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.