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May 10, 2010

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"Here and now is all that counts, here and now in large amounts" - that's pretty much the mind set that got us here.

A fitting epitaph for America's tombstone I think. Uh huh.

Getting the white working class and low-level managers to see themselves as entrepreneurs was a fairly amazing piece of political jujitsu. Rush Limbaugh made the sale with dog whistles so high-pitched you could barely discern them. Liberals and their wards (i.e., blacks) are takers. Conservatives are "producers". Ergo, politics was more a matter of racial allegiance than class consciousness.

The teabaggers are the final stand of an attitude many of us grew up with: American entitlement. They're assured of health care (Medicare) and a reasonable standard of living (pensions, SS, and paid-for houses). Socialism, as we're continually learning, is okay for me. For thee? Not so much.

We have pathologized government to the point that the nation itself is sick from an auto-immune disorder. We can't do anything because only corporations are "efficient" and "create jobs". Investment, education, R&D, and industrial policy depended on a tacit agreement between generations and classes: wealth would be shared. That agreement is now broken.

Friedman's fuzzy and eupeptic futurism seems like a fraud for this reason. A nation this split can find neither the political will nor the overarching rationale for common endeavor. The genius of the right was to stigmatize that as "liberalism". Help people and some welfare queen might have a dozen kids.

If the ordinary shlubs who make up the GOP base feel embattled, it's not because "socialism" is wreaking havoc on their lives. Rather, it's because they're reduced "America" to a sit-com where the poor, minorities, and the young are ridiculous clowns. Listen to talk radio for ten minutes and you'll catch the laugh track in its sniggering contempt for the unchosen. This is our nation now, for better or worse.

I'm not sure how you heal this fundamental split. Obama's post-partisan bonhomie has been utterly ineffectual. Maybe demographics will eventually take us to the place argument cannot. But by the time that happens, it may already be too late.

Screwed 4.0 will spare no one.

It's more out of wack than you state. The top tax rate during Ike's administration was 91-92%.(http://en.wikipedia.org/wiki/Income_tax_in_the_United_States)

In fact, the top federal personal income tax rate was 91 percent from 1946 through 1963. It went to 70 percent from 1965 through 1981. Then it was 50 percent during most of Reagan's administration, until 1987 when it went down to the Clinton era rate of 39 percent.

Here's a link with detailed charts for those who don't trust Wikipedia:

http://www.taxfoundation.org/publications/show/151.html

Regarding deficits and debt, while Mr. Talton has a point, it's a bit of a straw man argument, since many of those seriously concerned about these issues are not pointing to current levels relative to GDP -- which are still close to historical levels with understandable deviations due to the Great Recession (lower revenues and higher outlays for unemployment insurance, etc.) -- but rather are pointing to deficits and debt projected by the government to reach record levels in the next 10 years.

Heavy debt CAN cause problems and suck much needed revenues into debt-service (interest payments). I am running out of online time right now but wanted to chime in.

Excellent discourse, but some of it reminds me of Moondog's "ABANDON HOPE" poster. Somehow, we've managed to muddle through our various episodes of denial, greed and overall stupidity. Are we now fully marinated in pessimism?

P.S. Actually, I don't think that big cuts are on the table so much: though they'll be called for in the abstract, when it comes to the big money many Republicans will be just as reluctant to cut much beloved entitlements as Democrats; the elusive "waste and fraud" will eventually dominate the rhetoric if pressed.

What I suspect is not a big income tax raise on upper earners but a VAT tax, which is kind of a national sales tax only sneakier, since it enters at each point in the production chain -- cost to producers to be passed along to consumers, of course. That might be economic poison in an environment of already weak demand, though.

P.S. Take a look at this chart from the NYT -- be sure to click on the button that reads "Hide mandatory spending" to see what's left.

http://www.nytimes.com/interactive/2010/02/01/us/budget.html

Here's a great article on why projected deficits and debt pose a huge problem, from the center-left Center on Budget and Policy Priorities. See especially Figure 1 showing debt as a percentage of GDP.

http://www.cbpp.org/cms/index.cfm?fa=view&id=3049

Note that the problem isn't Obama's stimulus package or other spending and that the problem would exist regardless of who won office:

"Rising health care costs are the single largest cause of rapidly rising expenditures, and ongoing reform of the health care system is absolutely fundamental to any solution. The two main sources of rising federal expenditures over the long run are rising per-person costs throughout the U.S. health care system (both public and private) and the aging of the population. Together, these factors will drive up spending for the “big three” domestic programs: Medicare, Medicaid, and Social Security. Growth in those programs accounts for all of the increase in federal spending as a share of GDP over the next 40 years (and beyond)."


This is interesting in light of recent news articles about tax revenue levels:

"Rising costs throughout the health care system exacerbate the long-term budget problem in two ways. As is well known, they increase federal spending directly by raising the cost per beneficiary of providing health care through Medicare and Medicaid. Less well understood is that rising health costs raise deficits even further by eroding the tax base. Because of tax preferences for employer-sponsored health coverage and certain other health care spending, when health care costs grow faster than the economy, the share of income that is exempt from taxation increases and the revenue base shrinks."

The CBPP article notes that:

"For the past 30 years, costs per person throughout the health care system have been growing approximately two percentage points faster per year than per-capita GDP. Our baseline projections assume this pattern will continue through 2050. Over time, the fiscal consequences of this rate of growth in health costs are massive."

Emil, one of the frustrations about the health-care debate was the neglect by the professional media and political class of this fiscal time bomb issue. Instead of gently prodding the citizenry to understand the scope of the problem, the debate itself was largely centered around focus-group tested talking points. We wasted a year pitting one set of phantoms against another.

That conversation is not entirely irrelevant, however. The (mal)distribution of resources is central to the nature of political theory. The Tea Party agitprop illustrates the phenomenon. What the white-right is really saying is that the undeserving (i.e., minorities) are getting too big a slice of the national pie. Why not simply answer that slur? Because the right managed to hide their real concern behind the screen of fiscal rectitude.

If we're lost in a hall of mirrors, that's the price we pay for a system with imperfect (and decaying) buffers. It used to be a given that politicians understood basic reality. Sarah Palin's ascent suggests that may no longer be the case. I'm not sure there's a way to massage a tetchy popular psyche anymore. Basic agreements are now suspect. That's why the future no longer connotes something exciting and positive.

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