesday, for a day at Hamburg.”

  4. The Golden State is now officially a laboratory experiment to see how the worst of bad contemporary economic policy works in practice.

    This might be our best hope. The impending disaster in California might wake people up to the lunacy of the high-tax, higher-spending crowd before more damage can be done on the national and global level.

    …and monkeys might fly out of my ass.

    1. California. What is it?

      It’s a geographical area on the west coast of the US where scarcity doesn’t exist.

      but that’s not important right now.

    2. The moral of the California bailout will be the first to go bankrupt gets the best of the bailout. Every politician in the USA will be screaming that they need to go bankrupt too so they also can be bailed out.

    3. Sorry, isn’t going to happen. That would entail allowing California to fail. That might, just might have happened under a Romney administration. But, no way in hell Obama won’t come to the rescue of California’s self-inflicted mortal wounds.

  5. Truly batshit insane. Who the freak can afford weed or marriage if the economy gets much worse? Yet you keep endorsing candidates who can never win and then proceed to lament the terrible state of affairs. It’s all so simple when you never, ever have to govern, isn’t it? My husband & I are both unemployed but, hey, at least the smug hipsters have their principles and feel good about themselves. It’s so easy to feel morally superior when you never have to sell out for a job or make compromises or do the actual day-to-day dirty work of running a country.

    1. Sorry, I will not vote for a statist just because he can win. Maybe this logic is why we are in such dire straights as a country and why neither you or your wife have jobs?

      Or, maybe it is because the “hipsters” who have been against, from the beginning, all of the things that have steered this country towards an economic and monetary cliff, didn’t vote for the statist? I guess it is your opinion.

      1. I’m with you nuked. Voting for more government and less freedom, even though slightly more freedom than the other guy, is giving one’s endorsement to less freedom and more government.

    2. Libertarians don’t get to govern, because all of the freaking idiots keep voting for Republicans and Democrats. Keep doing the same thing over and over hoping for a different result if you wish…

    3. I hate to pile on but:
      1) The republicans had first shot at Gary Johnson, the most credible libertarian candidate in my adult life. A candidate who “could of won” because he was to the left of Obama on a host of issues and also was serious about to addressing the number one issue, the fiscal mess . I’m not sure he would of won (I don’t have a lot of faith in Team Blue putting their ideals before partisan politics) but he was more competitive than Romney. The Republicans didn’t even trash him they utterly ignored him.

      2) Romney could of gotten my vote if one he would of seriously addressed the deficit and two taken a principled federalist stance on social issues. Instead we got Obama wants to take away your Medicare and defense spending must go up. This is insane, it is simple math, you can not reduce the deficit without cutting defense, cutting entitlements, or raising taxes (probably doing all three) and Romney explicitly campaigned against doing any of these. At best a Romney win would mean we would go broke slightly slower, given the Bush years I’m not even sure about that.

      The people involved in “actually governing” and the dirty business of politics are the ones who got us into this problem, the ones that are bat shit crazy and in total denial. The electorate that keeps endorsing this status quo are ultimately responsible. So don’t pin it on those of us who oppose it.

    4. I hate to pile on but:
      1) The republicans had first shot at Gary Johnson, the most credible libertarian candidate in my adult life. A candidate who “could of won” because he was to the left of Obama on a host of issues and also was serious about to addressing the number one issue, the fiscal mess . I’m not sure he would of won (I don’t have a lot of faith in Team Blue putting their ideals before partisan politics) but he was more competitive than Romney. The Republicans didn’t even trash him they utterly ignored him.

      2) Romney could of gotten my vote if one he would of seriously addressed the deficit and two taken a principled federalist stance on social issues. Instead we got Obama wants to take away your Medicare and defense spending must go up. This is insane, it is simple math, you can not reduce the deficit without cutting defense, cutting entitlements, or raising taxes (probably doing all three) and Romney explicitly campaigned against doing any of these. At best a Romney win would mean we would go broke slightly slower, given the Bush years I’m not even sure about that.

      The people involved in “actually governing” and the dirty business of politics are the ones who got us into this problem, the ones that are bat shit crazy and in total denial. The electorate that keeps endorsing this status quo are ultimately responsible. So don’t pin it on those of us who oppose it.

    5. jcp370,

      I get your point. I would have much preferred a Romney administration to Obama 2.0. Now, let me ask a question, what exactly did Romney do to attract libertarians to his candidacy? I mean, you’d think that, after the Tea Party victories in 2010, the Republicans would be falling all over themselves to leverage those gains and differentiate themselves from the big government Obama administration. Instead, libertarians were told to go hang out up in the attic while the party tried to pander enough to women to offset the damage to the brand wrought by a couple of social conservatives.

  6. Matt Welch could have written this article after Romney won the Republican primary, when American “ratified an untenable status quo”. After all, there isn’t much difference between Obama and Romney in terms of policy. Even the Romney/Ryan budget INCREASES government spending by 3.1% each year.

  7. “Democracy is the theory that the common people know what they want, and deserve to get it good and hard.”
    -H.L. Mencken

  8. Yes, Romney had some big weaknesses as a candidate that did not involve ideology – http://modeltstocktrends.blogs…..slime.html

  9. A market solution: auction off America’s national parks to the highest bidder. They are only lightly used and their resources are by and large intact. The problem, after all is not a lack of money out there. At the moment they are only serving the dubious purpose of preserving nature’s grandeur and beauty.

  10. I am tired of these articles which act as though the American public votes with a collective conscience. People largely – and unfortunately – vote about me, me, me. The good of the country be damned.

  11. The Golden State is now officially a laboratory experiment to see how the worst of bad contemporary economic policy works in practice.

    This might be our best hope. The impending disaster in California might wake people up to the lunacy of the high-tax, higher-spending crowd before more damage can be done on the national and global level.
    ????? ????? ???????
    ????? ????? ???????

    The Golden State is now officially a laboratory experiment to see how the worst of bad contemporary economic policy works in practice.

    This might be our best hope. The impending disaster in California might wake people up to the lunacy of the high-tax, higher-spending crowd before more damage can be done on the national and global level.

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